Straws in the Wind S P Shah, President Dear friends, It is comforting to note that the auto market, barring commercial vehicles, is clawing back to the growth path, as February sales figures suggest. However, given the uncertainty still gripping the country, we have to guard ourselves against going overboard in concluding that the turnaround has begun, especially in the context not-so-enthusing performance of the economy during the Q3, in which GDP grew by mere 5.3%. What is worrying is that the GDP growth rate has shown decline in the successive quarters in this financial year. Going by this trend, the Q4 may see further slide in growth numbers. Disaggregated Q3 data indicate a negative growth of manufacturing and agriculture sectors, which means that the commercial vehicles that have been wilting under an acute slowdown in demand in this financial year are going to take some more time to recover. Before the code of conduct for the Lok Sabha elections could kick in, the Central Government came up with the third Stimulus Package including a further 2% cut in excise duty. RBI has also done its bit to give a boost to the flagging economy by reducing the Repo rate by 50 bps to 5%, although it is too little and too late to have any significant impact on the interest rates. The welcome development is that public sector banks prodded by RBI and the Government have come forward to make finance available for car buyers at attractive interest rates. However, the finance availability, by and large, still remains a concern. The gap created by the exit and overcautious approach of private sector banks in auto finance has not been fully filled. Two-wheelers, in particular, and CVs continue to face finance crunch. FADA has been making efforts aimed at increasing credit availability for auto market. I am happy to inform that I had discussion with the Chief General Manager of State Bank of India (SBI) at Ahmedabad regarding auto loans and inventory funding of automobile dealerships. He responded positively and organised our meeting with his concerned officers at Ahmedabad. As you are aware, SBI has already announced loans up to 85% of the on-road-price of vehicles at an attractive 10% rate of interest for the first year, the interest rate increasing progressively to 12% for repayment period between 5 and 7 years. Although this offer is initially available up to 31st May 2009, the offer is likely to be extended. The Government employees not only enjoy longer period of loan repayment, but also get 0.5 percentage point concession in interest rate. We are also proposing to meet other banks so that the credit crunch eases off. We also had meeting with Director General of SIAM at which matters of mutual interest were discussed. A coordination committee of SIAM and FADA is expected to meet shortly, which will provide an opportunity of discussing various issues of concern threadbare. I am also happy to inform that Commercial Automobiles at Jabalpur, a Tata Motors dealership managed by our past president, Mr Kailash Gupta has turned Green, giving a fillip to the Green Movement in the country. All of us in automobile trade can do our bit in spearheading this Green Movement. By replacing candescent bulbs with CFL, we can save a lot. Efficient use of water as well as its reuse & recycling is another simple measure that all automobile dealers can adopt. We have already published an article in one of the previous issues of this Journal on how more and more automobile dealerships in the US are adopting environment friendly measures. Turning Green, in fact, makes a business sense. With best wishes, Yours sincerely, S P Shah