Dear Friends,
 
As was predicted, healthy inquiry levels seen in December finally showed signs of conversions with the Year End offers continuing in January, especially by Passenger Vehicle OEMs which has helped the customer in making the final purchase.
 
Consumer’s interest, which had remained buoyant, started converting to sales in better percentages, backed mainly by never before seen retail offers. New Launches in the month also added to the overall excitement and got the attention of the buyer.
 

 

Although all the sectors on a monthly basis have shown signs of positive growth in registrations, 2W growth rates are not at a healthy high and are seen positive due to a huge de-growth in December. (-18% from November to December). CV growth is flat and has substantially dropped from the high growth rate it had maintained through year to date.

I would like to highlight that the Inventory of 2W Dealers still continues to be Very High, as 2W retails are still under pressure and I hope that 2W OEMs will take a realistic stock of the situation prevailing on the ground and reduce wholesale billing.
 
You may be aware that the new HSRP norms will come into effect from 1st Apr’19. F A D A has written to the Road Transport Ministry that the new notification makes dealers the single point of contact for affixing the new HSRP. This effectively means that every dealership will have to buy the HSRP machine which costs ~Rs. 4,00,000 – 5,00,000. Currently, there are ~25,000 dealerships in the country. The Dealership Community will need to invest an additional capex of Rs. 1,000-1,200 crores. This is a very huge cost and the auto dealership community is not ready for such investment at this point of time. Coupled with this, we will need to provide two additional manpower requirement resulting into a  cost, not to mention training in a very short period. The new manpower requirement of 50,000 – 60,000 across all dealerships in the country, will result in total annual additional manpower cost of Rs. 150-250 crores. This coupled with their training and higher electricity costs to keep the HSRP machines running for the entire day will further burden the Dealership Community.
 
Moreover, to deal with the additional cost which will be spend on the machine and to get ourselves reimbursed from the above mentioned costs, no formula has been mentioned in the notification. We have therefore requested that till the time, the Ministry comes out with solutions in consultation with all the Stakeholders of the industry, the enforcement of the notification should be extended by at least 6 months. We await consideration of our request and will keep you posted on the developments.
 
F A D A conducted the 1st State Chairperson and Regional Directors meeting sometimes back. 12 State Chairpersons and 9 Regional Directors were present for the same. We discussed multiple issues which related from state specific subjects to national issues affecting all the dealerships. This kind of meeting makes way for constructive planning on issues which are affecting Auto Retail and how should F A D A deal with them.
 
Please be rest assured that we are working on each and every issue and solutions will be found in times to come.
 
A recent circular from Ministry of Finance, Department of Revenue has created a huge uproar among the dealers across the country. I am talking about TCS being levied on GST. Both F A D A and SIAM have written to the Ministry in this regard requesting for a clarification that the notification should be modified to clarify other way i.e. no GST is applicable on TCS collected and deposited with the government account under the IT Act. We await positive communication from the Ministry on this issue, failing which we will have to take the legal course to get it rectified, as this will have Huge financial implications on all of us.
 
F A D A for the first time is taking Vyapar to Karnataka. In fact this will be a first of its kind conference in the State where Auto Dealers will come under one roof. Preparations for the same is going full throttle and am sure that the conference will be a huge success.
 
As usual, F A D A took a delegation to NADA Show 2019 from January 24-27 in San Francisco. This annual event continues to be the largest dealer convention in the world, this year with over 25,000 people attending from over 53 different countries – the largest attendee number in convention history. Staged around the expo were seminars and workshops which covered new ideas and best practice in areas such as aftersales, marketing, digital sales, human resources and strategic business management. A detailed review for the same will be covered in the next edition of the Journal.
 
To sum up my message, let me say that although the recent retail sales have not been very heartening, I am an eternal optimist. As the interim budget announcements get actioned and the Government gets into the election mode, I am hoping for an uptick in demand for 2W, Light CVs and Tractors.
 
The Recent RBI move to reduce interest rates by 25 basis point is a very positive step. Although not impacting interest rates on an immediate basis, it is a signal that the RBI will be Proactive in spurring demand and this will also be a message to the Banking Industry to open up credit for economic growth and leave the cautious approach behind.
 
I hope that the positive change in vehicle sales which was visible in January continues and we see the momentum growing in last 2 months of this financial year.
 
Happy Selling,
 
Warm regards,
 

 

Ashish Harsharaj Kale
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