FADA President's Message December 2004 Dawn of a New Year Jayendra Kachalia, President We are entering the New Year with an upbeat mood and with a sanguine hope that the Year 2005 would bring in more joy and cheers than the year gone by. It is gratifying that the year 2004 is concluding on a happy note for automobile industry & trade. The industry is well into the double-digit growth mode and continues to do well. New benchmarks in sales are being set with each passing month. What is comforting is that the growth is across all segments of industry, be it commercial vehicles, passenger cars, 2-wheelers or 3-wheelers. Excellent sales figures during the year come on the top of impressive financial results announced by various companies quarter after quarter. Indian automotive industry is not stopping at that. The industry is on course to exploring new opportunities beyond the realm of country's frontiers. Spectacular performance of the industry notwithstanding, all that glitters may not be gold. As for retail automobile trade, volume dealerships continue to reel under the growing pressure on their viability due to intense competition not only among the dealerships of different companies but also of the same company. The competition is so fierce that at times, it leads to undercutting among automobile dealers. While healthy competition is good for customers and even manufacturers and dealers in the sense that it keeps them on their toes to strive for better quality and practices, undercutting is brinkmanship and may doom everybody involved. Discounts breed more discounts. It is a never-ending war. Moreover, our past experience of cyclic booms and busts should not make us go overboard. As rightly observed by Mr R Gopalakrishnan, Executive Director, Tata Sons at the previous Auto Summit, the growth is not a straight-line phenomenon. While we must continue to hope for the best, at the same time, we cannot afford to lower our guard and always have to be prepared to cope with the downturn. Managing automobile dealerships profitably in the current scenario calls for creating competitive edge by building one's own service brand, particularly when different products are getting commoditised. Simultaneously, we have to look out for and tap business opportunities from allied activities. "Owning Customer for life" has to be the focus of all our activities. This is the message driven home by various industry leaders who have provided valuable advice and tips while dwelling on the current & emerging automotive scenario, through the medium of this journal. In this issue, an industry leader no less than Mr Venu Srinivasan shares with us his thoughts and vision. Mr Srinivasan, a towering personality, holds a pride of place among industry leaders in India, who have been spearheads of total quality movement in this country. He has not only won accolades for his company but has also made the country proud. Like other industry leaders who have addressed the automobile dealers at various meetings of FADA and through the medium of this journal, Mr Srinivasan, in his article, which is published elsewhere in this issue, brings forth the importance of building a loyal customer base for sustained business growth, as adding new customers is an expensive process. His observation that customer service of the highest order and impeccable trust built over a period of time eventually materialise into customer loyalty, which is the most important factor and vital for sustainable business development, is relevant and must be taken note of by all of us. He has aptly summed up that running a dealership is no longer a skill passed down from father to son and that the dealerships today have to be competitive both on site as well as outside, which calls for revamp of the dealerships in terms of quality of people, leadership skills of the dealer owner, robust process, after-sales service, adoption of technology, proactively reaching out to the customers, etc. I am grateful to Mr Venu Srinivasan for his wise counsel to the fraternity of automobile dealers who find themselves at cross roads in this fast changing scenario. His advice will go a long way in equipping the automobile dealers to tackle the challenges arising out of the new paradigm of automotive business. Needless to mention, Mr Srinivasan has always been forthcoming, whenever FADA has approached him for his support and guidance. Adverting to FADA activities, a 10-member delegation of FADA comprising myself and other senior members, recently visited Automechanika at Shanghai, China. The delegation availed this opportunity to visit Beijing as well. It was a study tour basically to know about the automobile business in China and how we could learn from the Chinese market. The delegation also used the occasion to interact with manufacturers and dealers' representatives by visiting Volkswagen stall and a dealership of Buick at Shanghai. You can see a few of the photographs of the delegation in Shanghai placed somewhere in this journal. Details on Automechanika are also covered elsewhere in this issue, for your information & knowledge. There is no gainsaying that the Chinese Automobile Industry has made rapid strides. China is the largest producer of two-wheelers in the world and their car sales are growing by whopping 50%. 3 years back, they were producing almost the same number of cars as India. However, they have taken a big leap forward and their current annual car production is around 2.7 million units. It was quite an exhilarating and learning experience for all members of FADA delegation. FADA intends to take similar delegations to other parts of the world to acquaint itself with the global scenario and to build & strengthen relations with the sister organisations of retail automobile trade worldwide. The work on revamping of FADA website is progressing very fast. A new-look interactive site containing a host of useful information on FADA and automotive scenario, including production and sales trends, will be in place soon. We have taken stock of the study of select car dealerships in north India, commissioned by FADA about 3 months back, with the aim of bringing in improvements, if required, in their systems and operations leading to the increased efficiency and profitability. I am sorry to say that the study is taking more time than what was expected. However, we are taking steps to speed up the study so that the membership at large benefits from its findings in general. Preparations for organising a mini Auto Summit in Mumbai are on a fast track. It is proposed to hold the Regional Summit on 26th February 2005 during the Mumbai Motor Show being organised by the Times of India and supported by FADA and Western India Automobile Association. The idea is to bring together members in western region. Similar regional conferences will be organised in other regions in the alternate year. Next meeting of FADA Council is scheduled for 7th January 2005 at Kolkata. A regional meeting at Bhubaneswar will be organised the following day, i.e. on 8th January 2005. Detailed programme is published elsewhere. Members are invited to attend these meetings. Your suggestions for improving the working & activities of FADA are welcome. Kindly feel free to write to us. We shall definitely act on your inputs. Wishing you and your families a Very Happy & Prosperous 2005. Yours sincerely Jayendra Kachalia