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| New Regulations: An Opportunity to Move from 7.5 Million Customers to 1.2 Billion Stakeholders | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dilip Chenoy, Director General, SIAM On 1st Oct' 04, new norms for in-use vehicles were introduced. On 1st Apr'05, new emission and safety regulations for new vehicles would be in force in the country. Is there a business opportunity for automobile dealers to move from meeting the needs of the 6.79 million customers served last year to meet the needs of over 1.2 billion stakeholders? I believe there is, and more importantly it can be done profitably. Last year, 6.79 million new vehicles were sold in India. This year, sales are expected to cross 7.5 million. While SIAM members produce these vehicles, it is the FADA members, who actually interface with customers, sell vehicles and service their needs. One view would be to look at the current - 7.5 million customers as the base or potential market for dealerships across the country. Another view would be to look at the registration data of over 60 million vehicles on the roads in India and see this as an opportunity. An opportunity for FADA members to provide value added services to customers not only at the time of sale but also beyond the period of warranty. Is there a way to focus on these 60 million and reach out to the over 1.2 billion people in India? Being new to the automobile industry, I would not venture to talk to FADA members on issues relating to market, service or dealership structure and functions. I would focus on sharing the changes in existing regulations for both new vehicles and in-use vehicles and actions that could lead to extension in the number of stakeholders. From 1st Oct'04, new emission laws for in-use vehicles have come into force. The new norms that in-use vehicles have to meet are in Table 1. Not only have the norms changed, but the test equipment, test method and procedure for testing have changed. New Pollution Under Control (PUC) Check Centres that meet the following norms among others would now only be recognised as being able to give PUC certificates. They need to have approved four gas analysers. At the time of going to press, four makes have been certified by ARAI. Not only do these centres require the new equipment but also have to ensure that these machines are properly calibrated and maintained; it is mandatory to enter into an annual maintenance contract with equipment suppliers. In some cities these have to be computerised. While the norms have come in force from 1st Oct' 04, many PUC centres are not ready to serve the needs of customers. There is a clear role for dealerships, installation of equipment on a priority basis and to take the opportunity to serve the increasing number of vehicle owners. It is not only a significant business proposition, but an opportunity to demonstrate a positive attitude towards environment protection. Simultaneously, the norms for in-use public service vehicles and transport vehicles are changing. To enable the testing of these vehicles on an annual basis, new inspection and maintenance centres are being set up. In Delhi, for example, a special centre for testing heavy vehicles is coming up while another for three-wheelers has also been announced. What is different is that these new inspection and maintenance centres would carry out loaded tests for emission measurement, requiring equipment like dynamometers. While in Delhi, these are being set up by the Government, in other states such as Himachal Pradesh, the Road Transport Authority has indicated that they would like to set up these in a public-private partnership mode. Many of you have existing land that could be used to set up the centres. There is a need to show initiative and drive to take advantage of this opportunity.
On 1st Apr'05, New Bharat Stage (BS) III norms in the 11 cities, and the extension of BS II norms for the rest of India would be mandated. The new vehicles sold in the 11 cities would need to meet emission norms as given in Table 2, Tables 3A, 3B and 3C.
SIAM members have been extending a voluntary emission warranty for new vehicles for up to 80,000 km for cars and 30,000 km for 2 wheelers fitted with catalytic converters. This warranty is subject to the provision that the vehicle owners follow a prescribed service schedule and procedure. A preliminary survey carried out by SIAM showed that a significant percentage of new vehicle owners do not come back to the dealership or authorised service centre for such "free" service. In some cases, the percentage that came back was only 15-20% and was further reduced as we moved from the first free service to the second and third. This low percentage was based on the perception that authorised service stations charge higher rates than neighbourhood service outfits with no added value! Thus, the warranty does not serve its purpose! Another service being provided by some manufacturers and dealers is the concept of extended warranty. There is a need for a Quick Service Facility (QSF). Under this, a vehicle owner can avail of a quick service or maintenance check where minor repairs would be taken care of within 5 to 15 minutes. By providing extended warranty, you have the opportunity to serve existing vehicle owners for an extended period of a time. QSF would encourage a shift of customers from unauthorised centres and direct a significant percentage of the 60 million vehicles on the road to your networks. This is an area where the dealerships and service stations have a role to play. There is a need to set up procedures and systems by which customers are tracked and educated' to bring back their vehicles for service and also for after-sales care. Not only is there a need for telephone calls, provision of driver services and tracking but equally important is the need for prompt and efficient service and also dispelling the notion that there is a higher cost of service. Start by targeting to double the percentage that comes back to you at each stage of service. Initiatives in this area could bring a significant percentage of the 60 million vehicle owners into the dealer