Looking Forward to Auto Summit 2016 with Excitement & Bated Breath

FADA’s 9th biennial event, viz. Auto Summit 2016, scheduled for 7th February 2016 at New Delhi during Auto Expo, is round the corner. While there is an all-round excitement, there is also a little nervousness largely because Auto Summit has come to be recognised as one of the most prestigious events of automotive sector. The nervousness stems from the fact that previous Auto Summits set high standards in terms of quality of deliberations, stature of speakers, grandeur and impeccable arrangements. Each successive Auto Summit has been getting bigger and better. The Organising Committee has an onerous task at hand to prove equal to the enormity of preparations. However, we are trying our best to rise to the challenge and live up to the expectations generated by this mega event.

Personally, I am all the more excited as the Auto Summit 2016 will traverse an uncharted territory, i.e. Digitisation of business operations.  We, the members of automobile retail trade community, have no choice but to keep pace with the latest development & trends and adopt and use the technology to stay afloat in this fiercely competitive world. Needless to say, in today’s intense competition, we are competing not only with other brands but also with other members representing the same brand. It is a mad race where only the fittest will survive.

As for any other business, automobile dealers cannot afford to lower their guard and have always to be geared to assimilate and embrace new ideas, lest they are overtaken by the events. Auto Summit 2016 will be an ideal forum for the members of automobile dealer fraternity to enrich their experiences. The Summit will enable us in retail automobile trade to gear up for the challenges arising from the changing paradigm of automotive business, including the challenges posed by the newer technologies.

Also dovetailed with Auto Summit 2016 is the Automotive Dealership Excellence Awards presentation function, another important event of FADA. Instituted jointly by FADA and Network18 in 2009, this will be the 7th edition of awards. ADEA is an ideal opportunity for my fellow dealers get recognised for the new benchmarks set by them in various areas of dealership management. ADEA is not all about excellence in business but also about the singular work done by my fellow dealers in the areas of CSR and community welfare. The recognition raises the bar for individual winners and makes others strive for excellence, thereby promoting all-round excellence in the trade. It also enhances the stock of dealer community in the eyes of the society at large.

I am looking forward to the overwhelming participation and response at these two premier events of FADA and hopeful that the tremendous efforts and preparations, which have gone into these events will be rewarding.

Regarding the activities and development since my previous column, it is heartening to note that Toyota Kirloskar Motor (TKM) has taken a number of measures to provide immediate relief to the automobile dealers affected by the Hon’ble Supreme Court order on banning the registration of larger diesel passenger vehicles in NCR.

We understand that TKM has undertaken to support its dealers in NCR by bearing the inventory carrying cost and shifting the stocks of such vehicles to the dealers in other locations at its own cost. We also understand that TKM has also suggested to their affected dealers not to dispense with the sales personnel handling Innova and Fortuner sales and offered to pick up the tab on their salaries up to March 2016. What is gratifying is that TKM’s MD had a meeting with the affected dealers personally to reassure them of the company’s support. While complimenting the management of TKM for their timely support to their dealers, we fervently hope that other OEMS will also come up with similarly measures, which will go a long way in promoting healthier OEM-Dealer relations and sustained growth of automotive market in India.

With best wishes and looking forward to meeting you all at Auto Summit 2016.

Yours sincerely,

K V S Prakash Rao

 

 

 

Ban on Registration of Diesel Vehicles in NCR - A Kneejerk Reaction

Dear friends,

The developments during the last month have brought in cheers and fears at the same time.

The auto market sustained the growth momentum in November 2015. The growth numbers are not rocking, though. Adding to the comfort was the IIP, which grew by a healthy 9.8% in October 2015. The economists have added a note of caution, saying that the high IIP growth for October 2015 could be illusory, as it came about on a low base in October 2014. Nonetheless, the latest IIP growth numbers are music to our ears.

Another positive news is that the inflation remains benign and is hovering at the comfort level of five per cent. In fact, crude oil prices have seen a sharp drop of late, plunging to below ‘35$-per-barrel’. It is another matter, though, that the retail prices of petroleum products have not witnessed corresponding drop.

