Digitalisation - The Way Forward

Dear friends,

As the monsoon rains have been bountiful, contrary to the Met Department’s gloomy prediction of rain deficit this year, there is a tad improvement in the business sentiment. However, going by the sales numbers of July 2015, the auto market remains subdued.

The rural economy has, for some time, been plagued by the uncertainty arising out of monsoon rains deficit last year and the erratic, unseasonal rains in the beginning of 2015. However, with the rain God being kind, the rural economic environment is expected to improve when the harvesting begins sometime in October 2015. 

What is more comforting is that the current macroeconomic indicators are encouraging. Factory output is slowly picking up; infrastructure development, especially, road building is gradually gathering pace; the inflation, barring seasonal fluctuations, largely remains benign; and commodity prices and, fuel prices in particular, are trending downwards. I am sanguine that the ensuing festive season will bring the smile back on the faces of automotive dealers.

I have been reiterating that the digitalisation of FADA and auto dealerships is the way forward with the explosion of Information and Communication Technology. There is no gainsaying that the digitalisation affords to customers the ease of buying and after-sales servicing. At the same time, it also helps the automobile dealers plug holes, cut costs and increase efficiency, productivity and profitability.

It has come out loud and clear in various research studies undertaken of late that preponderant majority of people (roughly 70%) do research on the internet for their purchase decisions and zeroing in on the dealers to go to. Therefore, the dealers who do not adopt digitalisation or strengthen their presence on the internet and social media are likely to be overtaken by the events.

In order to equip my fellow dealers to stand up to the challenges emerging from the digital era, we have been toying with various ideas, including tying up with the agencies specialising in the field and organising training programmes on the subject in different parts of the country.

The dialogue was initiated with Google and various other expert agencies. FADA associated with Google to organise a workshop on digitalisation of dealerships. We have covered a lot of ground and made a substantial progress since then and are on the verge of arriving at the understanding with the expert agencies that could help FADA and my fellow dealers in their digitalisation drive. 

In view of the currency and relevance of the subject, it has been decided that focus of the upcoming Auto Summit 2016 would be digitalisation of auto dealerships. To be precise, the theme of Auto Summit 2016, scheduled for 7th February 2016 at Hotel Le Meridien, New Delhi has been finalised as “Digital Dealer”.

In addition to the industry leaders, the Auto Summit 2016 will have ‘who is who’ of IT industry across globe, who will be addressing and interacting with the audience on various aspects of digitalisation and how the businesses have to be managed in a digital era, which is a reality and cannot be wished away. A FADA team is feverishly working on the content and programme of Auto Summit 2016, which will be announced through the medium of this Journal and e-mail in due course.

The preparations for Auto Summit 2016, which will be the 9th edition of biennial event, have already started in right earnest. An Organising Committee for Auto Summit 2016 has been formed under the chairmanship of Mr Kailash Gupta, Past President, FADA with members drawn from different parts of the country and representing various segments and franchises. 

I, therefore, appeal to my fellow dealers to avail this unique opportunity and benefit from the deliberations of the Summit by participating in large numbers. Please block 7th February 2016 in your calendar for this mega event of automobile dealers.

Deviating from the past practice, the Auto Summit 2016 would be a one-day event. Incidentally, the 7th February 2016 happens to be Sunday, which has been chosen to enable my fellow dealers, especially outstation dealers, to visit Auto Expo on the previous or next working day when there will be relatively less rush of visitors.

With best wishes,

Yours sincerely,

K V S Prakash Rao

 

Bridging Skills Gap

The vehicle sales figures for the month of June 2015 are not something to rave about. The auto market remains subdued. The economic activity, in general and the industrial production, in particular, are yet to gain traction. While there is a little pick-up in economic activity, the recovery is not broad-based. 

However, the current macroeconomic indicators are somewhat encouraging. Widespread monsoon rains across the country have given a sigh of relief from the lurking fear of the second consecutive rain-deficit year.

Inflation hovering in the 5-6% band is, by and large, within the comfort zone, fuelling hope of a further rate cut by the RBI, when the monetary policy comes up for review on August 4. What is more heartening is that the crude oil prices, after a spike in the recent past, are on downward spiral.

The current scenario notwithstanding, the experts unanimously agree that the long-term prospects of the Indian auto sector are bright. We need to gear for the huge opportunity ahead and address the skill gaps that exist today. The situation is likely to worsen if the corrective measures are not taken immediately. 

I had an opportunity to attend the Skill India launch by the Government on the 15th of July, along with Mr Sunil Chaturvedi, CEO, Automotive Skills Development Council (ASDC). It is very heartening to note that the Hon’ble Prime Minister is leading the initiative from the front. The young population in the country is being viewed as an asset and an opportunity to make India the skill capital of the world.

