Preparing Disruption

Dear friends,

The contours and dynamics of retail automotive business are changing at alarmingly fast pace. The competition is intensifying with each passing day. The fierce competition apart,  there are other challenges galore – Road safety and environment concerns inviting outcry of NGOs and people, Judicial activism and overreach, proliferation of mobile telephony and increasing use of digital technology for marketing and other business operations, and growing presence and influence of social media.

Above all, the businesses will soon be confronted with the GST, which is going to become a reality shortly. There is no gainsaying that the GST is the biggest tax reform ever undertaken since independence and is going to be a game-changer in the tax administration. Automobile dealer fraternity is hopeful that the GST will help avoid cascading effect of multiple taxes and streamline the tax system. At the same time, there are apprehensions that it will bring in new challenges and complexities never confronted before.

It is, therefore, incumbent on the automobile dealerships and, for that matter, other businesses to keep pace and change in tune with the fast changing scenario and business paradigm. Otherwise, they would not be able to survive the disruption caused by host of these challenges. Gearing for the disruptions is the need of the hour for the automobile dealers.

This message came out loud and clear from the deliberations of the Regional Meeting organised by Federation of Automobile Dealers Associations (FADA) at Jaipur on 22nd April 2017. The meeting was organised jointly with Authorised Motor Vehicle Dealers Association, Rajasthan (AMVDA).

The Regional Meeting at Jaipur gave me an opportunity to meet and interact with my fellow dealers in Rajasthan. I am enthused by the overwhelming response evoked by the Regional Meeting. As majority of the issues facing automobile dealers are local and State specific, FADA would like to have strong associations of automobile dealers at the local and regional levels, which will not only take up local issues in a concerted manner, but will also act as bridge between FADA and automobile dealers spread across the country.

We, in FADA Council, are continuing our endeavours to build connect and deepen relations with all stakeholders. Following series of meetings with SIAM, individual OEMs and Government authorities, a 4-member team of FADA, led by our Vice President – Ashish Kale, met Mr Ashok Lavasa, Finance Secretary, Government of India on 2nd May 2017. The meeting gave an opportunity for FADA team to share our apprehensions on GST. As I understand from the members who attended the meeting, FADA’s inputs and suggestions were well-received. The FADA team also requested the Finance Secretary to use his good offices for favourable consideration and an early outcome of the submissions made by FADA at the meeting with the Hon’ble Finance Minister on 2nd January.  

The Supreme Court order of 29th March 2017 has given a jolt to the automotive industry and dealers. We, in FADA as responsible corporate citizens, welcome the measures aimed at promoting clean environment and road safety. However, there is an imperative need for a holistic approach to tackle this twin-problem. The isolated knee-jerk reactions not only lead to uncertainty and disruption but also do not yield the desired results. All stakeholders, including the Government, industry, trade, NGOs and experts, must join hands and lay down a clear roadmap to achieve the objectives of clean environment and safe motoring.

Needless to mention, automobile dealers are left with a sizable stock of unsold BS III vehicles for no fault of theirs. We would urge the OEMs to extend necessary support to their dealers, enabling them to recover from the huge financial loss.

Look forward to your inputs and suggestions.

With best wishes,

Yours sincerely,

John K Paul

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