network. Perhaps a loyalty programme with service points may not be out of place. A major initiative to ensure this would be to create a database of vehicle owners. While SIAM member companies have data relating to where a vehicle was dispatched, given the nature of sales and distribution, complete registration records do not exist for the country. Tracing vehicles or determining the owner of a vehicle often becomes difficult and expensive. Most dealers have experienced this. While the government initiates action to computerise the RTOs and link them to a central server, or address the issue through smart cards, as being done in Delhi, there could be an initiative taken by FADA. Could all dealers target 100% computerisation and link themselves to a FADA network so that registration data is available online? SIAM could explore partnering in such an initiative. Another use of this network would be to help and trace stolen vehicles or vehicles involved in accidents. Imagine customer delight when they learn that the dealer network has helped in the recovery of a stolen vehicle. A related value added service would be to provide and install anti-theft devices in vehicles. The Police Departments of many states are making a request to proactively install such devices to deter theft. While a statutory standards on anti- theft devices AIS - 074 (2&3 wheelers) and AIS - 075 (4 wheelers) are proposed for implementation w.e.f. 1st October 2005, dealers are best placed to advise customers on the need and necessity to spend a little more to safeguard their vehicle against theft. In fact, many customers do not know that installation of such devices may result in the lowering of the insurance premium that they would have to pay and thus the device would pay for itself over a period of few years. Not to talk of peace of mind. There is a national regulation that mandates the wearing of helmets by two wheeler riders. Many State Governments have not mandated this. One view that could be taken is that since there is no mandate, why do anything. Another would be, that even in the absence of legislation, there could be a move by all of us to educate the customer on the need for riders to use helmets. A practice by some Asian countries is a voluntary movement to provide 2 helmets with every vehicle sold or rented out. In addition, there is a poster and education campaign, communicating the need to wear helmets - of the right kind - even though there is no regulation in place. India is a young country. Many of first time cars owners have young children but are unaware of the possible safety measures for children travelling in the car. In many countries, children can only travel in the back and not in the front seat, in others, it is mandated to use special child seats. Again, using that immense persuasive power that most of you possess and the innovating marketing skills that you have, it would be a huge contribution to society if you promote this campaign "Children in the Back" - "Use Child Seats". Some would ask the question whether this responsibility lies with the manufacturers or with the dealerships, or should it be made mandatory? It is a personal view that mandating never helps, and since possibly not all cars owners would require this, it would be better to encourage a pull and push from the dealers than a push by the manufacturers. It is said that 60-70 % of accidents are caused by driver's error. Yet, there are very few driver training schools or programmes for existing drivers. Many State Government surveys have brought out deficiencies in driving schools. In many of the SIAM conducted training programmes, drivers have indicated that they have never been through a proper driving school before they acquired a driving licence. Most have never been through a refresher course. Some states like Delhi have mandated the need to go through such courses before licences are issued or renewed while others are in the process of doing so but find facilities inadequate. Many SIAM members have opened driving schools. An initiative from dealers to set up driving schools and strengthening the training infrastructure in the country would not be charity. It would be a sustainable business proposition and a significant service that you could provide to both existing and new customers. Not to talk of the employment opportunity it would provide for many young people in the country. Dealers are an important link in the chain to promote safety and safe driving habits. It demonstrates that we care. While manufacturers and service centres have to follow and strive to exceed the requirements of existing environment, safety and pollution norms, there is more that could be done to reach out and touch the lives of the 1.2 billion stakeholders in the country. SIAM has been conducting driver training, safety awareness and pollution awareness programmes and camps across the country. Yet, there is a strong feeling among some sections of society that not enough is being done. A few vehicles that leave a trail of thick smoke bring to naught the extensive work that is being done by the manufacturers. There is a strong but often untrue perception that vehicles are the principal contributors to environment pollution. Sometimes, this is translated into "we do not care". Getting closer to 60 million vehicle owners through such programmes would not only insulate against any future downturn in the industry, but would also be a key for survival in the event that sales and distribution networks change in the future. There is need to demonstrate leadership to take proactive measures to dispel this perception. The frequency of such programmes needs to be increased and they have to become more meaningful and visible to the stakeholders. This is a win-win partnership for the manufacturers and dealers. What is more is that we would have over 1.2 billion stakeholders who would value this initiative and would be involved and alive to our concerns. The time to do it is now. The new regulations on 1st Oct'04 and 1st Apr'05 provide a window of opportunity. Let's seize it! The future is how we would shape it. |
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