What is in it for us in the auto retail fraternity? I am sure, each of you will agree that one of the key challenges, we, in auto retail in India, face today is the availability of skilled manpower. This is one element that has an immense bearing on delightful customer service experience and, in turn, on the bottomline of the dealerships. While the Government has taken the lead in skilling people, we in auto retail, should do our bit to help the government in achieving the goal of a skilled India. 

As most of you are aware, FADA, along with SIAM and ACMA, is a founder member of ASDC, formed under the aegis of NSDC. This body has developed the whole framework for defining the skills required in auto sector and the systems to assess. Across the country, ASDC’s accredited training partners have churned out hundreds of  skilled manpower ready to be absorbed by the automobile dealer fraternity. A few of our dealer friends have started their own training centres with affiliation to ASDC. While it addresses the need for skilled manpower, it is also a strong social initiative, which benefits one and all. Henceforth, we shall dedicate a section in this journal to keep the fraternity informed about every aspect of skilling in automotive retail.

Adverting to activities since my last column, FADA Council met in Kolkata on 4th July 2015. The meeting was very meaningful inasmuch as it helped in reviewing the market scenario and identifying major issues facing automobile dealers in various parts of India. The meeting also provided an opportunity for me and other members to meet some of our fellow dealers in Kolkata and eastern region. I would like to thank Mr Vinayak Nayar, Chairman and other members of Motor Industries Association (MIA) for hosting the Council Meeting and making excellent arrangements in connection therewith.

I participated at the program - Digital Garage, organised by CarDekho in collaboration with Google. A few of our council members and other young & tech savvy dealer friends also joined me in the program, which strengthened our belief that digitalisation is going to play a very major role in auto retail. FADA should, therefore, be at the forefront in ensuring that the perspective of the dealer community is built on this aspect. A group of FADA council members is working on the same. 

We are looking forward to our next major event, viz. FADA’s 51st Annual Session and Annual General Meeting, which is proposed to be held in my hometown - Vijayawada on a date during 18-20 September 2015. You will be hearing about the exact date, time and venue very soon. I am expecting a large number of my fellow dealers to participate.

With best wishes,

Yours sincerely,

K V S Prakash Rao

 Celebrations Over - It is Now Time for Reflection

Dear friends,

It is heartening that FADA’s Golden Jubilee was celebrated at a grand scale. I am overwhelmed by the congratulatory messages pouring in from the industry leaders, members of automobile dealer fraternity and others connected with automotive business.

The entire Golden Jubilee Celebrations event was impeccable. We, perhaps, could not have asked for more. However, the highlight, to my mind, was the release of Coffee Table Book tracing the 50-year journey of FADA and auto sector. Chronicling the landmarks and milestones, the Coffee Table Book profiles and recognises the pioneers of industry and auto retail trade. The book, in a way, is FADA’s tribute to these stalwarts.

I salute the automobile dealerships that have been in the auto retail business for over 50 years and still counting. It is a no mean achievement that they have stood up to the changing dynamics of automotive business for over 50 years. There is something special about these groups of dealerships, which the Coffee Table Book recognises. 

It is a memorabilia that every member of automobile dealer community would like to treasure as a collector’s item.  This exquisite book is worth gifting to your business associates and near and dear ones.

Copies of Coffee Table Book can be made available to the interested members at a nominal cost of Rs. 1,250 per copy (including courier charges of Rs. 250). The cost per copy to FADA is much higher, though.

With celebrations over, it is time now for us to reflect on what further can be done to make FADA more meaningful to its constituents. We are working on a number of new initiatives in this direction. Digitalisation of FADA and making FADA’s website more up-to-date and interactive is one of the measures, which is high on our agenda. A group of FADA members is working to give shape to this initiative. Members’ inputs & suggestions are welcome.

We are simultaneously working on strengthening the FADA Academy programme. Needless to mention, major issues of concern to automobile dealers such as viability & profitability of automobile dealerships and manufacturer-dealer relations continue to engage the attention of FADA Council.

Adverting to the automotive market, I understand from my fellow dealers that sustained recovery is still elusive. Though the wholesale numbers dished out by the manufacturers look decent on the face of it, the retail sales are not commensurate with the wholesale numbers. As a result, a large number of automobile dealerships are saddled with huge inventories. The situation in two-wheeler market, in particular, is not something to write home about. The erratic monsoon last year and unseasonable rains during March and April have dented the two-wheeler sales, especially in the rural markets.

Macroeconomic indicators, though stable, do not inspire much confidence in the auto market. The petroleum prices are on the rise again. The petrol prices have been hiked by roughly Rs. 7 per litre during the month of May 2015. While inflation is steadily climbing down, the industrial production is not displaying any significant, sustained pick-up. Exports are going downhill and have witnessed negative growth for the last four months. 

With inflation easing and industrial production growth slowing to 2.1% in March 2015 as against 5.0% in February 2015, we expect the RBI Governor to reduce interest rates. 

