Ending FY 2015-16 on an Optimistic Note

Dear friends,

It is a matter of satisfaction that auto market clocked a decent growth in March 2016 to end the FY 2015-16 on an optimistic note. The year as a whole witnessed a roller-coaster ride, though. 

Outlook for the current year and the subsequent years appears to be promising. The renewed emphasis of the Government through the Union Budget 2016 on boosting the rural sector and infrastructure development is a welcome sign for the auto market. Needless to mention, the rural woes due to deficient, erratic monsoon rains for two consecutive years, as also the slow pace of infrastructure development, have been two major factors retarding the growth of auto market in India, which witnessed an abnormally prolonged phase of sluggish sales for two years during 2013-15.

It is comforting to note that macroeconomic indicators are encouraging for the auto sector. The inflation, hovering at about 5.0%, remains benign. Crude oil prices in the international market have, more or less, stabilised in the $30-35/barrel band. Not surprisingly, the RBI has reduced the Repo Rate by 25 bps to 6.25%, which is a positive move and will spur investments and economic growth. We were expecting a 50 bps cut, though.

Another positive development is that the factory output and the core sector index are looking up. The combined Index of Eight Core Industries, which has weightage of 38% in IIP was 5.7% higher in February 2016 compared to the index of February, 2015. The Nikkei Manufacturing PMI in India stood at 52.4 in March of 2016, up from 51.1 in a month earlier. It is the highest reading since July 2015.

While positive trends in economy are music to our ears, we cannot afford to go overboard at this stage. Our expectations have been belied time and again in the past. While there were always straws in the wind, inspiring confidence from time to time, the economy and, for that matter, the auto market failed to live up to the promise. All said and done, positive signs in the economy augur well for the market.

Coming to the activities of FADA since my previous message, I had the opportunity of participating at the J D Power awards presentation ceremony for winners in various studies conducted by them in India during the past one year. I was given the honour of presenting award to the winner of India Dealer Satisfaction Study for the year 2015. The fact that Toyota Kirloskar Motor (TKM) won the award for the 5th year running bespeaks volumes of the dealer friendly policies & practices of the company. No wonder, the Toyota dealers in India are the happiest lot among the members of automobile dealer fraternity.

I fervently hope that other OEMs will replicate and adopt some of the policies & practices of TKM in relation to its dealers,  which will go a long way in promoting healthy OEM-Dealer relations and sustainable growth of automotive sector as a whole.

There is a FADA council meeting scheduled for 23rd April 2016 at Jabalpur. Being the first council meeting after the successful conclusion of Auto Summit 2016, it will give us an opportunity to review and identify the pros and cons. 

Kindly feel free to share your experience at the Auto Summit 2016 and give us your suggestions & frank opinion. While the feedback from members across India so far has been very positive, we would still like to address shortcomings, if any, to make the Summit more meaningful for the members of automobile dealer fraternity, in particular.

I am delighted that the council meeting scheduled for 23rd April 2016 coincides with the celebrations of 30 years of Mahakaushal Automobile Dealers Association (MADA) that is an Association Member of FADA.  A grand function to mark this momentous milestone in the 30-year journey of MADA is being organised in the evening on the same day. My heartiest congratulations to MADA for completing 30 years in the service of automobile dealers in the Mahakaushal region. 

With best wishes,

Yours sincerely,

K V S Prakash Rao 




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