Panicked Indian two-wheeler dealers send SOS
Motorcycle and scooter dealers in India were hoping for a better new year as the world’s largest two-wheeler market was not yet fully recovering from the failed 2020 lockdown and rising costs. But 2021 turned out to be even worse. Panicked outlet owners are asking for help.
As states imposed strict restrictions to contain a devastating second wave of Covid-19, exhibition hall traffic plummeted. About 60% of India’s 26,500 car dealers sell two-wheelers, and rural India is their largest market. With the virus now ravaging the backcountry, a rapid rebound is out of the question when outlets are sitting on an inventory of around a month and a half on average. Job cuts and closures are looming.
“We may see layoffs and some of them may have to close their workshops or reduce the number of two-wheeler outlets,” Vinkesh Gulati, president of the Federation of Automobile Dealers Associations, said on the phone. Dealers who don’t have deep pockets will find it difficult to survive without cutting costs or helping automakers.
Sales fell due to local lockdowns in India. According to the federation, 80% of outlets have been forced to close temporarily due to restrictions.
The owners of outlets have sought help from the scooter and motorcycle manufacturers. WhatsApp groups with resellers from multiple states as members continue to buzz with SOS messages.
âIt really is a very difficult time because all the OEMs are not providing any support to the dealers and the government is not giving any relief to the dealers; and then how we’ll pay for our inventory funding that will be due this month, âreads a text about one of the groups BloombergQuint consulted.
Gulati said the original equipment manufacturers, in informal discussions, asked to “wait and watch.”
BloombergQuint is awaiting responses to emailed questions to Honda Motorcycle and Scooter India, Hero MotoCorp Ltd., Suzuki Motorcycle, Bajaj Auto Ltd. and TVS Motor Co. on how they plan to support dealers.
âIf last year’s sales were bad, this year it will be worse,â Shrestha Jaiswal, a Honda Motorcycle and Scooter India Pvt dealer, said over the phone. Based in Calcutta. It has reduced expense management costs by reducing staff and reducing bonuses, he said.
âWe have bank loans, IMEs to pay and there are also operating costs. Sales were already down 50% last month, and in May there are virtually no appointments, âsaid Jaiswal, who is sitting on a 45-day stock. “We have no choice.”
He wrote to Honda Motorcycles through the Local Auto Dealers Association for assistance with the interest payment.
About 700 kilometers east of Kolkata, a Uttar Pradesh two-wheeler dealer prepares to answer a difficult call. Dealer Hero MotoCorp, who spoke on condition of anonymity outside of business concerns, said he had asked his human resources department to come up with a plan to downsize to cut costs. And unlike last time, he cannot afford to wait for the situation to improve when rural demand has plummeted.