Palpable Excitement as the D-Day Draws Near

Dear friends,

First thing first! The Union Budget 2015 has been presented by the Hon’ble Union Minister. There were a lot of expectations of the auto sector from the Budget, particularly in view of the prolonged downturn experienced by the auto market in India. As a person representing the auto retail business in India, I would say that the Budget fails to live up to our expectations. 

There is no gainsaying that auto market in India has been reeling under acute slowdown for the last 3 years.  We, in FADA, were expecting special measures including softer excise duty regime and high depreciation rates in respect of motor vehicles, for giving boost to the auto sector. We were also expecting incentives for scrapping old, unsafe, polluting vehicles plying on the Indian roads, on the lines of ‘Cash for Clunker’ program implemented in the US, as also the similar incentive schemes introduced in Europe, in the wake of global recession post-Lehman collapse. Hope, these suggestions of FADA will be incorporated by the Hon’ble Finance Minister before the Union Budget 2015 is finally passed by the Lok Sabha.

However, while there may not be specific measures announced for auto sector, the Budget on the whole is balanced and growth oriented, minus frills and big-bang announcements. The increased allocation for infrastructure & rural development and emphasis on Make in India are expected to put the economy back on high growth trajectory, thereby fuelling the auto market.

The only concern is that the Union Budgets in the past have not been short of good intent. However, implementation of the proposals contained in the Budgets on the ground has left much to be desired. While the incumbent Finance Minister and, for that matter, the present Central Government have shown earnestness & intent to pursue the growth agenda with all seriousness, the past experience makes us keep our fingers crossed, when it comes to the implementation of various proposals without cost & time overruns.

A welcome announcement in the Union Budget 2015 is the proposal that GST will be introduced from 1st April 2016. According to various experts, the introduction of GST will not only plug revenue leakages and minimize tax evasion, but will also improve the GDP growth number by 1.5-2.0 percentage point. With States being vital stakeholders in the introduction of GST, there are numerous hurdles to be crossed, before the GST becomes a reality in India. The good thing is that the discussions with the State Governments are in the final stages and almost all issues, including the protection of the State Governments’ revenue by a suitable compensation mechanism during the initial period of introduction of GST, have largely been addressed and sorted out.

Another cause of comfort is that the macroeconomic fundamentals are looking up somewhat. The inflation remains benign. We, in FADA, welcome the recent 25 bps cut in the Repo Rate by the RBI. With inflation rate well under control and within the comfort zone, we expect further cut in Repo Rate, going forward. Needless to mention, the high level of interest rates has been one of the major factors impeding the growth of auto market in India.

Likewise, the crude oil prices in the international market are also showing a semblance of stability. Though there has been an upward trend in crude oil prices in the recent past, necessitating the increase in the prices of petrol and diesel by over Rs. 3.0 per litre, it is manageable and does not warrant pressing a panic button at the moment. The outlook in the near and medium terms, as depicted by various experts and analysts, is that the petroleum prices are not likely to see the kind of volatility witnessed in the past. 

The downside is that the industrial production, especially the manufacturing, is not displaying any significant improvement and the economic environment remains, by and large, challenging. The latest Purchasing Managers’ Index for manufacturing and growth rate of India’s Core Sector, though remaining positive, are not something to rave about. The current challenging economic environment is also reflected in the auto market, which is finding the going tough. Though the wholesales numbers proffered by OEMs look decent, automobile dealers, on the whole, are not witnessing any significant uptick in the sales volumes at the retail level. 

All said and done, we, in FADA, are sanguine that the auto market will be back in the fast lane soon.

Regarding FADA’s activities, I am happy to inform that our preparations for the FADA’s Golden Jubilee event scheduled for 17th April 2015 at Hotel Taj Lands End, Mumbai are making steady progress. The confirmations are pouring in from a galaxy of eminent persons in the Government, the auto industry and the allied businesses. It is equally good to see a wholehearted support from the sponsors of the event, who were approached by FADA.

