Auto dealers’ fixed margin in India low: FADA
   Date :09-Jun-2020

Auto dealers_1  
 
 
Business Bureau :
 
Maruti Suzuki India and MG Motor are the only two passenger vehicle makers in the mass segment to offer above 5 per cent average fixed dealer margins, which is still short of 7 per cent of selling price that automotive dealers have demanded from auto makers. According to a recent survey by Federation of Automobile Dealers Associations (FADA), the average fixed dealer margin in India is much lower compared to countries like the US (8-10 per cent); China (9-11 per cent), 13-14 per cent in France, Germany, Italy, Spain, Belgium and Denmark; 12-14 per cent in South Africa and 6-8 per cent in the UK.
 
As per the study, among the major volume payers in mass PV segment, on an average across all models Maruti Suzuki India has a fixed dealer margin of 5.07 per cent; Hyundai Motor India 4.38 per cent; Tata Motors 3.74 per cent; Mahindra & Mahindra 3.75 per cent, Honda 3.41 per cent, Toyota Kirloskar Motor 2.32 per cent, Kia Motor 4.43 per cent and MG Motor India 5.22 per cent. FADA had recently written to automobile industry body SIAM twice to increase fixed dealer margin to 7 per cent of selling price. When contacted for comments, FADA President Ashish Harsharaj Kale told PTI, “We are at such a low level globally and otherwise also in India at 4 to 5 per cent, if you look at the kind of input that a dealer puts in specially in the last four-five years”. Stating that dealers have expanded infrastructure, upgraded manpower and cost increases have happened in the business based on OEM inputs, he said, “Over the time profitability has come down. These (margins) are okay five years back (but not anymore)”.
 
According to the FADA study, in less than Rs 4 lakh segment, Maruti Suzuki (MSI) provides its dealers a fixed margin ranging between 5.58 per cent and 6.05 per cent, while Renault India offers 4.32 per cent to 4.33 per cent. In the Rs 4 lakh to Rs 6 lakh category of vehicles, MSI’s dealer margins are between 2.9 per cent and 5.68 per cent, while the same for rival Hyundai Motor India is 4.22 per cent to 5.57 per cent. Mahindra & Mahindra’s (M&M) dealer margins are around 4.35 per cent to 4.54 per cent and that of Tata Motors is 3.59 per cent to 4.42 per cent.
 
As per the research in the Rs 6 lakh to Rs 8 lakh segment, MSI's dealer margins range from 4.43 per cent to 6.32 per cent, while that of Hyundai is 4.55 per cent to 5.52 per cent, M&M's is 3.93 per cent to 4.18 per cent and that of Tata Motors is 3.02 per cent to 4.46 per cent. In the Rs 8 lakh to Rs 12 lakh bracket, MSI's fixed dealer margins range from 3.79 per cent to 5.84 per cent, Hyundai at 3.28 per cent to 5.24, M&M at 2.75 per cent to 3.91 per cent, Tata Motors at 3.08 per cent and 4.44 per cent; while that of Kia Motor is at 2.47 per cent to 5.15 per cent.