Hyundai India shuts its four dealerships

Korean car maker Hyundai Motor recently terminated four dealerships in the southern part of India. The names of the terminated dealers are SKBR Hyundai in Madurai, Susee Hyundai in Vellore, Ramani Hyundai in Salem and Suryabala Hyundai in Coimbatore. Most of these dealerships were shut down "abruptly and arbitrarily" without offering a chance to explain why their performance wasn't up to the mark.

Hyundai said, it wasn't canceling the dealerships, but continuously monitors quality of service. The company spokesman said, “cancellation of contract or any action on such dealers is done after due diligence. Dealership agreement includes the process of cancellation of contract and arbitration."

Being a profit-oriented business, its obvious for car manufacturers to shut down non-performing dealers, but cancellation can put a dealer's whole investment under pressure. Roughly, each dealership puts in a minimum of INR 5 crore (excluding land and building) while setting up a showroom. Plus its employs 60 to 100 people directly and indirectly. So, there should be more communication between the manufacturer's and dealerships before taking such action, say dealers.

Hyundai, however, said, "Every year we increase the number of dealerships in India by 20-30 numbers. Among 393, most of the dealers are happy and strongly associated with Hyundai family. In the past two years, we have added more than 50 dealers."

This is the second time in a year that the Korean manufacturers has done this revamping of its dealership network across the country. Last August, Hyundai did the same with some dealers in the west zone, when the Hyundai (India) Dealers Forum indulged the ministry of heavy industries into the matter. And at time, the ministry had asked the manufacturer not to suspend dealerships. 

Source:  ET