Currency Ban: FADA urges OEMs to reduce inventory at dealerships

NEW DELHI: Federation of Automobile Dealers Associations (FADA) has supported the Government’s move to demonetise Rs 500 and Rs 1,000 currency notes. However, it has also mentioned the move's immediate adverse impact on auto market due to cash crunch and resultant slowdown.

FADA said that the situation of retails is much more alarming than the dealer community could anticipate. The entire auto retail trade has come under severe stress.

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The industry body expects this situation to be transitional and will ultimately normalise and probably be better than now. However, most of the dealerships are saddled with stocks and near zero retail. The situation is unlikely to see much improvement till financial year end.

Commenting on the crisis like situation at present, John Paul, President, FADA urged the vehicle manufacturers to come up with their support to reduce inventory at the dealerships and to make available enhanced credits from banks to the dealers. He informed that FADA had taken up the issue with all banks & financial institutions as well, urging them to take a favourable stand so that the auto market would sail through this turbulent situation.

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John Paul further suggested that banks should also come forward to increase vehicle/personal loan limits for the customers, including 100% on-road funding for vehicle purchases. Likewise, the Government should take steps to reduce the service charge levied by the banks for credit card transactions, which will go a long way in minimising cash transactions.