After a completely dry April, which is expected to see retail and wholesale sales at zero or near-zero levels for the first time in India’s 78-year history, the auto sector is making the first moves to get back to business.
Dealers located in green zones as specified by the government are applying for permission under the Shops and Establishments Act to reopen their showrooms.
India’s top two carmakers, Maruti Suzuki India and Hyundai Motor India, have already opened a few dealer and service centres and many more are awaiting permission. Others like Tata Motors, Honda Cars India, Volkswagen, Toyota Kirloskar, have sent out standard operating procedures (SOPs) that are to be followed before operations commence.
R C Bhargava, chairman of Maruti Suzuki, said: “As they are all part of the Shops and Establishment Act, a number of our dealers have sought permission to open their outlets in the green zone. It’s a positive development as most of them have a cash flow issue. This can be partly eased once they start selling and also completing earlier bookings.”
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Bhargava added that while manufacturing of cars could wait a few days, it was important for dealers to open. “What is the point of producing if dealers are closed? Most of them also have inventory which they have to clear.” The company has an inventory of over 130,000 units at its factories and with dealers.
Tarun Garg, director of sales, marketing and service at Hyundai Motor India, said the permissions given by a few state governments and local authorities would set the pace for dealers to make adequate preparations before starting full-fledged operations. “This will not be a zero-one game. It will be a gradual process,” said Garg.
Hyundai has also shared comprehensive guidelines with its channel partners and has been imparting virtual training. As a one-time support, it has dispatched 500,000 masks and hand sanitizers.
Cumulatively, Hyundai dealers have an inventory of 50,000 units. This will help in meeting demand till the firm restarts production after necessary approvals and clearances, he said.
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A Volkswagen India group executive said the firm’s dealerships would open up after the lockdown as most of its dealers were located in cities that were in the red zone. Tata Motors, too, is using the time before dealerships open, to issue guidelines and SOPs.
“We have developed and shared a new, comprehensive set of SOPs for engagement,” said a spokesperson. These guidelines are in line with the government-mandated norms. It is imparting virtual training to its dealers on the SOPs.
Honda Cars, too, is preparing for the days ahead, said Rajesh Goel, senior vice-president, sales and marketing. “Keeping the morale of the dealerships high is important at this point.”
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Honda is in the process of mapping its network — which zone do they fall under, how each outlet will meet manpower requirements, etc. Depending on guidelines, its channel partners will resume operations. It, too, has shared SOPs with the partners.
Puneet Gupta, associate director at IHS Markit, points out that automotive retail will undergo a complete change in the post Covid-19 world as customer needs and expectations will be very different. “For now, they will be a lot more dependent on carmakers for guidance and support,” said Gupta, adding that they cannot afford any missteps once they open up.