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Leveraging Relationships - A Key to Sustainable Growth
Outcome of Western Region Auto Convention

Building and leveraging relationships with all stakeholders in automotive business and engaging customer, over and above ensuring his satisfaction and delight, are a key to sustainable growth. This was the message that emerged loud and clear from the Western Region Auto Convention organised by FADA and its founder member - ADAM on 26th February 2005 at Mumbai.

While inaugurating the Convention, Hon'ble Chief Minister of Maharashtra - Shri Vilasrao Deshmukh said that Maharashtra Government was alive to the challenges, namely, road infrastructure, environment pollution and road safety arising out of the phenomenal growth of automotive industry. He said that the Maharashtra Government with its emphasis on e-governance and proactive policies, is willing to work with all stakeholders in automotive business to tackle challenges confronting the industry and trade. He expressed the view that it is the rural market that will drive the growth in India. He advised all players in automotive business to gear themselves to explore this huge untapped market.

M K Sanghi, President, ASSOCHAM, in his inaugural address, highlighted the tremendous growth potential of Indian economy and automotive industry. He said that the competition is here to stay and all those in the business have to learn to live with it. In fact, the Indian industry has been able to convert the threat of competition into an opportunity to improve technology and management practices. As a result, Indian industry has been able to give MNCs and foreign companies a run for their money. Honesty, constant manpower training, conservatism in financial management and cost controls are the key factors for a successful business enterprise, he added.

Ravi Santhanam, Managing Director, Hindustan Motors also speaking at the inaugural session, pointed out that fierce competition across all categories and segments of vehicles has presented newer challenges for the industry and the trade. With the introduction of more models, the dealerships require more space, more people and more working capital to sell vehicles. Frequent changes in the models and technology are giving rise to the challenges of forecasting, inventory devaluation and discount sales. Any management strategy has, therefore, to encompass-
 1. 
Who is my competitor?
2.
What to sell and to whom?
3.
What to stock and when?
4.
How to minimise costs and maximise profits?
 
In view of the high cost of acquiring new customers, he said that leveraging relationships with the existing customers is only way out to sustain growth and profitability.

Imran Hassen, MD, Skoda Auto India, in his presentation at Business Session-I, i.e. Challenges and Opportunities for Automobile Dealers, while tracing the long journey of Skoda Auto, stressed on the importance of customer relations.

A K Birla, Director (Mktg), Eicher Motors, while highlighting the phenomenal growth of automotive industry and the constantly changing customer needs and product technology, laid emphasis on engaging customers for sustained growth.

Ganesh Relekar, Industry Manager - Automotive & Transportation Practice, Frost & Sullivan India, brought home the point that focus on vehicle sales alone will not address the challenges of shrinking margins, high employee turnover, ever increasing competition and poor customer loyalty. Emphasising the need for tapping the allied business opportunities and creating a distinct service brand of automobile dealerships, he spelt out the following key areas for special attention of the dealers:
 1. 
Eliminating operating inefficiencies.
2.
Employee Motivation and Retention.
3.
Building a competitive advantage.
4.
Creating customer delight.
 
N R Mohanty, Business Head, Mumbai, Iffco Tokio General Insurance, in his presentation highlighted the business opportunities presented by the insurance sector for the Automobile Dealers. He said that the automobile dealers could not only sell motor vehicle insurance but also take up cross-selling other insurance products as a business activity.

In his address at Business Session-II, G K Raman, Chairman, Royal Sundaram Alliance Insurance Co tracked the history of insurance business in India. He also touched on the challenges for the private players in insurance business and opportunities for automobile dealers with the entry of private companies in the insurance sector.

Ramesh Chandra, Member Secretary, Empowered Committee of State Finance Ministers, in his address and interaction with the participants at Business Session-II gave an overview of the VAT scheme. He scotched all doubts about the implementation of VAT from 1st April 2005.

Puloma Dalal, Taxation Expert, while presenting the scheme of service tax, clarified a number of doubts and queries of automobile dealers on service tax.

High point of the Convention was the Open House Session which had distinguished panelists, namely, Kinji Saito, Director (Marketing & Sales), Maruti Udyog Ltd; Rajiv Dube, Vice President (PCD), Tata Motors Ltd; Sachin Khandelwal, Jt General Manager & Head, Vehicle Business, ICICI Bank Ltd; and Hormazd Sorabjee, Editor, Autocar India who provided a customer perspective to the interaction.

Issues that came to the fore during the lively interaction were:-
 1. 
Rising competition and customer expectations;
2.
High manpower turnover;
3.
The increasing cost of retaining good quality manpower;
4.
Regular training of automobile dealers and their managers;
5.
Need for professionalisation of dealerships;
6.
Ever increasing cost of dealership infrastructure and correspondingly shrinking margins of automobile dealers;
7.
Making most of the new business opportunities emerging for automobile dealerships; and
8.
The need for a better communication between automobile dealers and manufacturer on one hand, and automobile dealer and his customers, on the other.
 
Around 300 participants representing automobile dealerships, vehicle manufacturers, equipment manufacturers, banks, finance companies and insurance companies, had an exciting experience of acquainting themselves with the current and emerging scenario. The daylong convention also threw up a number of ideas on new business opportunities awaiting the players in automotive business and on coping with the new challenges brought about by the growth in its wake.