Following German truck maker MAN Trucks' "abrupt" decision to exit India, automobile dealers' body Fada has urged the firm to device a "compensation formula" to help the affected dealers in settling the final accounts with the company. The board of Volkswagen group's MAN Truck & Bus AG (MTB) in August decided to restructure its India business as part of its strategy to focus on premium segment markets. As a result, MAN Trucks India would now become an R&D centre for excellence supporting global projects.
"Since this incident of you shutting sales in India affects all MAN dealers, they have approached us to take up the matter with you on their behalf. "...We hence request you to kindly develop a compensation formula which will help them during their settlement with your company," John K Paul, president, Federation of Automotive Dealers Association (Fada), said in a letter to MAN Trucks India chairman and managing director Joerg Mommertz Wednesday.
There are around 41 MAN trucks dealers across the country, with a cumulative investment of over Rs 1,000 crore, who are out of business since August 10, when the company conveyed its decision to them, Fada claimed. Of the 41 dealers, only four are into servicing, while the rest 37 are full-fledged outlets dealing with sales, service and spares. The company has sold over 25,000 vehicles since its entry in the Indian market in 2006.
Stating that the dealers have invested huge sum of money in land, infrastructure, manpower, among others, Fada in the letter said "they have been left high and dry due to the company's abrupt decision of closing down the sales in India without even providing the (mandatory) three-month notice." The company has a production facility at Pithampura near Indore in Madhya Pradesh, which manufactures products such as tippers for off-road and construction and haulage for regular and over dimensional cargo.
Besides, it also produces special application trucks. This facility is being acquired by Pune-based Force Motors as a part of an agreement to sell and transfer certain assets of Man Trucks India.
"We understand that you want to continue with the service support for the vehicles which have been sold in India for next five years. "For this to happen correctly, the dealers will have to manage an entire infrastructure which will need another round of capital expenditure from their end as sales and service are entirely two different sets of businesses which needs to be looked into independently," Fada said.
For any vehicle which has been stopped selling in a country, this kind of "new" investment is not at all viable as the investment made will definitely start to nose dive from day zero itself, it said.