Tata Motors’ dealers reach out for support

Mumbai: A few dealers of Tata Motors have reached out to its top leadership, including Chairman Emeritus Ratan Tata, to find a solution to a sustained slowdown in sales that has resulted in mounting losses.

In two letters written in April and July, they have requested the top management to help them get back to normal quickly.

Tata Motors should announce interest-free loans of Rs 25 crore for commercial vehicle dealerships and Rs 10 crore for a passenger car dealership, they have urged, adding the company could recover the money over three to five years.

"Excessive vehicles, 0-50% margin on vehicles and other market conditions have resulted in mismatch with our limits, with accounting becoming irregular at times,” said Kailash Gupta from Jabalpur in Madhya Pradesh, who owns one of the oldest and largest Tata Motors’ dealerships in the country.

Other dealers told ET that they were disillusioned, as their second communication in July had gone unanswered.

“We have been with the company through five decades,” one of the dealers said, confirming the first letter to Ratan Tata in April.

When contacted, a company spokesperson said Tata Motors was constantly “engaged with its dealers to support them in concern areas and address business challenges.”

“As these exchanges are bilateral, it will be inappropriate to comment on a speculative reference made to any specific communication from our channel partners to Tata Motors,” the spokesperson said.

Tata Motors said a shift in focus to retail since 2019 has eased out any stock-carrying burden on dealers during the transition from BSIV to BSVI emission norms, and that it had near-zero stock of BS IV vehicles at the beginning of the current fiscal year.

“On the CV side, 1,500+ sales and service touch points are operational nationwide, while on the PV side, the success of such partnering is evident from the strong demand generation for our “New Forever” range of cars and SUVs,” the spokesperson added.

While Tata Motors has responded favourably to car dealerships through increased margins and better labour rates in workshops, truck dealers are unhappy as banks have raised concerns over the financials of such dealerships, Gupta said.

“One third of the 1,500-2,000 medium and heavy commercial dealerships will find it difficult to continue operations post Covid-19,” said Nikunj Sanghi, a large automotive dealer based in Rajasthan.

Tata Motors should offer support to dealers based on loyalty, actual loss of dealership and performance in terms of infrastructure and market share, some of the dealers told ET.

“We are cutting expenses by downsizing, restricting the number of outlets and going back to one shift. In addition, banks are demanding more collateral, without extending the moratorium or the cycle time to repay loans,” another Tata Motors dealer said on condition of anonymity.

A slow market and heavy discounts to maintain market share are also hurting dealers.

“This has resulted in huge losses and bankers have become very reluctant to continue their financing facilities after seeing our balance sheets,” a third dealer said.

Some of the dealers have over-leveraged themselves with excess manpower and infrastructure costs during good times, said T.T. Srinivasaraghavan, managing director of Sundaram Finance, a key financier for the trucking industry.

“Every dealer’s inherent strength is different, and by rescheduling loans, they will be able to rebuild the business,” he said.

Tata Motors sold 14,571 passenger vehicles in the first quarter, 61% lower than the corresponding period last year.

The company reported a consolidated net loss of Rs 8,443.98 crore in the quarter, compared to a net loss of Rs 3,679.66 crore in the same period last year.

It was, however, ranked third among passenger vehicle makers in India with a market share of 9.5% in the quarter.