On the flipside, the temporary ban in NCR on registration of larger SUVs and private cars, fuelled by diesel, by  the Supreme Court is a big setback. Such sudden and abrupt ban not only derails the short-term & long-term plans of the industry, but also causes uncertainty & disruption in the market. It should be noted that the industry has made huge investment in developing and operationalising diesel technology in India. Similarly, the automobile dealers have also invested heavily in setting up repair & service facilities for the diesel vehicles and training manpower.

I share the concern of automobile dealers in NCR, who have been left with huge inventory of diesel vehicles. Likewise, the customers who had booked diesel vehicles have also been left high and dry by this abrupt decision. As things stand today, the dealers in NCR may not be able to dispose of the 2015 model vehicles in 2016, resulting in huge financial loss to them.

The problem is that there are plethora of agencies addressing this issue, which is leading to  chaos. There should be a clear roadmap for addressing the problem of pollution in a holistic manner. This piecemeal approach and knee-jerk reactions are adding to the confusion. The industry formulated its plans based on the current and future indicative norms for vehicular emissions and safety. We, as corporate citizens, are also equally concerned over the increasing pollution. The Government or any of its agencies should set the emission standards and not dictate or discard any fuel technology. Diesel technology and diesel as a fuel have evolved and become cleaner over the years. Diesel is 30% more efficient fuel in terms of its thermo-dynamic performance. Therefore, to stifle diesel technology and to ban new diesel vehicles that are far less polluting than the old ones defies logic and rationale. Hopefully, the Hon’ble Supreme Court will review its decision and lift the ban immediately.

Regarding FADA’s activities during the last one month, the preparations for two forthcoming prestigious events, viz. (i) Auto Summit 2016 and (ii) Automotive Dealership Excellence Awards presentation ceremony for the year 2015 (ADEA 2015), scheduled for 7th February 2016 at Hotel Le Meridien, New Delhi, are underway in full swing. As you may be aware, the theme of Auto Summit 2016 is “Digital Dealer”.  We could not have had a better theme in the context of growing digitalisation of business operations. Similarly, the Automotive Dealership Excellence Awards is an opportunity for my fellow dealers to showcase their best practices and CSR activities. The entries for both the events are open. I hope, my fellow dealers will make most of this opportunity and register for the Auto Summit and nominate themselves for the ADEA 2015 overwhelmingly.

I had the pleasure of participating and speaking at the SIAM HR Conclave held on 4th December 2015 at Pune. My two colleagues in FADA Council -  Mr Nikunj Sanghi and Mr C S Vigneshwar - also participated as panelists at two different panel discussions. The message, which came out of the deliberations loud and clear, is that investing in human capital and skilling India are crucial factors for the success of ‘Make in India’ mission and growth & development of automotive industry.

My Best Wishes and Heartiest Greetings for the Year 2016.

K V S Prakash Rao

 

 

 

 Uncertainty Persists

Vehicle sales in September 2015 can, at best, be described as a mixed bag for the auto market. Two-wheeler and LCV sales continue to be sluggish, indicating that the economic activity is yet to gather pace and that the uncertainty is still haunting the people. 

The erratic monsoon for the third consecutive year has not helped either. A below-par agriculture growth will have a telling impact on rural demand, which is already showing signs of faltering due to consecutive bad monsoon, falling product prices and stagnant wages. Three consecutive monsoon shocks have resulted in significant erosion in farm income. 

Though agriculture sector accounts for 17 per cent of India’s GDP, there is no gainsaying that almost half of India's GDP comes from rural areas. About 40 per cent of India's households engage in agriculture and within this group, two-thirds are heavily reliant on it. The embattled rural economy remains a cause of worry for the auto market. Therefore, to expect auto market to return to high growth trajectory anytime soon, will be a far-fetched idea at this stage.

The good news is that inflation remains benign, so do the petroleum prices. The experts opine that the crude oil prices have bottomed out and are going to climb up hereafter, though.

Another piece of good news is that the Indian economy is slowly but surely gaining traction. Though International Monetary Fund (IMF) has cut its growth outlook for India for this fiscal year from 7.5% to 7.3%, yet said that the country is on track to remain the world’s fastest-growing large economy. Despite monsoon rainfall deficit, India's agriculture growth in this financial year could be around 1.5 per cent, marginally better than 0.2 per cent of 2014-15, because of some support from the allied sectors of horticulture and livestock, rating agency CRISIL has concluded in a report released recently. This portends well for the Indian economy and auto market.

