MG Motor becomes first carmaker in India to accept model dealer agreement: FADA
- The deal is key to safeguard MG Motor dealers in the wake of foreign carmakers, like GM and Ford Motor, shutting shop without warning and leaving dealers in the lurch.
The Federation of Automotive Dealers Association on Friday said MG Motor India has become the first automobile manufacturer in the country to accept its model dealer agreement that provides the retail partners equitable say in the running of the auto sales business.
The association launched the model dealer agreement (MDA) in September last year with an aim to reverse what has been traditionally a "one-sided agreement" between automakers and their dealers and make their contract a more balanced one.
"Model Dealer Agreement is an important part of the new age dealer association and management creating a level playing field for OEMs and dealers working together to provide some of the most innovative, cutting-edge products and services to Indian customers.
"Nine OEMs have personally heard about the modern dealer agreement, and we are happy to report that each of them has responded in a very positive way. I'm pleased to announce that after two years of hard work by FADA, the MDA was accepted and approved by MG Motor (India) today, marking the beginning of the journey's successful conclusion," Federation of Automotive Dealers Association (FADA) President Manish Raj Singhania said in a statement.
One of the key issues that the MDA sought to address was the fallout of foreign auto manufacturers leaving India and the resultant sufferings of the dealers.
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When Ford decided to exit from India in 2021, some dealers claimed they were taken by surprise as just a month before the announcement the company had issued letters of intent for setting up new showrooms.
In 2017 when General Motors exited India, dealers were left in the lurch claiming they suffered around ₹1,000 crore loss but were offered compensation of just about ₹100 crore. The company had, however, maintained that it was providing its dealer partners with a fair and transparent transition assistance package based on a methodology that is consistent across all dealers.
Singhania said the dealer network is a key component of the automotive ecosystem, providing over 45 lakh jobs and a large ongoing investment in addition to being a key contributor to revenue generation for states and the central government.
"The automotive sector has been on a roller-coaster ride in recent years, but it has weathered the storm. The past few months have clearly shown signs of revival, with increased commitment and trust among customers and the members of the automotive industry. We are optimistic that this momentum will continue," he added.