What thrills me the most is that my fellow dealers from across the country have shown an overwhelming interest and keenness to participate and celebrate the event in style. Such a spontaneous, overwhelming response of my fellow dealers is not surprising simply because it is their own event and an important milestone in their journey. It has been an eventful journey of FADA since 1964 when it was formed by four Regional Auto Retail organizations in east, west, north and south, respectively. It is an occasion to salute our forerunners and doyens of auto retail trade without whose contribution, FADA would not have become what it is today. It is also a solemn occasion to honour the visionaries and leaders of industry for steering the Indian auto market to become a major player in the global arena.

The occasion assumes added importance, as the Automotive Dealership Excellence Awards presentation ceremony for recognizing and rewarding my fellow dealers, who excelled in various areas of dealership management, community service and CSR activities during the year gone by, is a part of the FADA’s Golden Jubilee Celebrations function. It is all the more a compelling reason for my fellow dealers to participate on this special occasion in large numbers and be counted as one of the major contributors to the growth & development of the society at large.

There is a palpable excitement within the dealer community and my colleagues in the Council, who along with the members of Organising Committee, are sparing no effort to make the FADA’s Golden Jubilee celebrations worth tons of gold. I am looking forward to meeting all my dealer friends from across within and outside the country.

Please feel free to send your inputs. If any of my dealer friends is willing to take up any responsibility/role, I shall welcome that kind ownership.

Sharing a piece of good news with FADA members, I am glad to inform that FADA has purchased additional office space to take care of its ever increasing activities and expanding role in tune with the growing expectations of its constituent members. Double celebrations, as it coincides with Golden Jubilee of FADA.

Before signing off, I would like to inform that I, along with few members of FADA Council, attended the J D Power Awards presentation ceremony held on 4th March 2015. Among the winners in various categories, it was good to see Toyota bagging the Dealer Satisfaction Study award for the 4th time running, which speaks volumes of the dealer friendly practices of the company. It was in fitness of things that the award for the Dealer Satisfaction Study to TKM was presented by the undersigned as the President of FADA. The idea of such a study is to bring forth the best practices so that they become industry standards across OEMs. I hope, other OEMs will initiate measures to further improve OEM-Dealer relations in the interest of sustainable growth of automotive business, benefitting all stakeholders.

With best wishes,

Yours sincerely,

K V S Prakash Rao

 

 

 

 Expectations from Union Budget 2015

Dear friends,

As I write my column, a core team of top, trusted officials in North Block would be working feverishly towards meeting the month-end deadline for the presentation of the Union Budget in Parliament on February 28. By the time the journal reaches you, the Union Budget 2015 will have been presented by the Hon’ble Union Finance Minister.  

We, in auto retail business, have a lot of expectations from the ensuing Union Budget, particularly in view of the fact that auto market in India has not been doing well for the last 2 ½ years. Hopefully, the Budget will contain measures to give impetus to the economy in general and automotive sector, in particular.

There is no gainsaying that the automotive sector, contributing roughly 29% to the manufacturing GDP of the country and employing 2.00 million people directly is the key to realising the Prime Minister’s ‘Make in India’ and ‘Zero Defect & Zero Effect’ missions. Auto retail & service industry alone provides direct employment to 8.0 lakh people. Its ripple effect on other connected businesses, like petroleum, banking and insurance sectors needs no overemphasis. Auto industry and auto retail business are major contributors to the Central & State exchequers.

The automotive sector is a vital cog in the wheels of India’s economic growth. The past experience shows us that almost all developed industrialised nations have piggybacked on the automotive industry to grow and develop their economies. India is no exception and the auto industry has been the engine of India’s growth since 90s when the economy was liberalised. 

