Demonetisation Pain for Auto Market


Dear friends,

Hope, you would have had a blast and buoyant business during the long festivities culminating in the auspicious occasion of Diwali. As I understand from my fellow dealers across the country, the month of October turned out to be much better than September that had witnessed tepid retail sales; the OEMs had reported healthy wholesale numbers, though.

After taking over as the President of this august body, I want to assure you that we, in FADA Council, have got down to the job with all earnestness. As per the agenda broadly drawn up, stepping up interaction with SIAM and the individual manufacturers was one of the top priorities outlined by the new Council, with a view to sensitising the OEMs on dealers’ concerns, as also building and promoting healthy OEM-dealer relations.

I am happy to inform that a team of FADA office bearers held meetings with the chief executives of four OEMs, viz. Mr Anand Mahindra, Mr Nalin Mehta, Mr Sudhir Rao and Mr Ravi Pisharody, in their respective offices on 7th November 2016 in Mumbai. A FADA team also met Mr Yoichiro Ueno, President & CEO, Honda Cars India. Positive response of the OEMs to the matters discussed at the meeting was encouraging. The meeting helped in better understanding and appreciation of the areas of mutual interest. Further meetings with other OEMs are planned, as a part of the continuing OEM-Dealer dialogue and stepped up interaction between SIAM and FADA, in the interest of growth & development of automotive business as a whole. Meanwhile, if you have any specific issue or matter to be taken up with the OEMs, please send your inputs.

As I write this message, two unexpected developments have taken place. One, Mr Donald Trump, considered a rank outsider, has been elected as the President of USA, against all odds. Since Mr Trump is a wildcard, the global economy faces uncertainty in the immediate term. It is hard to guess at this point of time how the scenario unfolds.

The second development back home in our country, i.e. the demonetization of Rs. 500 and Rs. 1,000 currency notes from the midnight of 8th & 9th November, has taken all of us by surprise. While the Government’s aim of curbing parallel economy  by this revolutionary step is laudable and good for the economy in the long run, it  has immediately hit the common people and the auto market. Automobile dealerships across the country are saddled with the huge inventory, as a result of slowdown due to cash crunch. We urge manufacturers to come up with their support to reduce inventory at the dealerships and to make available enhanced credits from banks to the dealers. In order to promote widespread use of credit cards, we also urge the Government to take steps to reduce the service charge levied by the banks for credit card transactions.

While on the subject, the Government is pushing hard for the introduction of GST with effect from 1st April 2017. The GST Council has recently decided on the GST rates, which will be 5%, 12%, 18% and 28%, though classification of goods & services in these GST brackets is yet to be decided. We, in FADA, are keeping track of the developments.

FADA  participated at the Two-Wheeler Conclave organised by Autocar Professional on 16th November 2016 at New Delhi as Association Partner. FADA also participated at the SIAM CSR Conclave held the same day. Panelists representing FADA at these two conferences cogently put across  the dealer point of view and CSR activities being carried on by its members across the country.

Please feel free to send your suggestions, if any.

With best wishes,

Yours sincerely,

John K Paul




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