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




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