The unprecedented slowdown in India’s automobile industry has severely hit automakers with Nissan Motor Co. and Hyundai Motor Co. bearing the maximum brunt of shuttered retail outlets.

Car market leader Maruti Suzuki India Ltd, Tata Motors Ltd, Mahindra and Mahindra Ltd (M&M) and Renault also witnessed several dealership outlets close amid a sharp fall in demand.

Japan’s Nissan had the most shutdowns with 44 dealer outlets closing in the 18-months through April 2019, according to the Federation of Automobile Dealers Association (Fada). Nissan has been witnessing lower sales of its namesake as well as Datsun brand of vehicles in India.

Hyundai closed 39 dealerships during the period as overall customer orders fell despite robust demand for its recently introduced Venue compact sport-utility vehicle model.

Growing economic uncertainties, rise in insurance costs and an ongoing credit crunch has crimped automobile demand. Rural sentiments have been hit by irregular rainfall this year. Passenger vehicle sales have fallen for the ninth month in a row in July. With banks tightening credit norms for dealers, many have been starved of funds, forcing them to pull down the shutters.

Fada, which represents about 15,000 dealerships and 26,000 outlets across India, said a total of 286 dealership outlets downed their shutters in the 18 month-period.

The closure of retail outlets along with manpower downsizing across the 26,000 outlets has resulted in losses of about 200,000 direct and indirect jobs during the May to July period, adding to the 32,000 people who lost their jobs in the prior 18-months ended April, said Ashish Harsharaj Kale, president, Fada. He said the 26,000 dealer outlets employ about 2.5 million people.

“The dealerships are beginning to reduce manpower costs, which is the last resort among other cost cutting measures for us. While the vehicle manufacturers are now helping us control inventory, June and July were the worst months for trade. Our initial estimates suggest that about 7-8% of manpower reduction has taken place in the last three months," he said. Nissan contested that only 25 outlets have seen closures in the past 18 months.

“While we have had 25 outlets closures in the last one and a half year, at present, we have over 270 touchpoints across 220 cities and will continue to strengthen our presence across the country," said a spokesperson for Nissan India.

Hyundai did not respond to queries until press time.

Meanwhile, Tata Motors and M&M saw closures of 27 and 24 dealership outlets respectively, including both passenger and commercial vehicle retail outlets. Renault, Honda and Ford had 21, 19 and 17 dealership outlets close down, respectively, in the same period, according to Fada. Only 13 dealerships outlets of Maruti Suzuki closed down, which has the biggest retail network among domestic automakers.

S.N. Barman, vice president, sales and marketing, Tata Motors (TML) said, “During these 19 months, we have severed our relationship with 22 dealer principals. This was primarily done due to non-compliance with TML business objectives, customer interests and market coverage."

Barman said TML has appointed more than 59 new dealer principals who opened 93 outlets. In an e-mailed response, an M&M spokesperson said, “In the past 18 months we have had a few dealer closures across the country and this is nothing unusual."

Maruti Suzuki, Renault and Honda did not respond to emailed queries.

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