Rising Interest Rates & Global Oil Prices – Cause of Worry Binod Agarwal, President In spite of the fact that the Union Budget 2007 has been less than exciting for the auto business in the sense that it has not matched up to its high expectations, the Indian auto industry is determined to march on. The spate of new launches in the recent past and an impressive array of new launches and upgrades scheduled for the current year are the reflection of the upbeat mood within the Indian auto industry. However, the rising interest rates and persistent high inflation hovering over 6%, coupled with the continuing upward trend of international crude oil prices giving rise to uncertainty, have started to cause worries. Somewhat slowdown being experienced in 2-wheeler growth is a case in point. We hope that it is a temporary phase and that the 2-wheeler sales will bounce back with a bang sooner than later. RBI has been battling hard, with its own set of measures seeking to squeeze liquidity in the market, to rein in the inflation. That the apex bank has revised downward it own projection of GDP growth during the year 2006-07 from 8.5% - 9.0% to 8.0% - 8.5%, might not be enthusiastic to the 'Cheer India' brigade that is swelling in numbers by the day internationally. However, the scenario is not all that depressing and the Indian economy continues to perform well riding on strong macroeconomic fundamentals. Industrial sector, having recorded a growth of over 10% in the current fiscal so far, together with services sector, is leading the charge towards a healthy GDP growth in the third year running. The strong performance of economy and higher outlays for rural and infrastructure development in the recent Union Budget will drive the growth of auto industry. Deepening of domestic market and robust export performance are expected to sustain the growth at 10-15% in the FY07 -08. This is what industry leaders, retail trade and experts gathered at the SIAM Conclave organised recently, also concluded. Even as some of the disconcerting developments in the recent past are casting their shadow in an otherwise bright scenario, the healthy growth of Indian automotive industry and domestic market has brought in its wake a number of challenges for the Government, the industry and the trade. Managing growth is a challenge, which all stakeholders have to stand up to. This was the theme of Regional Convention, organised jointly by FADA and MIA on 15th March 2007 at Kolkata. To my mind, we could not have had a better theme to deliberate upon. Expanding dealership network, intense competition and rising customer expectations, trained manpower availability, infrastructure, shrinking margins & dealer viability, and environmental & safety concerns are the major challenges that have resulted from tremendous growth of Indian automotive market over the past decade. The need of the hour for all stakeholders is to make concerted effort to tackle these challenges. Otherwise, all our plans & projections will remain a pipedream. I am happy to note that the Convention deliberated upon some of the major challenges facing the industry and trade currently and new challenges likely to emerge on the horizon. From the perspective of automobile dealerships, customer satisfaction, dealer viability, taxation & insurance, and manpower availability are the key issues for the auto retail to contend with. These were precisely the .topics of four business sessions of the daylong Convention. Since the report and outcome of the Convention is published elsewhere in this issue, I would not like to repeat the same here. However, one thing is sure that we cannot achieve sustained growth in isolation; all stakeholders have to work together in partnership, adopting a holistic approach. What is more gratifying is that the Convention was able to enlist a wide spectrum of eminent speakers from amongst the Government, industry, trade, experts, & analysts, professionals and allied businesses, such as, banks, NBFCs and insurance companies. Further, the fact that the Convention evoked an overwhelming response & participation, particularly from Eastern Region, goes to show that West Bengal is a happening place once again. I express my profound thanks and gratitude to our distinguished guests and speakers: Mr Subhas Chakraborty, Hon'ble Minister for Transport, Sports & Youth Services, Government of West Bengal; Mr Ravi, Kant, MD, Tata Motors; Mr Mohit Arora, Country Director - India, JD Power Asia Pacific; Mr Anil Dua, VP - Mktg, Hero Honda; Mr B Kapoor - Sr G M, M&M; Mr Sudhir Chand, Consultant; Ms Puloma Dalal, Tax Consultant; Mr Vijay Kumar, Bajaj Allianz General Insurance Company; Dr G P Jakhotiya, Consultant; Mr Sudhir Chand, Consultant; Mr Dipankar Chatterjee, Consultant; Mr Pradeep Saxena, Sr V P, TNS Automotive India; and Mr Sharath Vijayaraghavan, ED, Sundaram Motors, for making it convenient to share their experiences and wisdom with the participants. I am also grateful to the sponsors, namely, Reliance Capital, National Insurance Company, Tata AIG Insurance, Magma Leasing & Finance, Bajaj Allianz, ICICI Lombard General Insurance, ICICI Bank, IFFCO Tokio General Insurance Company, and General Motors India, who came up with their precious support to the Convention. My sincere thanks are also due to Mr Vinay Nevatia, Convention Director; Mr 0 P Agarwal, Chairman, MIA; Mr R K Bubna, State Chairman - West Bengal, FADA; Mr Rajesh Sanei & other members of MIA, who worked tirelessly to make the Convention a grand success. I shall be failing in my duty if I do not acknowledge the support extended by Past Presidents - Mr K P Jhunjhunwala, Mr Bharat Sanghvi, Mr Rakesh Jain, Mr Kailash Gupta, Mr Ajit Chordia & Mr Deshnidhi Kasliwal, and Council Members of FADA, who came from various parts of the country to participate at the Convention. I am also indebted to Mr Sumantra Chowdhury, Principal Secretary (Transport), Government of West Bengal, who spared time to interact with the participants at the Open House Session organised on the previous day. Lastly but not the least, my grateful thanks to all the delegates and invitees from the Government, industry, retail automobile trade and allied sectors, whose overwhelming presence at the Convention made its proceedings not only lively but also meaningful. Personally for me, it was an enriching and satisfying experience. The deliberations of the Convention have given the automobile dealer fraternity a lot of food for thought. In the context of intense competition in the market place, we, in the retail automobile trade, have always to be on our toes and keep ourselves equipped to deal with the newer challenges that come our way. Automobile dealership operations are becoming complex with each passing day and require to be handled with a professional panache. In other words, we cannot run automobile dealerships the way we used to operate in the past. There is a need for constant training. We can afford to be complacent at our own peril and cost. I would urge my fellow dealers to organise training & development programmes in their region from time to time, to keep pace with the paradigm shift in automotive scenario as well as the changing needs of the market & society. FADA will pitch in with its support wherever necessary. Please feel free to send your suggestions and inputs for further strengthening the activities of FADA and making it more meaningful for its members. With best wishes, Yours sincerely, Binod Agarwal