Committed to Clean Environment & Safe Motoring S P Shah, President Dear friends, Recapping the events of last fiscal, 2009-10 started off with a slow and flat growth. Thanks to the lagged effect of fiscal and monetary stimulus announced by the government in the latter part of 2008, the economy was able to recover faster. By the beginning of third quarter of 2009-10, green shoots of revival became visible in all sectors of Indian economy. I am happy to note that auto market also started moving up the growth curve at a faster pace as year wore on and the economic recovery became firm. The fast growth displayed by the Indian economy is indicative of its inherent strength. After witnessing deceleration in GDP growth for five consecutive quarters, GDP during the quarter, April-June 2009 registered a growth of 6.1 %. The rise in GDP is viewed as an indication of economic recovery and was primarily due to increase in government spending and improved performance of industrial sector. Despite strong performance by the industrial and service sectors, a lower growth in the agricultural sector due to bad monsoon and floods in some parts of the country led to moderation in the real GDP growth in 2008-09. However, India's gross domestic product (GDP) in 2009-10 is expected to grow by 7.2 per cent, which is impressive by global standards. What is heartening is that upturn continues with a greater momentum with the result that India is likely to attain a growth of 8.25-8.75 per cent in the current year before leaping to 9-10% growth trajectory in the years ahead. India's industrial production in February 2010 was up 15.1 per cent. This spurt in industrial activity also finds reflection in performance of automobile market. In fact; the industrial output has been clocking a healthy double-digit growth for the last 5 consecutive months, which is reassuring for the auto market in general and commercial vehicle growth, in particular. It is well known that commercial vehicle growth is the barometer of the pace of industrial & business activity and vice versa. There is no gainsaying that automobile industry is the engine of growth, as the experience in the other parts of the world has shown. In fact, the level of growth of automobile industry in a country is the indicator of the economic prowess of that country. Automobile output accounts for a significant share of GDP of the top economies of the world. It is encouraging to note that auto market clocked decent sales numbers in March 2010 in spite of partial withdrawal of excise duty cut announced in the latter half of 2008 as a part of the Government's stimulus package, which goes to show that the economy can hold on its own without special measures. The performance of auto market in this year so far portends well for the remainder of the year. With new launches, new collaborations, capacity expansion plans, setting up of new plants, increased spending of the government on infrastructure and development of the rural sector on the anvil and India becoming a hub of small car & 2-wheeler exports, we can safely conclude that a healthy double-digit growth would continue for times to come. Changes in income tax slabs giving more spending power to the consumer are expected to further fuel the growth of auto industry. However, the biggest challenge I visualise is managing & sustaining the growth. In a dubious distinction for the country, the World Health Organization has revealed in its first ever Global Status Report on Road Safety that more people die in road accidents in India than anywhere else in the world, including the more populous China. The statistics for India are chilling. At least 13 people die every hour in road accidents in the country, the report of the National Crime Records Bureau reveals. In 2007, 1.14 lakh people in India lost their lives in road accidents - that's significantly higher than the 2006 road death figures in China - 89,455. In addition, 51akh people were disabled in the road mishaps in India. The real numbers could be higher since many of these accident cases are not even reported. There is no estimate of how many injured in road accidents die a few hours or days after the accident. The estimated annual cost of road accidents and injuries on India is Rs. 550 billion. In addition, there is a huge opportunity cost that the country has to bear in the form of major, permanent disabilities, resulting in loss of employment & earnings and other social problems. While rich nations had been able to lower their death rates through periodic inspection & certification of private vehicles and sound road safety programmes, these are sharply on the rise in the third world. Fatalities in road accidents in India are moving up at a compounded annual growth rate of four per cent. Road deaths in India registered a sharp 6.1 % rise between 2006 and 2007. Unless there is a national commitment to reducing accidents, there will not be much of a change. FADA, as the organisation of automobile dealers, has been doing its bit to promote the road safety and clean environment. We have suggested to the Government, including the Union Minister of Road Transport & Highways, through representations and at various meetings, the introduction of periodic inspection & certification regime for in-use personal vehicles. While the response has been positive, the proposal has to go through a long-winded procedure including the amendments in Motor Vehicles Act/CMVR and creating machinery & infrastructure. This is a gigantic task, which the Government alone may not be able to handle. The programme calls for a public-private partnership. Automobile dealers, as responsible corporate citizens are willing to pitch in this programme and invest Rs. 15 lakh each for installing equipment in their workshops for testing & certification of vehicles, as a part of their contribution to the clean environment & road safety. Since amendments to the Motor Vehicles Act/CMVR are likely to take time, we have also been exploring the possibility of introducing I&C programme outside the statutory framework, by having discussion with manufacturers and insurance companies. A meeting on the subject was held recently with select insurance companies and manufacturers under the aegis of SIAM. I am happy to inform that the idea was well received and the outcome of discussion at the meeting encouraging. The meeting felt that the I&C programme is a win-win for all stakeholders, viz. vehicle users, insurance companies, manufacturers and automobile dealers. What is amazing is that there is no additional cost burden for the vehicle user undergoing inspection & certification of his/her vehicle. We need to take the proposal forward and concretise it by involving a larger group of manufacturers and insurance companies. I am sure, we shall be able to make a significant headway at the next meeting scheduled for 26th April. I request all manufactures and insurance companies to attend the meeting. FADA is also working with the insurance companies for the introduction for GAP Insurance in India, which is in vogue in USA and other countries GAP insurance is the difference between the book value and the market value of a car. I am of the view that many vehicle owners in India, who are maintaining their vehicles in very good condition that fetches them a good market value in the used car market would like to go for the GAP insurance. It will also be an additional source of income for the insurance companies. FADA organised its 251st Council Meeting, a Regional Meeting and a Press Conference on 10th April 2010 at Patna. The meetings and the press meet gave FADA office bearers an opportunity to brief automobile dealers and media on the initiatives and activities undertaken by FADA for the benefit of automobile dealers and the society at large. The meetings also gave us the feedback on how FADA can further strengthen its activities and make them more meaningful for its members. The message that came out loud and clear from the discussion with my fellow dealers at Patna was that regional associations of automobile dealers have to play an important role in taking up and addressing the problems & issues of concern to the local dealers. The regional associations have to become a bridge between FADA and automobile dealers spread across the country, as FADA office bearers may not be able to reach out to each and every member. Council therefore decided to activate and strengthen the regional associations. While a formal notice will definitely go, I am going to send a personal letter from my side requesting the office bearers of all regional associations of automobile dealers to attend the next Annual General Meeting of FADA scheduled for the latter half of July 2010. The meeting with the office bearers of regional associations is likely to bring forth the expectations of FADA and the regional associations so that we can address and resolve the issues with a coordinated approach. Before I sign off I once again request all my dealer friends to organise periodically small group activities at the local, State and regional levels to share information and ideas, which can be quite a learning experience for all of us in auto retail. Please do write to me in case you have any new suggestions & inputs for improving and strengthening FADA's role and activities. With best wishes, Yours sincerely, S P Shah