The downturn in economy and the resultant weak sentiment for the last 3 years has done a collateral damage to the auto retail market in India. There have been tell-tale signs of the auto market picking up of late. However, it has largely been a roller-coaster ride and the green shoots of recovery are not firming up. While whole-sale numbers trotted out by the OEMs in the recent past look decent and display a tad pick-up in sales volumes, the situation at retail level remains hazy. Even the two-wheeler sales volumes that had been shoring up the numbers for auto market during the prolonged slump are tapering off lately. I understand from my fellow dealers across the country that retail sales are not climbing up significantly, except for few handful brands.

While the Government’s intentions are good and there are a slew of measures on the anvil aiming to kick-start the economy and put it on a high-growth trajectory, these measures are yet to translate into action on the ground. The economic environment remains challenging. The recent developments on economic front, at best, send mixed signals.

The encouraging development is that the economy is estimated to have grown by a decent 7.3% in Q3 of FY’2014-15, according to the advance estimates. Though this somewhat decent GDP growth number, after dismal sub-5% growth during the last two years, is being attributed to the change in components of GDP and base year, yet it is music to our ears after a long time.

On the flipside, other macroeconomic indicators are not so enthusing. The growth in Index Industrial Production (IIP) slowed to 1.7% in December 2014 from 3.9% in November 2014 suggesting that the actual GDP growth number may be lower than the GDP growth estimate of 7.3% for Q3. Another dampening news is that HSBC-Markit Manufacturing PMI in India decreased to 52.90 in January 2015 from 54.50 in the previous month, which means that the growth estimate of 7.4% for the year 2014-15 looks a tall order. 

Adding to the concerns is the fact that inflation has started inching up and so are the global crude oil prices. After bottoming out at $45/barrel, the crude oil prices are hovering at around $60/barrel presently, while CPI inflation climbed up to 5.11% in January from 4.28% in December.

We, in FADA, are expecting that the Budget will come up with path-breaking measures to boost the economy, leading to the sustainable recovery of auto market. Specifically, we wish that the excise duty sops for auto sector would be revived and the rate of depreciation for motor vehicles increased in tune with the market realities. We are also expecting incentives for scrapping old, polluting, unsafe vehicles in the interest of renewal and modernization of vehicle parc in India. A stimulus package especially for commercial vehicles that have been experiencing prolonged severe downturn is expected from the Union Budget. We are hoping for the best and, at the same time, keeping our fingers crossed.

Regarding FADA’s activities, a meeting of FADA Council was held recently on 3rd February 2015 at New Delhi. Apart from reviewing the market scenario, the meeting chiefly focused on the preparations for FADA’s Golden Jubilee Celebrations event, which has been rescheduled for the next month, on 17th April 2015 at Hotel Taj Lands End, Mumbai. The Automotive Dealership Excellence Awards (ADEA) presentation ceremony is also dovetailed with FADA’s 50th Year Celebration function.

I am happy to inform that the preparations for this mega event of automobile dealer fraternity are on track and making steady progress. The confirmation of participations are flowing in from the crème de la crème of the Government, industry and other allied businesses, as also the office bearers of the auto retail associations in other countries. Of course, we are also expecting an overwhelming participation of my dealer friends on this momentous occasion. Since ADEA – awards presentation ceremony is clubbed with the FADA’s Golden Jubilee event, this year’s awards assume added significance. 

Although these two upcoming events are engaging much of our attention, rest assured, we are also working on other initiatives aimed at promoting the larger interest of auto retail business. 

Over the years, the business of auto retail must have faced challenges in various forms, disrupting the way the auto retail business is conducted. The current format of brick and mortar model, in which the key premise is that the touch and feel of the product supersedes the purchase decisions, has stood the test of time. This time, a challenge to disrupt the business model apparently seems to be from the E-commerce. Of late, we see attempts by a few players in the e-commerce to offer services, which compete or complement the  activities of an auto retailer. Services such as online booking of test drives to vehicles booking are being tried and tested, albeit with little success so far. 

