FADA urges Govt to introduce Auto Dealers’ Protection Act

Excelsior Correspondent

JAMMU, Oct 27: The Federation of Automobile Dealers Associations (FADA) has urged the Central Government to urgently consider the introduction of an Automobile Dealers Protection Act to make contracts between dealers and Original Equipment Manufacturers (OEMs) more balanced and equitable.
“After GM (2017), MAN Trucks (2018), UM Lohia (2019), Harley Davidson (2020), Ford is the 5th Auto OEM to stop domestic sales, thus exiting a large and untapped Indian market. Such exits adversely impact the interests of consumers who are often left with no avenues for after-sales services and with resale value of their vehicles nosediving. Ultimately, this casts an unfair burden on the dealers who have to step in to ensure that their relationships with consumers are not ruined, while also facing the endless barrage of consumer complaints due to the OEM’s unilateral actions,” the FADA said in a handout issued today.
FADA said that the entrenched unethical and imbalanced power structures with OEMs have caused a great deal of anguish to Automobile Dealers as the existing laws are not adequate to protect their interests. “Unlike the imbalanced Indian agreements, foreign agreements often have more balanced and comprehensive clauses on termination, indemnification, repurchase obligations and afford more flexibility to the dealers,” it added.
Vinkesh Gulati, FADA president said, “Many countries in the world recognize the inherent power imbalance between OEMs and dealers within the automobile sector and have enacted legislation to level the playing field. Unfortunately, the existing legal regime in India is inadequate to address these specific concerns of Dealers. While OEM-Dealer agreements are governed under the Indian Contract Act, the law does not contain any clear solutions for us”.
Gulati said that India should also consider the introduction of an Automobile Dealers Protection Act to make contracts more balanced and equitable. He said such legislation should introduce robust contract enforcement and dispute settlement measures by incorporating a special authority with adequate representation from the Government of India, FADA and SIAM.
“The prevailing OEM practices are extremely problematic and against the principles of equity, justice, and good conscience, FADA president alleged and requested the intervention of Government of India to level the playing field between financially strong OEMs and the smaller automobile dealers.