Most car dealerships in India are in deep trouble these days. Given the lack of easily available and affordable consumer finance, car sales are going down and dealers are facing inventory pile up and profits are declining. The severity of the situation is, of course, different for different car dealers but up to 100 or more car dealerships across the country could be facing closure over the next few months.
According to the Federation of Automobile Dealers Association (FADA), more than 50 car dealerships across India were shut down in 2008 and more could follow suit this year. With increased overhead costs, increased competition (which often forces dealers to offer discounts, which further erodes their margins), declining sales and reduced profit margins, car dealers are facing tough times and there may be no respite for them in the near future.