Regarding FADA’s activities, we have had some breather after FADA’s Annual Session and AGM in my hometown – Vijayawada in September 2015. However, you may rest assured that we are working on a number of activities and initiatives simultaneously. These activities will take shape soon.

Preparations for FADA’s mega biennial event, viz. Auto Summit 2016, scheduled for 7th February 2016 at New Delhi during Auto Expo, have already started in right earnest. The theme of Auto Summit 2016 is: ‘Digital Dealer’. Participation in the deliberations at the Summit will not only equip my fellow dealers to stand up to the challenges arising from the digital world, but is also in sync with our Hon’ble Prime Minister’s vision of Digital India.

Another major activity that is engaging most of our attention is the 7th edition of Automotive Dealership Excellence Awards (ADEA 2015). The awards presentation ceremony for ADEA 2015 has been dovetailed with Auto Summit 2016. Entries for ADEA 2015 will be thrown open soon.

I appeal to my fellow dealers to avail this unique opportunity and register for the Auto Summit 2016 and participate in ADEA 2015 in large numbers.

I am happy to inform that furnishing of FADA’s new office adjoining its existing office is largely complete. The inauguration of the new office is scheduled for 28th October 2015. I would urge my fellow dealers to join me in Pooja for the new office of FADA at 9.00 a.m. on that day. We need your blessings. The expansion of FADA’s office has been undertaken with a view to taking care of the growing activities of FADA and meeting the ever increasing expectations of its constituent members.

Please feel free to send your suggestions and inputs.

With best wishes for the oncoming Navratris and long festive season,

Yours sincerely,

K V S Prakash Rao

Festive Sales Inspire Hope

Dear friends,

Hope, you would have enjoyed and made most of the festivities to grow your sales.

It is enthusing to note that auto market, riding on festivities, recorded a decent growth in October 2015. Maybe, this is an indication of the much awaited turnaround of the auto market struggling for about three years.

Much as automobile dealers would like to celebrate, we have to be guarded and should not go overboard simply for the reason that such celebrations have been premature and short-lived in the past, with sustainable growth, while showing promise, eluding us time and again.

However, the October sales numbers are encouraging in that the recovery is broad-based encompassing all the segments of market. A piece of good news for the auto market is that the sales of LCVs turned positive after a prolonged spell of negative growth. This inspires confidence and hope that the vehicle sales will be driving in fast lane soon.

On the flipside, the reason that makes us wary is that macroeconomic fundamentals are giving mixed signals. While the petroleum prices remain stable, the consumer price index, fuelled by food prices, is creeping up again. 

Another dampener is that the IIP growth declined to a 4-month low of 3.6% in September from 6.3% in August, as an unfavourable base effect played out. Rural sector continues to face uncertainty.

All said and done, the economy is gradually growing, though not at an expected pace. Likewise, the IIP remains on a positive track, fluctuation notwithstanding. This augurs well for the auto market.

Adverting to FADA’s activities since my previous column, I am happy to inform that preparations for the biennial mega convention of automobile dealers, viz. Auto Summit 2016, scheduled for 7th February 2016 at New Delhi, are making steady headway. The programme has, by and large, been given shape. A brochure detailing the salient features of the Summit, along with registration form, has already been dispatched to all my fellow dealers. 

In keeping with the changing dynamics of retail automobile trade, the theme of Auto Summit 2016 will be “Digital Dealer”. As most of my fellow dealers are aware, the presence in digital space has become imperative to retain a competitive edge in this digital and communication era. The use of digital technology not only helps in acquiring new customers, but also aids in plugging leakages and improving productivity & efficiency, thereby saving costs and increasing profitability.

I appeal to my fellow dealers to avail this great opportunity to equip yourself with the latest in digital world and register for the Summit in large numbers.

