'Indian Auto Industry has Arrived on Global Scene'

In a fast changing pecking order, India has arrived as a major automotive force on the global landscape. Indian auto market is, no doubt, poised for a big leap forward. However, automobile dealers will have to professionalise, scale up their operations, adopt IT in a big way and engage their employees & customers in order to stand up to the changing paradigm of auto business. This message came out loud and clear from the deliberations at FADA’s 46th Annual Session held on 24th July 2010 at Hyderabad.

Dwelling upon changing face of India, the Toyota way of management and Toyota’s key initiatives for dealers in his presentation, Sandeep Singh, Chief Guest on the occasion and Dy Managing Director, Toyota Kirloskar Motor Pvt Ltd, said that India is projected to become the 5th largest economy with a GDP of $4.5 trillion and per capita income of Rs. 82,000 by the year 2020. Increasing urbanisation, low motorisation level, preponderant young population and fast improving road infrastructure are the other major factors that will drive the Indian auto industry, which is expected to grow by 70% from 2010 to 2015. He cited intense competition with the advent of many new global players in Indian market, increasing commodity prices, liquidity crunch as a result of global financial crisis and fluctuating forex rates as the major challenges for the Indian auto industry.

Toyota India s vision is to be the Most Admired Company with a mission to become one of the major players and the Core Company among global Toyota in Indian market, Sandeep Singh revealed. He said that Toyota s philosophy is: (i) to respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust; and (ii) to work as a team with other players in value chain stimulating personal and professional growth, sharing the opportunities of development and maximising individual and team performance.

Rakesh Batra, Partner & National Automotive Leader, Ernst & Young, echoing the views of Sandeep Singh painted a promising future for the Indian auto industry and trade. Automobile dealers will have to focus and improve on human resource management; IT infrastructure; customer relationship management; succession planning with a vision to building an institution, which is independent of owners; alternate revenue stream & value added services; and operational efficiency to capture the opportunity presented by the tremendous growth of Indian auto market, Batra added.

In his presentation on Road Safety by Air Cmde A S Bahol, Dy Director General, NCC, AP, brought forth the changing traffic scenario with human behaviour, vehicle technology, range & population, and road infrastructure undergoing a sea change especially over the last one decade. He said that India has the dubious distinction of the highest number of road accidents recording 1,05,749 deaths in the year 2006 as against China s toll of 89,455. He attributed the chaotic situation to a number of factors, such as, rapid national progress, highways/road agencies working independently, lack of knowledge of traffic rules, no compulsory code for highway driving, absence of vehicle roadworthiness checks and lack of concern/courtesy for others. While a lot has been done in creating infrastructure and adopting technology, much more needs to be done in generating awareness and preventing road accidents and consequent injuries & deaths. All the efforts will come to nought unless an integrated approach to the issue encompassing the following measures is adopted, namely-(i) Educating all road users and introducing Road Safety in school curricula; (ii) Instilling discipline in new drivers and handing strict punishment to offenders; (iii) Coordination among all road agencies; (iv) Strict vehicle documentation/tests; (v) Improving road signage; and (vi) Training including training the trainers, NCC cadets and other voluntary organisations engaged in road safety.

C L N Gandhi, Jt Commissioner (Transport), Government of AP complimented automobile dealers of Andhra Pradesh for maintaining good equation and regular interaction with the Transport Department. Responding to the concerns for high tax incidence on motor vehicles and variation in road tax across States, Gandhi said that although the uniform tax regime helps in healthy growth, the State Government has been receiving signals from various environmental agencies, including EPCA, to further increase road tax. There is also a proposal emanating from various quarters to introduce Congestion Tax and Green Tax with a view to reducing traffic congestion on the roads. Stressing on healthy practices and corporate social responsibility, Gandhi exhorted automobile dealers to undertake steps for the training of drivers in tune with changing vehicle technology.

Hemant Kaul, MD & CEO, Bajaj Allianz General Insurance Co. Ltd, in his presentation, highlighted the growing significance of motor insurance in the revenue model of the automobile dealers, particularly with the entry of private insurance players upon opening up of the insurance sector a decade ago. While motor insurance per se did not bring in money for insurers, automobile dealers and insurance companies could forge mutually beneficial lasting relationships by cross-selling other insurance products.

On the occasion, Deepangshu Sarmah, Editor, Auto Monitor made announcement regarding the second edition of Automotive Dealership Excellence Awards (ADEA) a joint initiative of FADA and Auto Monitor - for the automobile dealers excelling in various areas of auto retail. The first ever awards for automobile dealers were presented at the Auto Summit on January 8, 2010 and evoked tremendous response. He announced that the nominations for the second edition of awards to be presented at a gala ceremony some time in the second half of January 2011 in Mumbai, would be invited by August end. He requested automobile dealers to participate in a big way to make the awards truly representative of the excellence in auto retail.

