Hover Automotive to wrap up India operations after Nissan terminated contract
The agreement between Nissan Motors and their former sales and distribution partner Hover Automotive, ended on February 17, 2014. Two months after the partnership agreement between Nissan Motor India and Hover Automotive India terminated, Hover Automotive India is working towards wrapping up their operations and shutting down the business.
Hover employs a total of 180 persons and has informed them of this decision though they will be kept on rolls for three months from March 2014 without pay. These workers have not even received salaries for March and have been informed to look out for alternative employment.
This termination of Nissan Motors – Hover Automotive contract comes after a period of 6 years. The reason Nissan India appointed Hover, was they thought it would be better to use local help in order to establish distribution and dealer network. What Nissan didnt expect, was a backlash from their own dealers, who were unhappy with the fact that Hover Automotive was acting as an intermediary for Nissan Motors in India and since sales were not upto the mark was seen as an unnecessary layer which was eating up margins on the profits.
Anyways, Hover Automotive was unhappy over the decision of Nissan Motors to terminate the contract which in their opinion was for a long term basis. Hover Automotive had even issued a public notice to this effect calling the termination invalid and ineffective while spokespersons at Nissan did not wish to comment on the issue. Hover Automotive had filed an interim and emergency relief against Nissan Motors at Singapore International Arbitration Centre which they lost in March this year.
After termination of contract with Hover, sales of Nissan Motors increased three fold in March 2014. During the past month, the company sold a total of 7,019 units as against 2,125 units sold in March 2013 with increased demand noted for the recently launched entry level Datsun Go.
Source Live Mint