Looking Back at the Year Gone By S P Shah, President Dear friends, I shall have completed one year in the office of President of this august body, when this issue of FADA Journal reaches you. It is time for me to share with you my experiences and important developments & activities during the last one year. When I took over in September 2008, the trouble that had already been brewing within the multinational financial institutions was threatening to blow into crisis, which it eventually did. The financial meltdown led to the worst kind of global economic depression in the last 6-7 decades, engulfing virtually all countries. India could not escape unscathed from this downturn. The interest rates were already ruling very high in September last year due to high inflation and consequent monetary tightening measures adopted by the apex bank. The financial meltdown aggravated the situation further, as banks became overcautious in lending for vehicle purchases. As a result, the credit availability became a major issue for the auto market. It was not as much a crisis of fundamentals as the crisis of confidence that led to credit squeeze. The sales figures for the period September 2008 to December 2008 point to the grim situation the auto market was faced with at that point of time. Thanks to the stimulus packages that the Central Government came up with to tide over the slowdown and the gradual easing of liquidity by the RBI through lowering of CRR and Repo Rate, the auto market in India headed back to the recovery path from January 2009. I am happy to note that the public sector banks have started playing a major role in auto market and interest rates have softened in the last 6-7 months. The credit availability has improved significantly, two-wheeler segment continues to face credit crunch even today though. The domestic auto market is clawing back to positive growth track slowly but surely. While commercial vehicles still continue to reel under severe slowdown, the July sales performance rekindles the hope that CVs will be back on growth trajectory in not too distant future, as the measures announced in the Union Budget 2009 translate into action on the ground and whatever uncertainty that remains ebbs off. That the Indian economy is on a recovery path is reflected in the Sensex and better-than-expected financial results for the first quarter posted by a large number of companies. The impressive sales & financial performance by the consumer goods and consumer durable companies suggests that consumer confidence is back and that the worst is over. Industrial production and construction activity are also picking up, which is a good sign. I am therefore sanguine that the buoyancy will return very soon. Adverting to the activities of FADA during the last one year, as the new Council assumed office in September last year, credit crunch and soaring interest rates were the major issues of concern. Our first priority at that point of time was to step up interaction with various banks and industry. I am happy to inform that there has been gradual improvement in credit availability and softening of interest rates, thanks to the intervention of Central Government and monetary steps taken by the RBI. We are indeed thankful to the public sector banks that came in a big way to fill the space vacated by some of the private banks. Although there has been an upward movement in inflation and global oil prices of late, the prices are not as volatile as they were a year and half ago. Similarly, commodity prices also remain stable by and large. Reaching out to automobile dealers spread across the country and meeting them to understand the problems and issues facing the automobile trade at the regional & local levels in different parts of India was another major task that I undertook during the last one year. With the support of my colleagues in the Council and senior members, we were able to organise a number of regional meetings and interactions with members at various places during the year. With the globalisation and integration of Indian economy with rest of the world, we cannot remain immune to the happenings in other parts of globe. With a view to have a global perspective of retail automobile trade, a FADA delegation visited USA to participate at the 92nd NADA Convention and Expo in New Orleans. It was an enriching experience for all the 11 members who comprised the FADA delegation. FADA also got an opportunity to showcase India's emergence as an automobile-manufacturing powerhouse in global arena. Our Vice President, Mr Nikunj Sanghi and I made presentation at a workshop organised by NADA on Indian automotive industry as a part of the Convention programme. Needless to mention, NADA has been playing a very important role in influencing, through collective strength of its 20,000 odd members, the decisions/policies of the industry and the US Government. Bailout of General Motors and Chrysler by the US Government through bankruptcy route is the case in point. NADA together with auto industry worked tirelessly to sensitise the power that be on dire consequences of closure of these companies and their dealerships, which would have rendered thousands of people jobless keeping in view the fact that auto retail accounts for 20% of the workforce employed in retail sector in the US. We also came back with many other ideas that can be adopted by my fellow dealers in India. Green dealership is one such idea, which, if implemented, not only improves environment and conserves energy & water, but also makes an economic sense. Going green is, therefore, the way forward for all of us in retail automobile trade. I am happy to note that a number of automobile dealers are implementing the concept of green dealership. Group 20 is another idea that is very popular among automobile dealers in USA. There are over 170 such groups functioning within NADA. Deliberations in the Group meetings help identify benchmarks and best practices in automobile dealerships. Assimilation and implementation of these benchmarks and best practices have enabled many dealerships in the US to improve their productivity and profitability. We tried to implement this idea. However, I am sorry to say that we could not make much headway because of lack of response from our dealer brothers. As late as July 2009, a Regional Convention of automobile dealers was organised at Hyderabad, which was a tremendous success. Since Auto Summit is organised biennially at New Delhi, such regional conventions afford opportunity to the automobile dealers to network and interact with the manufacturers, allied businesses and their fellow dealers in the region. The regional conventions focus on and address the local issues. Our next major event, viz. FADA's 45th Annual Session is scheduled for 27th August 2009 at New Delhi. I am looking forward to your participation at the Annual Session. We have also started groundwork for the 6th Auto Summit to be held in January 2010 during Auto Expo, and shall keep you updated on the programme as it shapes up. Simultaneously, we are working on a number of other matters of interest to automobile dealer fraternity and society as a whole. These issues are: (i) Periodic inspection & certification of personal vehicles and involvement of non-government agencies, including automobile dealers having the requisite technical equipment & competence, in this task; (ii) Need for introduction of scrappage incentive scheme, as introduced in the European countries and USA, in the interest of clean environment and road safety; Recognising and awarding annually those automotive dealers, who excel in various aspects of dealership operations and are engaged in community service. Automotive dealers need to work closely with the State Governments, particularly in the areas of periodic inspection & certification of personal vehicles and community service. I al"1 sure, the next Council to be constituted at the AGM will carry forward the work in these areas already set in motion during the last one year. I am alive to the fact that retail automobile trade is confronted with a number of challenges. It requires collective effort on our part to surmount these challenges. Automobile dealers need to organise at the local, State and national levels and highlight the important role being played by automobile retail trade and service industry in national economy in terms of employment generation, contribution to the Central & State exchequers by way of various taxes & fees and improving the mobility. Before signing off, I would like to thank my colleagues in the Council, Past Presidents and members at large for their unstinted support and cooperation in driving the activities of FADA during the last one year. I am also thankful to FADA Secretariat, ably headed by Mr Gulshan Ahuja, Secretary General for their wholehearted support. With best wishes, Yours sincerely, S P Shah