Q: Congratulations on assuming the charge of the President of FADA. What are your immediate priorities?

Gulati: Thank you!

The past eight to nine months have been a challenging time for the entire humanity and every business sector. It has been a difficult phase for the dealer fraternity too. We have worked in very adverse conditions with zero business and zero earnings, along with a high operational cost. Post reopening of dealerships, proper decontamination and sanitisation of the entire premises, vehicles, employees, etc., have added cost to dealers who were already seeing slow sales for over 18 months in the pre-COVID era.

We are a resilient lot, and COVID has taught us to make tough decisions to ensure that our business and community survive, while offering the best of our services to customers. During my tenure, I will rigorously take up all our dealer issues at every possible platform and offer the association the finest representation, better visibility and hearing, offering a competitive business and operational environment to our fraternity.

The automobile industry has been an important driving force in India’s economic growth. Reviving the automobile industry is vital to regain lost momentum in the economy. The Government and the sector need to work together to strengthen the industry, wherein the dealer fraternity is an important element in the system.

One of the key issues which we will be working upon is improving dealer margins. Over the years, profitability has dwindled due to high costs and low operating margins.

Auto dealerships in India are operating at an average net profit level of 0.5 percent to one percent of the total turnover, which is much lower than the global standard, as internationally, dealer margins range from seven percent to 12 percent on selling price of the vehicle.

We have already written to SIAM about this, and we will further strongly urge all our OEMs to make the dealer business more sustainable and shockproof.

While we were trying to bring auto dealers under the ambit of MSME, we will up the ante further and make sure that dealers are treated at par with other businesses who are reaping the benefits of being an MSME.

Further, as a category, 2-wheelers comprise 75 percent of the sales in India, and I am working to make an exclusive 2-wheeler vertical at FADA.

This will specifically work on the nuances of 2-wheeler dealership such as sub-dealers, brokers etc. The dynamics of 2-wheeler dealers are very different from 4-wheeler dealers and hence need special attention. As they say, fortune is at the bottom of the pyramid!

FADA will continue to take up issues concerning regulatory and legislative burdens, representing the dealer fraternity across every possible platform. We will continue to reach out to our principals and build strong relationships moving ahead.

Q: FADA has been working on increasing dealer margins for ages but ends up in a stalemate. Where is the issue? How are you going to tackle this?

Gulati: Yes, this is one issue which we have been working for many years, but efforts were not made concretely until sometimes back. It’s during the 2nd Auto Retail Conclave, when we brought up the issue to our executive committee, had a panel discussion exclusively on dealer margins. There onwards, we started building momentum with continues efforts in this direction, and a few months back we also did a study on dealer margin offered by individual OEM to their respective dealers across the product lineup. This was an eye-opener for the entire fraternity as nothing of this sort was brought out in the past; this showcased that Indian dealer’s community were working on a minimal margin which was way below the global standards.

I am happy to mention that post this study, few OEMs have reviewed their dealer margin, few are in discussion with their management and respective dealer council. However, the increased margins are still not at a level which we have been asking for, but a movement has started, which is quite encouraging for the entire community.

Dealership business has a significant daily expense which is addressed by the dealer from his marginal profit. A better profit margin will help the dealer to re-invest a subsequent amount of his earning for the development and expansion of his business, which in return will add up a new business to OEMs.

We will continue to do this kind of studies in times to come and also keep negotiating with our principals as they also understand that their first customers are not in good shape and they require higher margins to sustain their business.

Q: What according to you are the skill gaps persist in the automotive industry still and how FADA is addressing this?

Gulati: Skill gap is a subject which is never-ending as technology keep changing, and we need to make a continuous effort to upgrade our manpower. In recent time, the automobile industry has gone a long way in terms of technology upgrade.

To address this change, all the three auto Associations (Automotive Component Manufacturers Association of India (ACMA), Federation of Indian Automobile Dealer Associations (FADA) and Society of Indian Automobile Manufacturers (SIAM)) have come together in tune with National Skill Development Council and created ASDC (Automotive Skill Development Council) which looks to reduce the gap in between yesterday’s skills and today’s requirement. FADA has been making a continues effort to keep our dealership manpower at par with the newer technologies.

At FADA, we are starting up with a FADA Academy which will hold courses for Dealer Principals and their Chief Experience Officers to train them in running an efficient dealership business from all aspects.

Q: With more than 50 percent of the work in purchasing any vehicle done online, where do you see the role of dealers in the future? Do you see the new trend fuelling unemployment further?

