Staying on Course

Mohan Himatsingka,

Dear friends,

At the outset, I express my profound thanks and gratitude to FADA Council and you all for reposing your confidence in me by electing me as the President of this august body. With your support, I will try me best to live up to the high standards set by my predecessors and rising expectations of the automobile dealer fraternity.

As you would have observed, the last few years, in particular, have seen the feverish activity within FADA that has embarked on a clutch of new initiatives for the benefit of automobile dealers while sustaining the tempo of activities already undertaken.

One such new initiative is the ongoing training and leadership development programme. Since a vast majority of automobile dealerships in India are family-owned, the programme assumes an added importance. It needs no reiteration that the dealership management is not a cakewalk in this fiercely competitive market. The dynamics of retail automobile trade today contrast sharply with the scenario, say, 15 years back, when it used to be an era of shortages and seller's market. The management of automobile dealerships today requires not only professional panache but also the processes in place for sustainable growth & development. Historically, we have seen that family-owned dealerships,barring few exceptions, fall apart when the third or the fourth generation takes over the mantle. To keep the familyowned
dealership going, it is important that the baton is passed over to the one who is capable of assuming the
leadership role. Succession planning and leadership development are, therefore, essential for smooth transition in management, which these training and development programmes, among other things, aim at.

Importance of processes & systems for effective management of automobile dealerships, which is becoming increasingly complex by the day, cannot be overemphasised, especially with shrinking margins and rising cost of dealership operations. As the product line-up proliferates and the competition intensifies, the cost-cutting, the inventory control & management, the efficacy of manpower & marketing efforts and the CRM assume significance. It is in fitness of things that these training programmes also focus on the processes for effective dealership management.

While seven programmes were conducted at various places in the country in the previous year, we would keep up and, rather, increase the tempo by organising more such training & leadership development programmes in the next one year.

With the globalisation and integration of Indian economy with the rest of the world, India cannot remain immune to the developments elsewhere in the world. This is testified by the sub-prime crisis in the year 2008 and the recent economic turmoil in Europe. The Lehman collapse had ramifications far and wide across the world, which went through traumatic recession and slowdown from which most of the countries are still struggling to wriggle out.

It is, therefore, imperative that we work closely with the auto retail organisations in other countries and exchange information on a regular basis so that we are not overtaken by the events all of sudden. FADA is working in all earnestness to form an apex body of auto retail at the global level. Such a networking is mutually beneficial for automobile dealer fraternity across the world. We can learn a lot from the developed countries where auto retail organisations wield a lot of influence & clout and play an active role in shaping the policies having bearing on the economy and the auto industry & trade. Auto retail franchise laws in US can very well be adopted in India to avoid arbitrary terminations and to make the severance of relationship less painful. Similarly, automobile dealers in other
countries can borrow and adopt some of the auto retail practices, which are unique only to India. The fact that automobile dealers in India are able to survive on razor-thin sales margins amazes rest of the world.

Shortage of trained and skilled manpower is one of the major concerns for automobile dealerships. FADA, SIAM and ACMA have joined hands to formAutomotive Skills Development Council (ASDC) under the aegis of National Skills Mohan Himatsingka, President Staying on Course Development Corporation, sponsored by the Government of India. FADA will continue to work with missionary zeal to bridge the skill gaps and shortage of manpower in automotive sector.

Encouraged by the tremendous response and success of the three editions Automotive Dealer Excellence Awards (ADEA) a joint initiative of FADA and Auto Monitor, we are going ahead with the fourth edition of ADEA. In fact, the process has already been set in motion. My dealer friends may have received or will be receiving communication from Auto Monitor inviting nominations for the awards. I urge my dealer friends to participate in the ADEA overwhelmingly so that the awards truly reflect the excellence in various areas of auto retail for other dealers to follow and adopt.The awards do not stop at recognising the business performance or the best practices alone.They also seek to recognise and honour those of my fellow dealers who are engaged in social and community service. There are special awards for Green Initiative, Corporate Social Responsibility and Road Safety initiatives.

Another priority area for me as President and new Council is to reach out to and engage with FADA members
spread across the country. Keeping in view the size and geographical spread of India, it is a gigantic task. I am, therefore, of the view that regional associations of automobile dealers at various places must be strengthened. You will kindly appreciate that it is well nigh impossible for FADA office bearers to visit each and every town and city. These local associations can act as link between FADA and its members all over India.

Sales margins and exit policy, to my mind, are the core issues and will continue to be high on our agenda during the next one year. There are host of other issues at the local & State levels, which bedevil the automobile dealers day in and day out. In particular, cumbersome vehicle registration procedure is a cause of concern for most of the automobile dealers I have interacted with in the last few years during my visit to various places. Similarly, taxes on motor vehicles are not only abnormally high but also vary from State to State, which not only stifle the growth but also lead to undue
diversion of trade from one State to another and unhealthy practices. We, in FADA, have been emphasising a uniform, rational tax regime for motor vehicles be it road tax, VAT or any other tax, in our meetings with SIAM and Government authorities. We shall continue our endeavours in this regard. I am hopeful that with the introduction of GST, most of the anomalies and tax related concerns would get addressed. However, the Government seems to be in a state of flux, nor is any indication of timeline from the Government.We hope that the creases will be ironed out and the GST introduced at the earliest.

There is no gainsaying that FADA has made long strides since its inception in 1964. However, I do realise that a lot more needs to be done to make FADA more meaningful to its constituents and to secure due recognition for the significant contribution made by auto retail in the growth & development of automobile industry, in particular, and the national economy, in general.

To sustain the increased pace of activities and to secure the recognition for the auto retail, it is important and necessary that FADA is further strengthened financially and in terms of its membership base. I, therefore, seek your support, among other things, in bringing more automobile dealers into membership strength of FADA. I am sure, with the kind of respect you command and influence you have, all automobile dealers in your area will become members of FADA, if you personally approach them.

As regards the market scenario, I am afraid, the slowdown is again staring us in our face. We were somewhat fortunate in that the global slowdown in 2008 did not cast its shadow long on India, thanks to the strong domestic demand and timely stimulus measures announced by the Government of India and RBI then. What is worrisome is that the market is relapsing into the kind of slowdown witnessed four years ago. The distressing reports, one after another, on the performance of Indian economy, emanating from national & international agencies from time to time, are not helping either. According to its latest World Economic Outlook report, the International Monetary Fund (IMF) has lowered India's economic growth forecast by 1% to 5-6% for 2012-13 - more than one percentage point lower than in the April 2012 WEO (World Economic Outlook). Before the situation deteriorates and assumes alarming proportion, it will be in order that the Government and the RBI intervene by way of duty relief and cut in interest rates.

Wishing you a Happy & Prosperous Festive Season,

Yours sincerely,

Mohan Himatsingka

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