This development is being keenly watched by the auto retail fraternity, trying to understand whether it will disrupt the current pattern of working. FADA has taken the lead and, in partnership with Google, embarked on a drive to equip my fellow automobile dealers with the perspective of the possibilities that exist through online presence. A seminar titled “Digital Immersion for Auto Dealers” was conducted recently at Google facility in Gurgaon. Over 40 dealers participated from across the country. The response has been encouraging. We intend to take it to few other locations across India. I am keen that dealers participate and build their perspective.

You will hear about other initiatives/activities shortly.

Look forward to your views and inputs.

With best wishes,

Yours sincerely,

K V S Prakash Rao

 

 

 

 Automotive Scenario Remains Hazy

Dear friends,

The recovery of auto market remains fragile. While the manufacturers, largely, have reported decent sales numbers during the month of November, quite a few of my fellow dealers have informed me that there is a huge inventory build-up at the dealerships. The situation at the retail level is fluid, if not gloomy.

Auto market is the reflection of Indian economy that continues to face challenging environment, despite the free fall of international crude oil prices and softening of inflation. Macroeconomic indicators are sending mixed signals. It seems that the uptick in sales volumes have largely been driven by the feel-good sentiment arising out of the formation of a strong Government at the Centre and consequent push to the Sensex.

It is not all the way a gloomy scenario, though. There are quite a few positive developments of late. The Wholesale Price Index (WPI) inflation for the month of November plunged sharply to 66-month (5 1/2 year) low of 0.0% versus 1.77% in October. This is way below an experts’ estimate of 1%. The fuel inflation for November was down (-) 4.91% versus 0.43% Month on Month. Manufacturing sector WPI came down to 2.04% versus 2.43% Month on Month. The Consumer Price Index released earlier revealed a further slowing in inflation to 4.38% in November — well below RBI's 6.0% target for Jan 2016. 

What is further comforting for the auto market is that fuel prices continue to witness steady decline. Volatile fuel prices and high interest rates, coupled with uncertainty in economy, have been the major factors dragging down the sales.

While there is a little comfort on inflation front, the real economy is yet to pick up pace as reflected in the latest IIP numbers. The Index of Industrial Production (IIP) unexpectedly contracted 4.2% in October, the worst in three years, underlining the fact that consumer sentiment and investments are yet to see a significant, tangible improvement.

Adding to the woes is that India’s external sector is also facing the heat due to the global slowdown. India's exports are lately experiencing headwinds after a heady start and the trade deficit is on the rise. The economy expanded 5.3% in the July-September quarter, slower than 5.7% in the preceding one, raising fears that recovery was faltering after two years of below-5 per cent expansion. The latest IIP numbers reinforce those concerns.

We, in auto retail business, therefore, expect the RBI to seriously consider a rate cut ahead of the next monetary policy announcement, which is due in February, with industrial production seemingly in slump and retail inflation slowing further. The RBI Governor has recently said that interest rate action alone won't lift the economy. However, why such a stimulus, for whatever it's worth, should be denied to the economy with inflation easing.

It is heartening to note that the Government has got down to the work in all earnestness and is gradually clearing the projects stuck in bureaucratic and inter-ministerial tangles. We can expect to see heightened economic activity and tangible recovery on economic front sooner than later, especially if interest rates are eased. I, therefore, remain optimistic that auto market is headed for better days in time to come.

Adverting to FADA’s activities since my previous column, as you are aware, FADA has completed 50 years of its formation in 1964. The apex national body representing the interest of auto retail business and service industry has come a long way since its humble beginning. FADA has come to be recognized as the Voice of the Automobile Dealer fraternity in India. We propose to celebrate this important milestone in FADA’s long journey by organizing a mega event sometime in March 2015. We are expecting ‘Who is who’ in the Central and State Governments, captains of industry and allied businesses and members of automobile dealer community, among others, to participate at the event in overwhelming numbers. While the event is tentatively scheduled for 20th March 2015 at Mumbai, there is a possibility that the date and venue may be readjusted depending upon the convenience of the Prime Minister, The Union Finance Minister and the Union Minister of Road Transport & Highways, who are proposed to be invited to bless the automobile dealer fraternity and to share their vision on the occasion.

