FADA Council & Regional Meetings at Ahmedabad

FADA has been rotating its council and regional meetings in various parts of the country with a view to identify the issues and problems facing automobile dealers at the local, State and regional levels for appropriate action. The rotation of meetings also provides an opportunity for the office bearers to meet and interact with members spread across India.

In line with this policy, FADA organised its Council & Regional Meetings back-to-back on 5th July 2008 at Hotel Le Meridien, Ahmedabad.

The day started with a Regional Meeting of automobile dealers at which Mr Nitish Nagori, Head - Car Loans, ICICI Bank and Mr Deepak Mohanty, Sr Vice President (Transportation Group), HDFC Bank interacted with participants comprising council members from across the country and automobile dealers from within Gujarat.

Since both Mr Nagori and Mr Mohanty represented two major banks engaged in auto finance and dealership funding, the deliberations at the regional meeting centred on auto finance availability, dealership funding & lending rates. The discussion was quite lively and useful. The key observations that emerged from the interaction were:

▪	Indian car market is poised for a healthy growth in the medium & long terms;
▪	54% of growth in car market in the ten-year period 2003-2013 will be accounted for by the Asia Pacific region outside Japan and the growth in this region will be led by mainly China and India;
▪	Per Capital Income of $ 3,000 is an inflection point for the car market to take off;
▪	The banks are becoming more and more risk-averse in the context of rising delinquency levels;
▪	The Supreme Court order on repossession of vehicles of the defaulting borrowers has also contributed to the banks exercising more caution in loan disbursement;
▪	As per Basel 2 Norms to be implemented post 2008 - All exposures above Rs. 10 crores to be rated by an external agency in future; The cost of funds for entities rated BBB and below is likely to increase with capital adequacy norm in such cases becoming more stringent, i.e. from 9.6% to 13.5%; hence, need for automobile dealers to maintain strong balance sheets.

 
The following concerns were raised by participants:

▪	Provisional sanction by the banks for auto loan should be dispensed with as the customers hold dealers to ransom based on the provisional sanction; ideally, D.O. should be issued straightaway;
▪	Only authorised signatory of the bank should issue D.O.; if the bank has authorised their DSAs to issue D.O.'s, those D.O.'s should be honoured by the bank;
▪	There is normally a long time gap between issue of D.O. and release of payment by the bank; the system needs to be streamlined.

 
Both Mr Mohanty and Mr Nagori assured that issues and concerns raised by the participants would be favourably considered.

The regional meeting concluded with lunch and soon after the lunch, a meeting of FADA Council was held. Major decisions and observations made at the meeting are as follows:

▪	Market scenario- Alto scenario is hazy at present and the market is likely to witness the slowdown in sales in the current financial year;
▪	Approval of Annual Accounts and Annual Report of FADA;
▪	AGM of FADA to be organised some time in September 2008;
▪	Since National Automobile Dealers Association (NADA), a sister organisation based in Virginia, USA has proposed a workshop on India at its Convention scheduled for 24-27 January 2009 at New Orleans, USA, a FADA delegation would participate at the Convention;
▪	FADA-ldea7 Automotive joint academy programme at Mumbai - A batch of 20 candidates had already undergone a 15-day skill development programme at Mumbai; majority of these candidates had been absorbed in the dealerships.

 
On the eve of these meetings, Mr Pradip R Kamdar, President, FADA hosted a dinner for the outstation council members and guests at Karnavati Club.