Dealers Want Excise Relief On Inventories Available With Them As On Dec 7
There seems to be a never ending trouble in the auto industry over who shares the ‘hit’ due to the 4% excise duty reduction. As reported by TOI on December 9, a major fight is now brewing up over sharing of the burden on the inventory bought at higher excise duty.
Federation of Automobile Dealers Association (FADA) has estimated that the burden could be to the tune of Rs 600 crore. And with manufacturers not very forthcoming to help meet this cost, they have now petitioned the government for relief, requesting that excise relief be also applicable on the inventories/stocks available with them as on December 7 (the day the government’s financial package was announced).
Dealers, who are cash-starved because of poor margins and low demand, on Tuesday wrote letters to various ministries, including finance and commerce, as well as to the Planning Commission and Cabinet secretariat for help to “correct the unpleasant, anomalous situation”.
“The automobile dealers, saddled with huge inventories due to slowdown, find themselves in a bind. The automobile retail trade collectively may have to take a hit of Rs 500-600 crore in clearing the existing stocks at the revised prices announced by the manufacturers. We, therefore, request that the benefit of 4% excise duty cut may also be extended to the stocks already lying with the automobile dealers as on December 7,” FADA secretary general Gulshan Ahuja petitioned.
“The situation is particularly bad in two-wheelers where some companies have said they are ready to share only 50% of the burden while the dealer will have to chip in with the rest. This is just not acceptable as dealers are cash-crunched and are carrying huge inventories following very poor demand in the market,” a leading dealer said on condition of anonymity.
Another dealer said instead of helping dealers meet the burden, companies were now coming out with indirect schemes that were of no use. “We have been given a ‘target-based’ scheme under which the company will only compensate us if we are able to achieve a particular sales target,” the dealer said.
FADA officials said this was “not at all acceptable” and they were looking at greater engagement and support from the manufacturers. The dealer association has already written to the Society of Indian Automobile Manufacturers (SIAM), the grouping of auto manufacturers, for support. “We hope that the manufacturers would come forward to compensate the automobile dealers for the inventories already held by them,” it said in a letter to SIAM.
No comments:
Post a Comment