The FADA’s Golden Jubilee event will be an occasion to recognize the pioneers and the game changers in automotive sector, including doyens of auto industry and auto retail business. It will also be an occasion to track important landmarks in the history of auto sector and provide crystal ball gazing into the future of auto retail business in India.

Needless to mention, Automotive Retail Trade & Service Industry is a very important link in Automotive Business Value Chain. With a current investment of Rs. 42,000 crore, having a turnover of Rs. 450,000 crore and employing over 10 lakh people directly, auto retail business is 3 times the size of rest of the organized retail. It contributes around Rs. 44,000 crore to state exchequers by way of VAT on vehicle and component sales and Rs. 35,000 crore by way of road tax, in addition to the service tax and various other levies.  

It is gratifying to note that quite a few members of FADA across the country have initiated ‘Swachch Bharat’ campaign, including use of green/recyclable material, treating waste before discharge and construction of toilets, in their respective cities/regions. Many more are going to join the campaign soon. The Golden  Jubilee event will be an occasion to reiterate our commitment to the Hon’ble Prime Minister’s ‘Swachch Bharat’ mission and showcase the work in this direction already initiated by the members of auto retail business fraternity in various parts of India.

I would urge my fellow dealers to undertake the ‘Swachch Bharat’ and ‘Clean & Green Environment’ campaign in their respective cities, if they have not already done. Those who have already joined the campaign and are contributing their mite to promote ‘Swachch Bharat’ should inform FADA of their contribution or steps taken by them so that FADA could make announcement and recognise the efforts of members of auto retail business at the Golden Jubilee Celebrations ceremony. There is no gainsaying that no business can sustain in vacuum. The business can thrive and flourish if it enjoys the goodwill of the society at large.

As a part of the Golden Jubilee Celebrations, Automotive Dealership Excellence Awards for the year 2014 (ADEA 2014), instituted by FADA jointly with Auto Monitor magazine, shall also be presented to recognize members of automobile dealer fraternity excelling in various areas of dealership management, CSR and community service.

My fellow dealers who have not sent in their nominations should apply immediately without further delay to make sure that the sample size is large enough to reflect truly the excellence in auto retail.

The entries for the current (6th) edition of awards for the year 2014 are open. This year’s awards assume special significance, as the awards presentation ceremony will be a part of FADA’s Golden Jubilee event that will be organized at a grand scale and is expected to see an unprecedented turnout that will, among others, represent the crème de la crème of the Government, industry and auto retail business. This is an event, to my mind, no automobile dealer should miss.

We, in Council, are sparing no effort to make this event a memorable for everyone. An organizing committee under the chairmanship of Mr Vinay Nevatia, Past President, has been constituted to give shape to the event.

Meanwhile, I look forward to your suggestions and inputs, if any.

Wishing You All a Very Happy & Prosperous 2015.

Yours sincerely,

K V S Prakash Rao

 

 

 

Starting Off 2015 with Renewed Hopes

Dear friends,

We start off the New Year with lots of prayers and renewed hopes that the auto market in India will regain its momentum and will be driving in fast lane very soon.

The year gone by was a mixed bag for the auto market. The year saw off one of the worst slowdowns in the history of auto market, lasting over 2 ½ years. While the vehicle sales started slowly experiencing a whiff of recovery, it did not gain traction in keeping with the expectations.

Whatever little uptick seen of late remains fragile. Though the figures released recently by the OEMs, as despatches to the dealers, look good on the face of it, there is more to it than meets the eye. Apparent good sale numbers have been bolstered by the improvement in sentiment in the wake of a strong, decisive Government at the Centre and the year-end freebies & discounts offered by the manufacturers. Above all, the most important trigger for uptick in sales has been the lower vehicle prices due to the excise duty sops announced in the interim union budget of 2014, which were extended by the current Central Government up to December 2014.

