The muted industry scenario has stressed credit profile of dealers, especially those of new entrants and, has forced some dealerships to shut down as well, he added.
"Also, while on one hand, OEMs have benefitted from dealership expansion, sales per dealership have not witnessed commensurate increase over last few years," Modani said.
Over the last several quarters, automotive retail demand has come under severe pressure due to confluence of multiple factors like liquidity crunch and tighter financing environment, weak rural income and overall slowdown in economic activity.
Further, prices and cost of ownership has also increased in recent period due to regulatory changes (safety, emission, insurance) and fuel prices all of these combined has negatively impact consumer sentiments.
"Real income growth has been modest in recent period which directly impacts large discretionary purchases like car, real-estate among others. Moreover, demand from the cab aggregator segment has almost dried up due to incentive rationalisation by cab aggregators, which earlier accounted for 8-10 per cent of sales," Modani said.
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