Gulati: Getting prospective customers through the online route is a growing trend. Dealers and manufacturers have been active on online platforms for quite a long time now. The pandemic is the reason for this change in consumer behaviour. Earlier, customers had to visit dealerships several times before the final buy. e.g. all loan formalities, document verification, vehicle test drive etc. These are now offered online or at the doorstep. But for the final sale, customers have to visit the dealerships to test the vehicle and take delivery.

Today every customer is well informed. The vehicle-buying experience involves several steps, right from an online search, specific automobile website visits, going through views, reviews, product comparison, collecting information from peers, social media and users and evaluating a brand, product and its services.

Only after doing all these research consumers make their decision. It is not just a transaction for the customer, but more about in getting into a relationship of trust. That is where the dealerships come into play. Every customer wants to experience the vehicle physically before closing the deal. More importantly, they want to meet up face-to-face with the dealer and satisfy themselves before committing to this high-ticket purchase.

I don’t think there is any change in the playbook, but digital has now moved from “Nice to have” to Necessity. In this COVID era, with total lockdown, digital marketing has played a significant role in boosting sales and smooth execution. Every dealership has initiated digital training of its manpower, equipping them to conduct sales coordination through a digital platform. This initiative has further enhanced its sales and service reach. Dealerships must be the most frugal and flexible link across the automobile network.

Dealers and dealerships have always been the face of the brand and will continue to be so. I don’t see any immediate challenge or threat to the dealership business. However, with companies being more aggressive and active on online platforms, this will add on to dealership engagement with the brand and the customers, helping them further to enhance their sales and service reach and experience.

Q: What are the challenges you face with emerging technology trends like vehicle electrification?

Gulati: I don’t see vehicle electrification as a challenge for the dealer fraternity. The dealer community has been one of the most adaptable segments of the automobile ecosystem. We have always strived to keep ourselves at par with the manufacturers, and it’s business requirement, product and services utility. The dealer business is one business which significantly depends on its skilled workforce across the offerings such as sales, aftersales, engineering, etc. With every new product or technology, the dealer in association with its OEM partner makes certain that it initiates rigorous training for its employees so that it can offer the best service to its customers on behalf of the brand.

As far as vehicle electrification is concerned, India is still at a very initial level as electric PVs still have less than 0.25 percent market share. The EV segment requires immense Government support in terms of infrastructure, subsidy, allowance, recognition, etc., to get the segment to grow. I don’t want to comment on the technicalities of the segment and its products and services. Instead, on behalf of the entire dealer fraternity, I would like to assure that as a community we are committed to offering all necessary support and service to the Government for its vision about the EV industry.

Q: Episodes like FIAT & Peugeot (decades ago) and GM & MAN Trucks (in the recent past) etc., exiting the Indian market continues, leading the dealerships to lurch. What kind of safeguard mechanisms can we have to support the dealer community?

Gulati: Setting up a global brand dealership in India is a massive cost which varies from brands to segment, size of the dealership, region, location, etc. On an average setting up a premium 2-wheeler brand dealership cost somewhere around INR8-10 crore whereas setting up a premium 4-wheeler brand requires close to INR 20 - 30 crore. It is not just the setting up of a dealership which is a cost, the operation of a dealership is also a huge which involves day to day operational cost, vehicle stocking, employee salary etc. The dealer bears all this. As you know, the dealership business operates on a very minimal profit margin; any such activity by any brand ends up leading to capital loss along with loss of jobs in the sector. And now the pandemic poses another challenge for the dealer fraternity.

For example, the recent announcement by Harley-Davidson to discontinue its manufacturing and sales operations in India has left its Indian dealers stranded. This will result in the closure of 35 Harley-Davidson dealerships, with an approximate capital loss of INR 110-130 crores, besides also leading to a job loss of around 1,800-2,000 people at dealerships.

This is the fourth instance of automobile companies exiting India in the last three years (since 2017). Earlier, General Motors, MAN Truck and UM Lohia had quit their Indian operations, leaving their dealers in a similar fix. Due to FADA’s strong intervention and the Indian Government’s full-fledged support, General Motors and MAN Trucks had partially compensated their channel partners, but the UML matter remains unresolved till date.

Had there been a Franchise Protection Act in India, brands like these would not have abruptly closed their operations, leaving their channel partners and customers in the lurch.

We are already working on a draft with our legal team and have initiated communication with other retail associations to bring the Franchise law in India, which will support the dealer fraternity in the dire situation of an exit or termination.

We would also request the Government to initiate the law on priority as this law will help level the playing field for large international and domestic automakers and dealers and also help in regulating over-dealerisation.