It is disconcerting to note that the softer excise duty regime, introduced in the previous interim Budget and extended by the present Government in June 2014 to give impetus to the flagging automotive sector, is not being further continued.

Green shoots of recovery are yet to fructify into a sustainable growth momentum as indicated by the retail sales performance of the automotive market in the recent months. The automobile dealerships are saddled with huge stocks of vehicles, suggesting that the auto market continues to struggle, the decent wholesale numbers notwithstanding.

Withdrawal of stimulus at this critical stage, especially when the interest rates continue to be high and the economy is yet to show resurgence at the ground level, is likely to lead to the automotive market relapsing deep into the negative terrain, resulting in further loss of employment and revenue to the Central & State Governments. The sales of mass segment vehicles, as also the commercial vehicles, in particular, are likely to take a hit as a result of the increase in prices from January 2015, dampening any hope of early recovery. Discontinuation of softer excise duty regime comes as a double whammy, as the manufacturers had announced varying degrees of price increase effective January as a result of rise in input costs.

We, in FADA, therefore, appeal to the Hon’ble Finance Minister that the excise duty sops for the automotive sector may kindly be continued for a further period of one year.

All said and done, the members of automobile dealer fraternity are not giving up on hope, which is reinforced by the recent internal and external developments.

Inflation that has been the bane of the slowdown in economy, in general, and auto market, in particular, has been on downward spiral for some time. Commodity prices, especially petroleum prices, are witnessing free fall, alleviating somewhat worries on account of Current Account Deficit and subsidy burden. 

The factory output that remained lacklustre last year is showing a semblance of rebound. India's manufacturing PMI rose to a two-year high of 54.5 in December 2014, while in the corresponding period a year ago it stood at 50.7, just above the crucial 50 mark which separates growth from contraction. Overall, the PMI data suggest a gradual expansion in the manufacturing sector.

Likewise, according to the data released by the Government recently, eight core industries, which have a combined weight of 37.9 per cent in the Index of Industrial Production (IIP), grew by 6.7 per cent in November 2014, which finds reflection in the IIP for the month released later.

Though macroeconomic indicators are showing a marked improvement in India’s economic environment, the inflation, particularly the food inflation, has started rearing its ugly head again, which is a cause of worry. Since the food inflation is essentially on account of demand-supply mismatch, RBI Governor, as a pleasant surprise, has taken a step in the right direction, slashing Repo rate by 25 bps, which, I feel, will go a long way in boosting the investment in industrial, construction, infrastructure development and other economic activities. As such, we, in FADA, look forward to better days ahead for the India auto market.

Adverting to FADA’s activities since my previous column, I am happy to inform that the preparations for the FADA’s Golden Jubilee and Automotive Dealership Excellence Awards presentation function scheduled for March 2015 in Mumbai have picked up steam. Though I have personally not been able to devote time for a few days due to the bereavement in our family, I find a lot of enthusiasm amongst my colleagues in the Council, who have been assigned various responsibilities and tasks to give shape to this mega event.

For FADA, there cannot be any bigger occasion than celebrating 50 years of auto retail in India. It will give us an opportunity to thank and salute the doyens of auto industry and retail trade, who made painstaking efforts to build a world class auto industry and spearheaded all-round excellence in auto retail practices in India. This is also an occasion to reflect and gear for the challenges ahead.

Needless to mention, auto retail and service industry plays a very important role in the national and state economies, be it employment generation, contribution to the GDP or revenue collections of the Central & State Governments by way of various forms of taxes and levies on motor vehicles. Auto retail is 3 times the size of the rest of the organized retail. Its spin-off effect on other allied business, such as finance, insurance, fuel & lube retailing, etc. needs no overemphasis. Therefore, auto retail ought to receive the attention and recognition deserving of its contribution.