We, in auto retail business, are counting a lot on the good Monsoon this summer, though forecast by the Metrological Department is not enthusing. I am sanguine that the auto market will witness turnaround in its fortunes sooner than later, defying odds.

With best wishes,

Yours sincerely,

K V S Prakash Rao 

 

 

 

Sustaining on Eternal Hope

Dear friends,

We, in auto retail business, have been clutching at straws and hoping for a growth momentum in automotive market for over two years now. However, our hopes have remained hopes with sustainable recovery eluding us time and again.

We started the FY’16 with renewed hopes of early revival of auto market. The sales performance for the first two months of the fiscal is not something to rave about. With rural incomes hitting bump due to erratic, deficient rains, the two-wheeler sales that had spectacular run are losing steam. A little comfort is that commercial vehicles have started growing, thanks to the impetus given to the infrastructure development by the incumbent Government. Passenger vehicles are also witnessing a modest uptick. However, it is too early to celebrate. 

What I gather from my fellow dealers is that the retail sales do not reflect the wholesale numbers reported by the OEMs. There is inventory build-up at the dealerships. It is huge discounts and freebies that are largely driving the sales. When seeking to know the health of the auto retail, I encounter bitter smiles - signifying only topline growth with bottomline hurting in most cases. I think the time has come for manufacturers and dealers to come together to work on the productivity of the assets deployed at the dealerships.

The economic environment remains challenging. Macroeconomic indicators give mixed signals. Industrial production is having roller-coaster ride. The forecast of deficient monsoon rains this year has added to the worries particularly for the rural market, which is not good news for the two-wheeler segment. While agriculture accounts for roughly 17.0% of India’s GDP, its ripple effect on other sectors of economy cannot be overemphasised.

On the positive side, the petroleum prices are exhibiting a semblance of stability after sharp upward movement last month and the inflation remains benign despite erratic rains. India's external account is within the comfort zone with the Current Account Deficit (CAD) narrowing to $1.3 billion or just 0.2% of the GDP in the Jan-Mar’15 quarter. Industrial activity picked up in April, posting a better-than-expected 4.1% growth, up from 2.5% in the previous month. This piece of news is encouraging, fuelling hopes that a revival may be underway.

The growth prospects of economy and, for that matter, auto market largely hinge on the good monsoon rains this year. The drought, if it happens as predicted, for the second consecutive year will be a big blow. What is comforting is that multilateral agencies continue to be bullish about India’s growth prospects. I am also hopeful the Rain God will be kind to us this time and that despite various challenges, auto market will soon be driving on sustainable growth path.

Regarding FADA’s activities, I wish to inform that FADA Council will be meeting in Kolkata on 4th July 2015. There are quite a few important items on the agenda for consideration of Council. Apart from approving the Annual Accounts and Annual Report, Council will also be discussing and finalising the dates, venues and programmes of two important forthcoming events, viz. FADA’s Annual Session and 9th Auto Summit. Strengthening and further developing the FADA Academy training programme, as also the digitalisation of FADA, are also high on Council’s agenda. 

My fellow dealers, particularly from eastern part of India, are welcome to attend the Council Meeting at Kolkata on 4th July 2015 as our special invitees.

Meanwhile, please feel free to send your views and suggestions, if any, for further improving the working of FADA.

With best wishes,

Yours sincerely,

K V S Prakash Rao

 FADA @ 50

Dear friends,

It gives me pleasure and a sense of satisfaction to inform that FADA’s Golden Jubilee Celebrations event held on April 17, 2015 at Hotel Taj Lands End, Mumbai - was a day well spent. The Event was a tremendous success – be it in participation, the impeccable arrangements or the grandeur.

The fact that the Event was well attended by a wide spectrum of participants representing the Government, the industry, the allied businesses and my fellow dealers from across the country goes on to show the importance of auto retail in the entire value chain. 

The Golden Jubilee Celebrations Event was special as it not only tracked FADA’s 50 year journey and that of auto retail but it recognized the pioneers and game changers in automotive sector, including doyens of auto industry and auto retail business. The other highlights of the event included the release of the Coffee Table Book, an informal panel discussion & Automotive Dealerships Excellence Awards (ADEA).

Understanding that the retail automobile business having gone through crisis in the past required managerial acumen and digital re-imagination to retain an edge in this highly competitive and technological savvy era, FADA addressed this by holding two sessions in the afternoon of 17th April 2015, to help dealers understand the way forward.

The session by Radhakrishna Pillai, Author & Founder Director of Chanakya Institute of Public Leadership (CIPL), on Managing Crisis The Chanayka Way emphasized on Chanayka Niti & things one should be doing to cross the bridge in difficult times like:  documenting all the processes and learning’s; to remain positive; introspection; to seek out the right person with relevant experience and ask the right questions to overcome a situation or challenge; do SWOT analysis of self and of competitor; and critically look at the financials and take corrective actions.