Q: What kind of support/guidance FADA has given to its members to tide over the current situation triggered by the pandemic?

Gulati: These are unprecedented times. Everybody is making the best efforts to emerge from it in their own way. The auto dealership is one such business which was deeply impacted by COVID-19. The auto dealership is a very marginal profit business, and we do not have large funds like car and component manufacturers have, which makes it more difficult for us to emerge from this difficult time. The industry was already struggling with a 15 to 16-month slowdown, and the lockdown has pushed the entire industry further back.

FADA has provided all possible and necessary help to its dealer members. At the time of the lockdown, FADA wrote a letter to Prime Minister Narendra Modi to apprise him about the dealers’ issues and suggesting dealership survival and demand revival initiatives. Apart from this, FADA wrote a letter to SIAM making them aware of the situation of the dealers, requesting them to review the dealer margin and extend their support so that dealer can survive these difficult times. FADA quite actively worked to protect dealers from the loss on remaining stocks of BS-IV vehicles from the ban on the sale. The association petitioned the Supreme Court to extend the dateline for sale of these vehicles. At the same time, while securing the future of dealers, FADA demanded that car makers increase the dealer margin to five percent PBT and reduce the infrastructure cost by 25 percent.

FADA conducted online training for its dealer brothers, training them to prepare for maximum work with limited resources. (MT)

The Sri Lanka Automotive Component Manufacturers’ Association (SLACMA) has appointed its latest Executive Committee, bringing together industry representatives from across the country’s component manufacturing sector.

The new leadership team takes office as Sri Lanka seeks to expand local vehicle assembly, increase domestic value addition and integrate local suppliers into regional and international supply chains.

The association represents manufacturers producing rubber products, electrical components, springs, seating systems, metal parts, trailers and other vehicle assemblies.

A core focus for the organisation is expanding industrial links with India to leverage its automotive manufacturing ecosystem and supplier network.

At present, SLACMA maintains a formal partnership with the Automotive Component Manufacturers Association of India (ACMA) via a Memorandum of Understanding, an initiative commemorated during Automechanika New Delhi 2026 to mark 10-years of institutional cooperation.

The implementation of Sri Lanka’s vehicle assembly Standard Operating Procedure (SOP) has created frameworks for local component integration. Local suppliers currently manufacture parts for vehicle assembly programs involving international and Indian brands, including Tata Motors, TVS Motor Co, Bajaj Auto, Mahindra & Mahindra, Ashok Leyland, Hyundai Motor India, BAIC, DFSK, JAC Motors, Proton, Wuling, JMC and Chery.

In global markets, Sri Lankan manufacturers supply components to international original equipment manufacturers. Lanka Harness Company produces safety components, including airbag sensor switches, seatbelt sensor switches and sun visor harnesses for brands such as Toyota Motor Corporation, Aston Martin and BMW. Electronics manufacturing services provider Variosystems manufactures electronic assemblies for international clients, including Bombardier.

The newly appointed Executive Committee is led by President Dimantha Jayawardena, Vice-President Athula Haputantri, Secretary Thisal Jayathilaka, Treasurer Dr Shriyantha Cooray and Deputy Secretary Vidurshan Gopalakrishnan.

The committee members represent brands such as Shamini Rubber Industries, Modicon Group, Bopitiya Auto Springs, Dyno Innovations, OREL Group, M.V. Electronic, Accolade Ventures Group and LPG Rubber Industries.

Dimantha Jayawardena, President, SLACMA, said, “As an Association, our priority will be to work collectively with our members, policymakers and industry stakeholders to address the challenges facing the sector while creating opportunities for greater local value addition, technological advancement and international competitiveness. I am confident that, with the experience and commitment of the new Committee, SLACMA can continue to build a stronger platform for collaboration and contribute meaningfully towards the long-term development of Sri Lanka’s automotive manufacturing industry.”

Indian automotive retail sales reached nearly 2.5 million units in August 2026, marking its best-ever performance for the month. A total of 2.42 million units were sold last month, which translates to a 17.51 percent YoY growth as per the latest data released by the Federation of Automobile Dealers Associations (FADA).

In terms of segment-wise sales, two-wheelers at 1.71 million units, passenger vehicles at 402,398 units, construction equipment at 5,166 units and commercial vehicles at 90,769 units, clocked strong double-digit YoY growth.

Interestingly, the penetration of alternative energy (CNG, hybrid and electric) in the passenger vehicle segment at 41.95 percent, surpassed petrol vehicle demand at 40.85 percent for the first time in the country.