Earlier, S P Shah, President, FADA in his address highlighted various initiatives undertaken by FADA for the benefit of automobile dealers and the society at large. He said that FADA’s 6th Auto Summit held in January 2010 was a tremendous success as the Summit helped in building bridges with the Government, the industry and the international organisations of auto retail. He referred to the ADEA initiated by FADA jointly with Auto Monitor and Voluntary Vehicle Safety Inspection in 19 automobile dealerships for passenger vehicles that are more than 3-year old, with the aim of making roads safer and environment cleaner. He informed that to begin with, FADA and Society of Indian Automobile Manufacturers (SIAM) have started a pilot at 19 automobile dealerships. The programme was formally launched by Dr Pawan Goenka, President, SIAM at the SAFE Annual Convention 2010 held in Chandigarh on 5th May 2010.

The inspection checks would include inspection of brake, suspension, emission levels, tyre condition & headlight alignment. All the checks, except headlamp & tyre condition, would be carried out on computerised, automated machines and computerised reports generated to avoid subjective judgement as far as possible. Vehicle owners undergoing these checks would have to pay Rs. 500. However, two insurance companies, Bajaj Allianz and ICICI Lombard have agreed to give a rebate of Rs. 500 in motor insurance renewal premium in respect of cars that undergo voluntary inspection at any of the authorised VEHICLE SAFETY INSPECTION CENTRES and are declared fit on these parameters. The pilot run is expected to start by mid-August 2010, Shah added.

Thanking members for their whole-hearted support during his tenure as President of FADA, Shah stated that the past two years were marked by ups and downs for auto industry & trade. However, India was fortunate to come out of the slowdown caused by the global financial crisis earlier than other countries, thanks to the timely stimulus package rolled out by the Government.

Starting the proceedings, Major P T Choudary (Retd), Chairman, AP Motor Vehicle Dealers Association welcomed the FADA members and other participants to the meeting, which was timed, as in the previous year, with the Auto Show held at the same place from 22nd to 25th July 2010.

The Annual Session concluded with a Vote of Thanks by Nikunj Sanghi, Vice President, FADA.

Meeting with Office Bearers of Regional Associations of Automobile Dealers

The post-lunch programme started with a meeting with office bearers of regional associations of automobile dealers, which witnessed a lively discussion and brought forth the concerns and good practices in various States. The concerns included variation in taxes across States, multiplicity of taxes including levy of works contract tax over and above VAT & Service tax in some States, cumbersome registration procedures and some States insisting on approval of variants of the models already approved for registration. The States, namely Delhi, Rajasthan, Bihar and Goa where registration procedure has been simplified to a large extent, came in for special mention for their good practices.

Regarding non-uniformity and multiplicity of taxes, the members hoped that these issues are likely to get addressed once GST is introduced. As for cumbersome registration procedure for vehicles, the meeting was of the view that the local associations should continue their dialogue with the respective State Governments. FADA will pitch in with its support.

Regarding the concerns over complex and unnecessary provisions in the Motor Vehicles Act & CMVR, such as approval of new models or their variants by the respective State Governments and non-uniformity in colour of school buses across States, it was pointed out that FADA had already taken up these issues with the Union Ministry of Road Transport & Highways.

FADA’s AGM and Council meeting

Following the interaction with regional associations, FADA held its 46th AGM followed by 253rd meeting of Council constituted anew at the AGM. Council elected Nikunj Sanghi, MD, J S Fourwheel Motors, Alwar as President of FADA; Mohan Himatsingka, MD, Maurya Motors and Shankar Motors, Patna, as Vice President ; KVS Prakash Rao, MD, Garapati Autoventures, Vijayawada, as Hony Secretary; and Mukesh Jain, Director, Rishabh Motors, New Delhi, as Hony Treasurer, for the year 2010-11.

New council listed the following priority areas for action during the next one year: (i) Activation of and greater interaction with the State Associations of automobile dealers; (ii) Focussed attention on 5 States, namely, Maharashtra, Andhra Pradesh, Gujarat, Rajasthan and Bihar having active leadership; (iii) Bringing into FADA’s fold new generation of automobile dealers and conducting special seminars & workshops for new generation dealers; and (iv) To take SIAMFADA Vehicle Safety Inspection Programme to its logical conclusion Minimum target: 50 centres by March 2011.