Auto Dealers Face Low EV Margins Despite Rising Electric Vehicle Sales: FADA

New Delhi, Nov 9 (KNN) Indian automobile dealers are facing low margins on electric vehicles (EVs) despite rising sales, with investments in infrastructure, specialised workshops and skilled technicians adding to operating costs.

EV Sales Rise, But Dealer Margins Remain Low

According to the Federation of Automobile Dealers Associations (FADA), EV penetration stood at 11.5 per cent in October, with sales of 3.55 lakh units, driven by higher fuel prices, improved vehicle range and prices approaching those of internal combustion engine (ICE) vehicles.

“India is one market wherein we get the lowest margins as far as electric vehicles are concerned,” FADA President Sai Giridhar told ETAuto.

He said dealerships are investing in specialised facilities, tools and trained technicians to support the shift to electric mobility. However, EV workshops generate lower revenue than ICE vehicle workshops, adding to the financial burden.

Dealers are also expanding into Tier 3 and Tier 4 markets to strengthen sales and after-sales networks, further increasing short-term costs. FADA has called for competitive dealer margins in line with global standards to support these investments.

Rising Operating Costs Add To Profitability Concerns

Dealerships are also facing higher workforce and operating expenses, including the cost of hiring and retaining skilled personnel and upgrading workshops to service newer vehicle technologies.

Giridhar cautioned that sustained pressure on profitability could affect customer service standards. Unlike vehicle manufacturers, dealerships have limited flexibility to pass on rising costs through higher prices.

“For the dealership, we don't have that kind of luxury. We can't increase the price. We can't mark up,” he said.

Digitalisation Seen As Key To Improving Productivity

FADA sees digitalisation as a means to improve dealership productivity and optimise workforce utilisation. Technology could enable sales teams to serve more customers without a proportionate increase in staffing.

Giridhar called on original equipment manufacturers (OEMs) and dealers to work together to address profitability concerns as the industry invests in new technologies and expands its market presence.

EV Demand Outpaces Production In Key Segments

Despite these challenges, he said EV demand is currently outpacing production in both the two-wheeler and passenger vehicle segments, supported by rising fuel prices and uncertainty surrounding developments in the Middle East.

He added that the economics of dealership operations and after-sales services would need greater attention as electric mobility expands.

(KNN Bureau)