While the 2nd session on Driving Growth in Digital Marketplace by Jagdish Mitra, Chief Strategy Officer, Tech Mahindra stressed on the importance of digital world and impact of it on our environment and how to embrace digital in various facets of our business; on changes that are happening around us and its impact on customers and on their expectations; the importance of data analysis.

The feedback has been that dealer friends found these sessions to be both interesting and useful.

The celebrations in the evening kick started by a scintillating Light & Sound performance by Illuminati chronicling FADA’s inception in 1964, to its contribution to auto retail business, the various initiatives, research, training and studies  undertaken by FADA in association with other agencies/ institutes, its alliance with global auto retail bodies and its efforts in strengthening Voice of Dealer. This not only raised everyone’s spirits but set the tone for the evening. 

Rajiv Sabharwal, Executive Director, ICICI Bank while presenting the forward for FADA’s 50 year Journey and auto retail trade agreed with me that the Golden Age was definitely in front and wished that it continued forever. He emphatically appreciated and thanked the dealer fraternity for the important role played by them in the country’s progress and stated that the ICICI bank would travel with FADA in this journey, be it bad or good times. He also stressed upon digitalization, and social networking as the way forward for dealerships to increase their visibility and footfalls in their dealerships.

Vinod K Dasari, MD, Ashok Leyland also congratulated FADA for celebrating its Golden Jubilee and emphasized on the importance of Manufacture – Dealer relationship. He emphasized on the important role played by the dealer and added that dealer network was the soul of the economy. Infact, Dasari added that in the next 5 years auto industry would be witnessing major changes in technology especially in passenger and commercial vehicles - engines, emission norms, crash protection and enhancement capabilities. Going forward OEMs would be increasingly dependent on dealers for their inputs in bringing about new models pertaining to customers ever changing needs and choices.

Another ceremony dovetailed with the Golden Jubilee Celebrations event was the sixth edition of the Automotive Dealership Excellence Awards. ADEA 2014 was organized by Overdrive in partnership with FADA to recognize best dealerships and dealership practices. This time the dealerships received special awards for Marketing Initiative, Employee Engagement initiative and Women’s Empowerment initiative of the year. Let me reiterate that automobile dealers, were adjudged by an independent jury of eminent persons on various parameters of dealership management

I am happy to share with you that ADEA 2014 had an overwhelming response with Overdrive touching over 70,000 consumers and nominations received from over 4,000 dealers. Congratulations to my dealer friends who emerged winners for ADEA 2014.  I hope, my fellow dealers who did not send in their nominations this time will stand up and be counted when the awards for the next year are announced.

The presence of Shri Nitin Gadkari, Hon’ble Union Minister of Road Transport & Highways, Government of India signified the importance Auto retail holds in the eyes of Government. We also had distinguished members from Auto Principals to share our joy on this wonderful occasion.

I am indebted to all our sponsors without whom it would not have been possible for us to organize the Golden Jubilee Celebrations event on such a grand scale. My sincere thanks and gratitude to ICICI Bank, Mahindra Rise, Mobil, Ashok Leyland, the New India Assurance, Oriental Insurance, Sikkens AkzoNobel, Care ratings; Sula Vineyards, Ravish Kapoor, and Pinnacle.

I am grateful to the dealers representing dealerships over 50 years for being present at this celebration. It surely was inspiring for the members present. It only shows that the business of Auto retail is a long term and rewarding business.

I am also thankful to the team of Network 18, especially Bertrand Dsouza and Sudhanva Jategoankar for their untiring efforts and hard work in initiating and giving shape to the Golden Jubilee Celebrations event and the 6th edition of Autmotive Dealership Excellence Awards culminating in a gala function.  I acknowledge with thanks the invaluable time and contribution of our jury for the awards.

Above all, my profound thanks and appreciation for all the hard work put in by Vinay Nevatia, Chairman, Golden Jubilee Celebration event committee to put in place the entire programme, logistics and excellent arrangements to make the Golden Jubilee Celebrations & the 6th ADEA 2014 a huge success.

My profound thanks are also due to our Past Presidents and my colleagues in FADA Council, especially Mr K P Jhunjhunwala; Mr Vinay Nevatia; Mr Ajit Chordia; Mr Binod Agarwal; Mr Deshnidhi Kasliwal; Mr Arun Sanghi; Mr Rakesh Jain; Mr Kailash Gupta; Mr Ramesh Suri; Mr Bharat M Sanghi; Mr Nikunj Sanghi; Mr Mohan Himatsingka, who extended their unstinted support.

Last and not the least, I acknowledge with thanks the support of members of automobile dealer fraternity from across the country for their participation in a big way.

With best wishes,

K V S Prakash Rao

 

 

 

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