The second important activity that is engaging our attention at present is the Automotive Dealership Excellence Awards for the year 2014 (ADEA 2014). ADEA 2014 assumes added significance, as the awards presentation ceremony has been dovetailed with FADA’s Golden Jubilee Celebration event.

Entries for the ADEA 2014 are open. My fellow dealers who have not sent in their applications for ADEA 2014 are requested to do so immediately. I urge my fellow dealers to participate in FADA’s Golden Jubilee Celebrations event and ADEA 2014 in large numbers to display your strength and contribution. We are expecting ‘who is who’ of the Government and the industry to grace the occasion. Therefore, it is all the more important for you to be the part of this special occasion.

With a view to engaging with our fellow dealers in South India, I along with Nikunj Sanghi - our Past President, visited Bangalore, Coimbatore and Cochin in the month December. The response was encouraging with Dealer Principals expressing their interest in being a part of FADA. My special thanks to our council members - Naveen Sarawgi and C S Vigneswar, as also our Vice President - John Paul, for extending their support in organising meetings with the Dealer Principals in these locations. 

We also had the privilege of spending time with Annamalais Toyota in Coimbatore as well as Nippon Toyota and Popular Maruti in Kochi. We were impressed with the process centricity in each of these dealerships. What caught our attention was the training facilities available in each of these dealerships and the professional approach with which training is being imparted to address the trained manpower needs of the automobile dealerships. It is worth emulating!

Let us all resolve to further energise FADA and reach out to more friends in automobile dealer fraternity. Together, we can take FADA and auto retail business to new heights.

Your views, inputs and suggestions are welcome.

Yours sincerely,

K V S Prakash Rao

 

 

 

Uncertainty is Back to Haunt Auto Market

Dear friends,

Hope, you celebrated the festival of lights – Diwali and other festivals, with traditional fervour, gaiety and solemnity associated with them.  

It is somewhat disconcerting to note that the sustained recovery of the auto market remains illusory. Having started off on the promising note and after five straight months of growth since May this year, the passenger vehicle sales during the month of October have been dampener. Two-Wheelers have also hit the bump, putting brakes on their impressive run over time. The tepid sales during this festive season this year  and, coming as it does, on the heels of equally lacklustre performance last year, is particularly a cause of worry, signalling that the economy is yet to gain traction.

Despite the buoyant sentiment in the wake of the formation of a stable & perceived decisive Government at the centre, the growth of economy remains sluggish and the uncertainty continues to dog the business and the consumers. The National Council of Applied Economic Research (NCAER) has lowered India's GDP growth forecast to 5.0% cent in the current financial year on weak macroeconomic fundamentals. NCAER had earlier suggested that the Indian economy was likely to grow at 5.7% in 2014-15. 

The pace of growth in the service sector has been slow. The bank credit to the business and industry has not picked up pace. Adding to this is the continuing slowdown in the global economy, except for the United States, which shows little prospects of surge for the external sector. This is borne out by the latest data of India’s merchandise exports during the month of October 2014, which declined by 5.0% y-o-y.

After showing promise, the growth of industrial sector, manufacturing in particular, has been tapering off lately. The Index of Industrial Production (IIP) dropped to a 5-month low of 0.4% y-o-y in August 2014 from 0.5% in the previous month. The below par performance of industrial output growth over two successive months indicates the fragility of India's industrial recovery. 

However, all said and done, there are straws in the wind, which inspire confidence. The good news is that the crude oil prices in the international market are on downward spiral. Another piece of good news is that the inflation is gradually climbing down and that the FDI inflows have witnessed upswing of late. The moderation in fuel and food prices, in particular, is enthusing. The deregulation of diesel prices leaves the Government and the apex bank with more policy space. The move will ease the Centre’s subsidy burden and, thereby, help narrow the country’s fiscal deficit. 