The industry body attributed the shift to running-cost economics and continuing consumer hesitation around the E20 transition, which pushed petrol buyers towards CNG, hybrids and EVs.

Sai Giridhar, President, FADA, said, “Even as retails eased 6.48 percent over a record July on the seasonal monsoon lull and a festival calendar that shifted Ganesh Chaturthi and the spillover of Onam-led buying into September. Two-wheelers, passenger vehicles, commercial vehicles, tractors and three-wheelers each set fresh August records, and overall registrations were the highest ever for the month.”

“The defining development of the month, however, was a structural one: for the first time in India’s history, alternative fuels – CNG, hybrid and electric combined – overtook petrol in the passenger vehicle market, at 41.95 percent against petrol’s 40.85 percent. A little over a year ago petrol led this contest by nearly 11 percentage points; that lead has now been erased. We would, however, read the headline with discipline: much of the YoY strength rests on a soft August 2025 base, when buyers had deferred purchases awaiting the GST 2.0 rate cut, and dealers report that the festive curtain-raiser came in below their own expectations – the true test of the season lies in showroom conversion through September to November, not in year-on-year optics,” he said.

On the other hand, tractor sales at 87,977 units, witnessed flat growth, due to the widening monsoon deficit of about 13 percent across 14 states.

But rural passenger vehicles at 24.9 percent YoY, as against 10.9 percent YoY growth in the urban segment, pointing to a stronger base demand decoupled from the monsoon.

“Rural demand, in other words, has begun to decouple from the monsoon — the farm-income-linked segment softened, yet the non-farm rural economy of livelihood mobility, goods movement and construction kept accelerating. For an industry long accustomed to reading rural India through the rainfall map, that is the quiet structural marker of FY27, and a measure of how broad-based Bharat’s consumption has become,” pointed out Giridhar.

The two-wheeler segment at 1.71 million units recorded its peak for August since 2018, despite a 5.7 percent decline over July 2026.

FADA attributed sustained GST 2.0 affordability and steady rural demand to the performance. Interestingly, electrification in the segment crossed the 10 percent mark at 10.68 percent, as against 7.6 percent a year ago.

Similarly, electrification in the commercial vehicle segment too reached its highest-ever at 5.18 percent from a 2.06 percent penetration last year.

FADA expressed caution on the passenger vehicle inventory rose to 38-40 days, an additional 5 days over July 2026, as against the recommended 21-day benchmark. “With festive stocking now underway, we urge PV OEMs to bill strictly to retail so that dealer capital is not locked in ageing inventory,” said Giridhar.

Going forward, the industry body expects a positive growth story with the festive season leading to increased demand. But widening monsoon deficit and price hikes by OEMs could affect demand.

Furthermore, FADA has shared its outlook for the three-month period (September to November), which incorporates major festivals including Ganesh Chaturthi, Navratri, Dhanteras, and Diwali (November).

Dealers identified festive demand failing to meet expectations as the primary operational risk, cited by 29.06 percent of respondents. Additional risks include the impact of below-normal rainfall on rural demand, noted by 17.52 percent of dealers, and price increases affecting consumer affordability, identified by 11.11 percent.

FADA stated that retail sales figures for October and November will be compared against the previous year's high base, which was influenced by GST rate adjustments, alongside the calendar shift of Diwali into November. Total retail sales for the 2027 financial year have risen 18.47 percent over the initial five-month period. FADA noted that price increases driven by input costs have reduced the consumer affordability cushion provided by tax revisions across entry-level passenger vehicles, commuter two-wheelers, and commercial vehicles.

The industry body highlighted supporting structural factors, including a stable central bank repo rate, electric vehicle promotion policies and rural economic growth. Non-fossil fuel powertrains have passed petrol options in passenger vehicle retail volumes. Water reservoir levels supporting the upcoming Rabi crop cycle and non-agricultural rural activity were cited as additional factors supporting demand across rural regions.

“Two-wheelers should draw support from festive demand and the alternative-fuel shift, though rural cashflows remain hostage to late-season rainfall; Passenger vehicles enter September with fresh launches and healthy pipelines but must convert them against elevated inventory and a demanding base; and Commercial Vehicles should firm up as post-monsoon freight, infrastructure and harvest movement resume. Overall, the outlook for September’26 appears Cautiously Optimistic – with festive conversion and the monsoon’s closing behaviour the key swing factors,” concluded Giridhar.

The Executive Committee of the Society of Indian Automobile Manufacturers (SIAM) has elected Shenu Agarwal, Managing Director and Chief Executive Officer of Ashok Leyland, as its President for the 2026–27 term.

