Ashok Sachdev, a New Delhi-based Toyota dealer, is losing his market fast — but what adds to the pain is the loss of employees.
The cause of both, directly or indirectly, is the ban on the registration of diesel vehicles with engine capacity of more than 2,000 cc in the National Capital Region.
The Supreme Court imposed the ban in December 2015 to check air pollution in the NCR. Till the ban was imposed, Sachdev, who runs multiple outlets in the city, used to sell thousands of vehicles every month. But this year, even as the passenger vehicle sales are growing, his dealership manages to sell only about 200 units.
Since the December 2016 ban on registration of diesel vehicles with engine capacity of 2,000 cc in the NCR, Toyota and Mercedes have been badly hit Sales fall: In the NCR, Innova and Fortuner sales have fallen by 70% Loss of staff: At least 30 per cent sales staff have resigned from Toyota’s 43 outlets in the NCR last month Help from top: Toyota is assisting dealerships through higher incentives and credit days, along with bearing part of staff wage cost
To add to his pain, about 40 per cent of the sales staff at his outlets have quit because of the uncertainty over the future of diesel vehicles in the NCR.
“All the employees were waiting for an outcome and a resolution till the last hearing in early May. Since the ban was not lifted, 40 per cent of sales staff have quit their jobs,” Sachdev said.
He added: “Sales should be allowed, either with a small or no cess.” The situation is equally grave across the 43 Toyota outlets in the NCR. The uncertainty and the inability to bear huge losses have put these dealers in a bind when other dealerships from rival brands continue to do brisk sales.
Even Mahindra & Mahindra dealers, who were briefly impacted by the ban, are a happy lot after the company introduced 1,990-cc diesel engines that allowed company to resume sales of its key models in NCR.
While the Toyota is trying to handhold these dealers in these challenging times, it has not been able to stop the exit of manpower.
Luxury car maker Mercedes, which is also significantly impacted because of the ban, had said in December that it will impact future investments in the country and cause job losses. It has tried to offset the impact on the NCR dealers by increasing their allocation of petrol cars.
Akito Tachibana, managing director, Toyota Kirloskar Motor, says the unscientific and illogical diesel ban is having a real impact on lives.
“The most impacted stakeholder is the NCR dealer. I visited the dealerships recently and they are in a very difficult situation because 70 per cent of sales are gone thanks to the ban on Innova and Fortuner. About 30-40 per cent of the sales staff also resigned to seek other job opportunities. The big impact for the owners of these dealerships is the loss of human resources they developed for years. That is my biggest concern,” he told Business Standard in an interaction early this month.
The going has not been great for Toyota which faced five consecutive months of sales decline in Indian market after the ban.
Still, the Japanese auto major has been trying to help its stressed dealerships through several measures.
“We have not spent on ads on Innova and Fortuner in the NCR. We are trying to use some marketing budget to keep the dealers motivated. The company has increased its share in advertising cost as their (dealers) earning was impacted we did not want them to bear this expense. Our overall strategy has been to retain the teams at dealerships. The cost of manpower they did not need owing to a drop in sales has been taken on by the company,” said N Raja, senior vice-president and director (sales division), Toyota.
After the ban was announced, Toyota took back all stocks of Innova and Fortuner from its NCR dealerships with no extra cost and also supported them on the interest loss on the blocked inventory.
The company is giving them extra credit days for spare parts. It has also increased the allocation of Camry Hybrid for the NCR dealers and offering additional incentives on sales of Etios and Liva.
The next hearing of Supreme Court is scheduled in July. While Toyota and its dealers are hoping to see an end to the ban, the outlooks is uncertain.
“We will continue to support the dealers till the ban continues,” assures Raja.