While we are hopeful that the RBI will cut the interest rates in view of the moderating inflation, quite a few analysts remain wary of the lowering of the cost of borrowing by the central bank in the near future. That is because of poor & erratic monsoon rains that could affect crops and drive food prices back up. In addition, continuing geopolitical tensions could also see oil prices spiking up again.

There is no gainsaying that the fate of auto market is closely linked with the pace of growth in economy and industry. This is reflected in the fact that despite improvement in the sentiment and the uptick in Sensex as a result, the auto market is yet to gather momentum. 

With a stable Government at the Centre, which is striving to give a big push to the infrastructure and manufacturing with its ‘Make in India’ campaign, I am sanguine that the Indian economy will soon be on a high-growth trajectory, enabling the auto market in India to thrive and flourish again. The drop in diesel prices augurs well for the commercial vehicle segment, which has been going through a prolonged slump. 

The experience worldwide shows that the automotive industry is the engine of growth. The stage of development of auto industry in a country is the index of economic development of that country. It plays an important role in country’s industrial development as well as technology & processes upgradation. Due to its deep forward and backward linkages, the auto industry has a strong multiplier effect on other sectors. 

Automobile retail trade is a vital cog in automotive business value chain and its spin-off on insurance, finance, banking, lube and oil sectors cannot be overemphasised. Automobile dealerships play a pivotal role in building the nation. As elsewhere in the world, auto retail business in India contributes significantly to the central & state exchequers in various forms of taxes & levies, in addition to employing over 8 lakh people directly.

Adverting to the FADA’s activities since my previous message, I am happy to inform that a training programme on Effective Management of Auto Dealership was held during the first week of November in Patna under the aegis of FADA Academy, in association with Prashaste Training Academy. FADA intends to organise such programmes throughout the country at more frequent intervals. Any member keen in having the training programme organised in his/her city/town may kindly get in touch me directly or with the FADA Secretariat. FADA will extend all possible support.

As you are aware, FADA has completed 50 years since its inception in 1964. In tandem with the growth and changing paradigm of auto retail business in India, FADA has also kept the pace and evolved over the years, thanks to the vision and dynamism of my predecessors and successive councils. However, you may rest assured, we are not resting on our laurels. A number of new initiatives are on the anvil.

We propose to celebrate the Golden Jubilee Year of FADA by organising a mega event sometime in the first half of March 2015. It will not merely be an occasion to celebrate but also to honour the pioneers of auto industry and retail trade. 

I would appeal to my fellow dealers and others connected with automotive business to participate and be part of this grand and solemn occasion.

The Golden Jubilee Celebration event will be clubbed with the Automotive Dealership Excellence Awards (ADEA) presentation ceremony. This edition of ADEA, viz. ADEA 2014 assumes special significance, as it will be a part of the 50th Year celebrations of FADA.  Entries for the ADEA 2014 are open. My request to my fellow dealers is that they should come forward and send in their applications in large numbers to make the awards truly representative of excellence in auto retail. The objective underlying these awards, instituted jointly by FADA and Auto Monitor in 2009, is to bring to the fore the best auto retail practices and the social & community welfare activities of automobile dealers across the country.

I had mentioned in my previous message about the devastation caused by the cyclone Hudhud in Visakahapatnam and neighbouring areas. A large number of automobile dealerships, including mine, were damaged by the cyclone. With urbanisation and climatic changes taking place, there is going to be higher probability and frequency of natural disasters, such as earthquakes and cyclones in future. It would be good if our fellow dealers can share their ideas and suggestions to make the dealership facilities resistant to these natural disasters. Or else, they could suggest some experts in the structure design in the country for the information of their fellow dealers.

Please feel free to send your suggestions and inputs for making the activities of FADA more meaningful to its constituents.  

With best wishes,

Yours sincerely,

KVS Prakash Rao

 

 

 

Copyright © 2017 FADA India. All Rights Reserved.
Joomla! is Free Software released under the GNU General Public License.
Federation of Automobile Dealers Associations(FADA)
Website by Carazoo