The election took place during the organisation's Executive Committee meeting in New Delhi.

Agarwal, who previously served as Vice-President of the SIAM, succeeds Shailesh Chandra, Managing Director and Chief Executive Officer of Tata Motors Passenger Vehicles.

The Executive Committee also elected K N Radhakrishnan, Director and Chief Executive Officer of TVS Motor Company, as Vice-President for the 2026–27 term. Santosh Iyer, Managing Director and Chief Executive Officer of Mercedes-Benz India, was elected as Treasurer.

Federation of Automobile Dealers Associations (FADA), the apex national body for automobile retail in India, has unveiled the findings of its sixth annual Dealer Satisfaction Study (DSS) 2026. The results were announced during a prestigious awards ceremony at the 8th Auto Retail Conclave on 1 September. This comprehensive industry barometer is conducted in collaboration with PremonAsia, a Singapore-based consumer-insight and advisory firm.

The 2026 study broadened its analytical framework to include the Tractor and Wheeled Construction Equipment sectors for the first time. The Tractor segment recorded a satisfaction index of 784, while the 4-Wheeler Luxury category posted an index of 758. JSW MG Motor maintained its dominant position in the 4-Wheeler Mass Market with an industry-leading score of 865 points. Royal Enfield retained its top ranking in the Two-Wheeler category with 878 index points, closely pursued by Hero MotoCorp.

The Commercial Vehicle segment witnessed a shift in leadership, with Tata Motors CV ascending to the top spot with 800 points, narrowly edging out Ashok Leyland. In the Pure Electric category, Ather Energy and VinFast Auto emerged as frontrunners in the 2-Wheeler and 4-Wheeler sub-segments, respectively. BMW in the 4-Wheeler Luxury segment and Mahindra's Swaraj Division in tractors secured pole positions in their respective categories.

The aggregate Industry Average Dealer Satisfaction score rose by 29 points to 810. The Two-Wheeler segment improved by 35 points to 827, while the 4-Wheeler Mass segment saw a 39-point increase to 810. Toyota Kirloskar Motor and Kia Motors recorded the most notable gains among 4W Mass OEMs, while VECV-Eicher demonstrated strong improvement in the CV space.

Product attributes continue to garner the highest scores, reflecting robust dealer confidence in reliability and refresh cycles. After-Sales service holds the highest importance in dealers' minds, and together with Sales & Order Planning and Business Viability & Policy, these account for nearly 68 percent of dealer priorities. Business Viability & Policy remains the lowest-scoring factor, with dealers highlighting challenges such as unsold inventory buyback policies, training cost-sharing and margins on vehicles and spare parts.

Two-Wheeler dealers appreciate product reliability but voice concerns over inventory write-offs and cost-sharing. In the 4-Wheeler Mass segment, operational pressures like stock carrying costs and network expansion policies are paramount. Commercial Vehicle dealers are focused on service economics including labour rates and warranty reimbursement, while Tractor dealers seek improvements in trial-vehicle support and warranty policies.

Profitability and margins are the most frequently cited requests for improvement, followed by concerns regarding the EV transition and OEM relationships. Dealers are increasingly calling for fairer agreement principles, greater predictability in network policies and more robust support systems to navigate the evolving automotive landscape.

FADA President Sai Giridhar said, “The DSS 2026 continues to provide an important reflection of the evolving Dealer–OEM relationship. This year’s record participation reinforces the confidence of dealers in using this platform to voice their expectations and concerns. While product quality, reliability and range continue to be strong areas, the findings clearly underline the need for greater focus on dealer viability, including sustainable margins, inventory and buyback policies, training cost-sharing and greater clarity in OEM policies. Dealers are also seeking more structured involvement in decision-making and regular engagement with OEMs at national, regional and zonal levels. As the automotive retail business evolves, particularly with the transition towards new technologies, strengthening dealer economics and ensuring a fair, collaborative and sustainable OEM–dealer relationship will be critical for the industry’s long-term growth.”

PremonAsia Director and COO Rahul Sharma said, “The Overall Dealer Satisfaction Index has moved up 29 points over 2025. Changing importance of factors influencing dealer satisfaction displays the dynamic nature of Industry. While Product remains the strongest pillar, After-Sales, Sales & Order Planning and Business Viability & Policy together account for nearly two thirds of dealer mind space. The 2026 DSS study is not just about ‘who ranks where’; it is a clear mandate to build a more viable, fair and future-ready dealer ecosystem. The Voice of Dealer reinforces the quantitative findings – profitability, inventory, dealer rights and future readiness are now central to the OEM-dealer partnership.”