FADA President's Message September 2004 Collaborative Approach to Tackle Challenges Jayendra Kachalia, President Dear Friends, At the meeting held on 2nd September 2004 at New Delhi, the Council of FADA entrusted me its rein for the next one year. I am indeed grateful to the Council and my fellow automobile dealers for reposing their confidence in me. With your support, I am sure, we shall be able to take further the objectives of our Federation assiduously cultivated and nursed by the doyens of retail automobile trade to promote a spirit of cooperation & goodwill among automobile dealers and to maintain proper standards of ethics and practices of automobile merchandising. I assume the office of the President of FADA at a time when there is an intense competition in the market. The need of the hour for all stakeholders in automotive business is to forge partnerships and to work jointly to increase the market size and value addition so that everybody is benefited. It is comforting that the Indian automobile market has been doing very well for the last 2 years or so, which should naturally translate into a good business for automobile dealer fraternity. Somehow, the tremendous growth witnessed by the industry does not find reflection in the bottomlines of automobile dealers. Frankly speaking, we should partly share the blame, for, we have not kept pace with the paradigm shift in automotive business. One way out could be to adopt an integrated model encompassing the sale of new vehicles, used cars, finance, insurance, spare parts, accessories and workshop operations, as suggested by Mr. Vinay Piparsania at our Annual Session on 2nd Sep’ 04. Simultaneously, we have to adopt self-regulatory measures on restraining ourselves from giving irrational discounts. In this competitive environment, discounts will surely be there and they are here to stay. Important is how much one can afford to give that we call it reasonable. It is a proven fact that discounts don’t buy customer satisfaction. On the contrary, it is proved otherwise where customer feels he could still have negotiated for a better deal. Day by day service standards on pre-sales and post-sales front are becoming too demanding. In nutshell, in this scenario of the increasing cost of dealership operations due to massive investment required in setting up world class showrooms and workshops, rising marketing costs, expanding product range, and investment in technology and training, we have to create a distinct service brand at the retail and workshop levels to be able to retain and command the loyalty of customers. The fact that we have to focus on service was also brought home by Dr Arindam Bhattacharya in his presentation during the Annual Session when he observed that after just two years of ownership cycle, satisfactory customer service is a stronger factor than satisfaction with the product. According to his study, satisfaction with customer service at the end of ownership cycle explains 70 per cent of variance in brand loyalty. Tracking & retaining customers after the usual free service period, is of immense importance in creating a loyal base of customers. As for the agenda for the next year, a number of measures of direct benefit to the automobile dealers have already been initiated. Although, we have made a steady headway on all these initiatives, we need to give them a concrete shape so that members start using these facilities and feel cogent benefits accruing to them from their association with FADA. Specifically, we would carry forward and give impetus to the B2B programme, Helpline Service to Members, Co-branded ICICI Bank-FADA Credit Card and making FADA Website more informative & interactive, to list a few. When it comes to retail automotive business, there is no gainsaying that automobile dealers cannot operate in vacuum and independent to their principals. We are an extended arm of automobile manufacturers and owe our existence to them. We have to work in tandem for sustainable development of automotive industry and trade. It will be appropriate for me to reproduce here the words of Mr Jagdish Khattar, President SIAM and MD, Maruti Udyog, published in the previous issue of FADA Journal. Quote: “There is occasionally a perception, perhaps even among manufactures, that dealerships and manufacturers can grow only at the expense of each other. In other words, it is Zero Sum game. This is misconception with the potential to cause enormous harm. If we are to indeed make the customer the focus of our business activity, then the manufacturer and dealer have a collaborative role. They have to work in tandem to beat the expectations of the customer where alone lies value for business.” I would take this opportunity to assure the manufacturers that we, the automobile dealers, are committed to the collaborative approach for sustainable development of automotive business and to ensure that all players in automotive business chain share the fruits of growth and development. We would step up our efforts to work with SIAM to address various issues or mutual concern. There are a number of issues, e.g. (i) VAT; (ii) Rationalisation of Excise Duty; (iii) Impending Introduction of High Security Licence Plates; (iv) Non-Uniformity in Motor Vehicle Taxes at the State and Local levels; (v) Delegation of Registration of New Vehicles to Automobile Dealers; (vi) Periodic Inspection and Certification of Non-Transport Vehicles; and (vii) Development of Road and Parking Infrastructure, to name a few, on which SIAM and FADA need to work together. Besides, FADA would also like to work closely with other players in the automotive business to enhance value across the entire value chain in the interest of sustained growth. It is a good sign that other players are equally keen to work with FADA for exploring and expanding business opportunities in mutual interest. The urge on their part of forge partnership is reflected in the fact that FADA got an overwhelming support for its various activities, including the Auto Summit 2004. I take this opportunity to express our thanks to manufacturers, finance companies, banks, insurance companies and others connected with automotive business who have come forward to extend their support to FADA’s endeavours and activities from time to time and continue to work with us. This leads me to believe that the road ahead for all of us is encouraging. FADA as a body of automobile dealers has traveled a long distance. We can make things happen by working together. I count on your support and co-operation in our common cause of promoting the growth of automotive business. Before signing off this message, I would like to think and compliment Mr Deshnidhi Kasliwal and Mr Binod Agarwal, our immediate Past President and Vice President, respectively for the hard work and a lot of time put in by them to give pace to FADA’s activities during the year gone by. I hope that they will continue to associate with FADA with the same zeal and zest and offer their wise counsel from time to time to steer FADA and automotive business to greater heights. With best wishes, Yours sincerely, Jayendra Kachalia President