Another activity that is engaging our attention presently is the Automotive Dealership Excellence Awards for the year 2015 (ADEA 2015). The awards presentation ceremony for ADEA 2015 has been dovetailed with the Auto Summit 2016 and will take place in the evening on the same day and at the same venue. ADEA 2015 is yet another opportunity for my fellow dealers to showcase their excellence in various areas of dealership management as well as singular work done by them in CSR and social welfare activities. Entries for ADEA 2015 are open for my fellow dealers. Please send in your nomination and get recognized for your achievements. The idea underlying the institution of these awards is to bring forth novel ideas in dealership management and exceptional work done by the members of automobile dealer fraternity in social space.

Before signing off, I am deeply pained to inform about the loss of three stalwarts of Auto Sector, namely, Dr Brijmohan Lall, Founder & Chairman Emeritus, Hero Group; Shri Mahesh Sanghvi, Director, Automotive Manufacturers Pvt Ltd; and Shri Mukesh Jain, Hony Treasurer, FADA, who passed away recently. While conveying our condolences to the members of bereaved families, please join me in praying that the Departed Souls May Rest in Peace.

Yours sincerely,

K V S Prakash Rao

Time to Take Stock and Reflect

 

Dear friends,

By the time, this issue of FADA Journal reaches you, I shall have completed one year in the office of President of this august organisation.

It is, therefore, about time that we take stock and reflect on the year gone by. The last one year has been a mixed bag for the auto market. While it was refreshing to see the Passenger Vehicle and M&HCV segments returning to growth path, LCVs continued to go downhill, suggesting that the economy, though displaying a semblance of improvement, is yet to gain traction. What was discomforting was that the two-wheelers that had hitherto bucked the trends and stayed on course in the face of economic slowdown, slipped into deceleration mode. 

It is heartening to see that the economy is slowly gathering pace and so is the Indian auto market. The current macroeconomic indicators are encouraging. The retail inflation at about 5.0% is under control and within the comfort zone. The commodity prices including petroleum prices, are on downward spiral. The factory output has clocked over 4.0% growth in the last two successive months, viz. July and August. Interest rates are also gradually climbing down. With inflation remaining benign, we expect RBI to cut further the key policy rates at its next review of monetary policy scheduled on 29th September. The infrastructure development, especially road building, has got a boost with the installation of current Government at the Centre last year.

While the economy is still facing headwinds as reflected in the bearish stock market and weakening Rupee, I feel that Indian economy is better placed and has resilience to swerve back to the fast lane of growth.  In tandem with the uptick in economy, the Indian auto market will soon witness turnaround in its fortunes, I hope.

Regarding the activities of FADA during the last one year, it is a matter of satisfaction that we in current FADA Council were able to maintain the pace and momentum. FADA not only promptly took up the issues of concern to the automobile dealers for redressal by the concerned authorities, it also worked proactively to address the emerging challenges. FADA Academy training programme continued to make a steady headway and a series of training & development were organised for the benefit of automobile dealers and their senior managers in partnership with Prashaste in various parts of the country.

The highlight of the year was the celebration of FADA’s Golden Jubilee in a style and grandeur never witnessed before in the history of FADA. A grand function organised on 17th April 2015 at Mumbai saw the release of a Coffee Table Book, which tracks the history and important milestones in the journey of Indian auto sector, auto retail business and FADA spanning over 50 years. The grandeur and scale apart, the event went a long way in securing further recognition for FADA from the Government, the industry and the society at large in terms of its contribution to the growth & development of auto sector in India, employment generation and revenue generation for the Central and State Governments. It was also an occasion for FADA to remember and recognise the singular contribution made by the stalwarts of auto industry and auto retail business in steering the Indian auto sector to glorious heights. I am thankful to Network 18 and its team for organising and making impeccable arrangements in connection with FADA’s Golden Jubilee function.

I also express my gratitude to my colleagues in Council, our Past Presidents and my fellow dealers across the country for their unstinted support and guidance.

I shall be failing in my duty if do not acknowledge the support extended by the Government, the OEMs and the chambers of commerce, especially SIAM.

While we have done out bit, I do realise that a lot more needs to be done to iron out creases for the sustainable growth of auto retail trade.

With best wishes,

Yours sincerely,

K V S Prakash Rao

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