After A Month Of Zero Sales Auto Dealers Gear Up To Get Back Into Business

After a completely dry month that is expected to bring retail and wholesale sales down to zero or near zero for the first time in the seven decades of its existence, India’s auto sector is slowly making moves to get back to business. Dealers in givernment-designated green zones are applying for permission under the Shops and Establishments Act.

India’s top two carmakers, Maruti Suzuki India and Hyundai Motor India, have already opened a few dealer outlets and service centres and many more are awaiting permission in select regions of the country. Others like Tata Motors, Honda Cars India, Volkswagen and Toyota Kirloskar, have sent out standard operating procedures and a set of comprehensive guidelines to be followed by their dealers before they start operations.

Says R C Bhargava, chairman, Maruti Suzuki: “As they are all part of the Shops and Establishments Act, a number of our dealers have sought permission to open up their outlets in green zones. It's a positive development as most of them have cash flow issues that can be partly eased once they start selling and completing earlier bookings. While manufacturing of cars can wait for a few days, it is important that dealers open up. What is the point of producing if dealers are closed? Most of them also have inventory which they have to clear.”

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The company has an inventory over 130,000 vehicles at its factories and with its dealers.

Tarun Garg, director, sales, marketing and service at Hyundai Motor India said permission given by a few state governments and local authorities will set the pace for the dealers to make adequate preparations before starting full fledged operations. “This will not be a zero-one game. It will be a gradual process,” said Garg.

Like rest of the companies, Hyundai too has shared comprehensive guidelines with its channel partners and have also been imparting virtual training. As a one-time support, it has dispatched 500,000 masks and hand sanitisers.

Cumulatively, Hyundai dealers have an inventory of 50,000 units that will help in meeting the demand till the company starts production after necessary approvals and clearances at its plant, he said.

A Volkswagen India group executive said its dealerships will open up after the lockdown as most of its dealers are in cities declared red zones.

Other, such as Tata Motors, are using the time before dealerships open to issue guidelines and standard operating procedures. “We have developed and shared a new, comprehensive set of Standard Operating Procedure (SOP) for engagement,” said a company spokesperson. These guidelines are in line with government-mandated norms. Tata Motors is evenn training its dealers to comply with these SOPs.

Honda Cars too is using the time to prepare for the days ahead, said Rajesh Goel, senior vice-president, sales and marketing. “Keeping the morale of the dealerships high is important at this point,” he said.

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Honda is currently mapping its network to ascertain which zone each individual dealer falls under, and how each outlet will meet manpower requirements, etc. Depending on further guidelines, its channel partners will resume operations. It too has shared SOPs with the partners.

Puneet Gupta, associate director at IHS Markit, points out that automotive retail will undergo a complete change in the post Covid-19 world as customer needs and expectations will very different. “For now, they will be a lot more dependent on the car makers for the guidance and support,” said Gupta adding they cannot afford any missteps once they open up, he added.