Taking Auto Retail to the Next Level Nikunj Sanghi, President Dear friends, At the outset, I express my profound thanks and gratitude to FADA Council and you all for reposing your confidence in me by electing me as the President of this august body. With your support, I will try my best to live up to the high standards set by my predecessors and rising expectations of the automobile dealer fraternity. As you would have observed, the last few years, in particular, have seen the feverish activity within FADA that has embarked on a clutch of new initiatives for the benefit of automobile dealers while sustaining the tempo of activities already undertaken. One such new initiative is the Vehicle Safety Inspection Programme initiated jointly with SIAM. The programme was launched by Dr Pawan Goenka, President, SIAM at the SAFE Annual Convention on 5th May 2010 at Chandigarh. The details of this new programme were published in May 2010 issue for the information and benefit of my fellow dealers. FADA is working overtime to make the programme a reality at the earliest. A pilot is being started with 19 automobile dealerships located in various parts of the country, which have initially offered to set up Vehicle Safety Inspection Centres. We would like to see at least 50 such Centres up and running by 31st March 2011. Needless to mention, the programme is a win-win for all stakeholders the vehicle users, the insurance companies, the industry & trade and the society at large. The programme is our humble contribution, as responsible corporate citizens, towards clean environment and road safety. I am sure, as the programme gets going, it will pave the way for introduction of a full fledged mandatory Inspection & Certification regime for all category of vehicles like in other developed countries. With the globalisation and integration of Indian economy with the rest of the world, India cannot remain immune to the developments elsewhere in the world. This is testified by the recent developments. The Lehman collapse had ramifications far and wide across the world, which went through traumatic recession and slowdown from which most of the countries are still struggling to wriggle out. We were somewhat fortunate in that the global slowdown did not last long in India, thanks to the strong domestic demand and timely stimulus measures announced by the Government of India and RBI. It is, therefore, imperative that we work closely with the auto retail organizations in other countries and exchange information on a regular basis so that we are not overtaken by the events all of sudden. FADA is working in all earnestness to form an apex body of auto retail at world level. Such a networking is mutually beneficial for automobile dealer fraternity across the world. We can learn a lot from the developed countries where auto retail organisations wield a lot of influence & clout and play an active role in shaping the policies having bearing on the economy and the auto industry & trade. Auto retail franchise laws in US can very well be adopted in India to avoid arbitrary terminations and to make the severance of relationship less painful. Similarly, automobile dealers in other countries can borrow and adopt some of the auto retail practices, which are unique only to India. The fact that automobile dealers in India are able to survive on razor-thin sales margins amazes rest of the world. Shortage of trained and skilled manpower is one of the major concerns for automobile dealerships. We are joining hands with SIAM and ACMA to start Automotive Skills Development Programme under the aegis of National Skills Development Corporation, sponsored by the Government of India. Encouraged by the tremendous response and success of the first ever Automotive Dealership Excellence Awards (ADEA) a joint initiative of FADA and Auto Monitor, we are going ahead with the second edition of ADEA. In fact, the process has already been set in motion. My dealer friends will be receiving communication from Auto Monitor inviting nominations for the awards very soon. I urge my dealer friends to participate in the ADEA overwhelmingly so that the awards truly reflect the excellence in various areas of auto retail for other dealers to follow and adopt. The awards do not stop at recognising the business performance or the best practices alone. They also seek to recognise and honour those of my fellow dealers who are engaged in social and community service. There are special awards for Green Initiative, Corporate Social Responsibility and Road Safety initiative. Another priority area for me as President and new Council is to reach out to and engage with FADA members spread across the country. Keeping in view the size and geographical spread of India, it is a gigantic task. I am, therefore, of the view that regional associations of automobile dealers at various places must be strengthened. You will kindly appreciate that it is well nigh impossible for FADA office bearers to visit each and every town and city. The local associations can act as link between FADA and its members all over India. Sales margins and exit policy, to my mind, are the core issues and will continue to be high on our agenda during the next one year. There are host of other issues at the local & State levels, which bedevil the automobile dealers day in and day out. In particular, cumbersome vehicle registration procedure is a cause of concern for most of the automobile dealers I have interacted with in the last few years during my visit to various places. Similarly, taxes on motor vehicles are not only abnormally high but also vary from State to State, which stifles the growth and leads to undue diversion of trade from one State to another as well as unhealthy practices. We, in FADA, have been emphasising a uniform, rational tax regime formotor vehicles be it road tax, VAT or any other tax, in our meetings with SIAM and Government authorities. We shall continue our endeavours in this regard. I am hopeful that with the introduction of GST, most of the anomalies and tax related concerns would get addressed. However, there are some disquieting voices and signals already emanating from States, which means that we have a lot of distance to cover before a consensus is arrived at. However, I remain optimistic that the GST regime will see the light of the day and kick in from 1st April 2011 as proposed. There is no gainsaying that FADA has made long strides since its inception in 1964. However, I do realise that a lot more needs to be done to make FADA more meaningful to its constituents and to secure due recognition for the significant contribution made by auto retail in the growth & development of automobile industry, in particular, and the national economy, in general. To sustain the increased pace of activities and to secure the recognition for auto retail, it is important and necessary that FADA is further strengthened financially and in terms of its membership base. I, therefore, seek your support, among other things, in bringing more automobile dealers into membership strength of FADA. I am sure, with the kind of respect you command and influence you have, all automobile dealers in your area will become members of FADA, if you personally approach them. As regards the market scenario, I am happy to note that the auto market has had a very good run so far in this financial year on the back of increased industrial activity and improvement in economic environment in general. While industrial output during the month of June 2010 does not boast of flattering numbers, I am hopeful that with good monsoon, we shall be able to sustain the tempo in the remaining part of this financial year. Look forward to your inputs and guidance. With best wishes, Yours sincerely, Nikunj Sanghi