Off to a Cautious Start S P Shah, President Dear friends, As I start writing this column, the vehicle sales figures from various auto companies for the month of April 2009 have started pouring in. The sales data for the month form the same pattern as we have witnessed during the last three months. In other words, while 2-wheelers and passenger vehicles are showing signs of improvement, commercial vehicles have not been able to come out of the negative terrain. It has been quite a long since we saw an uptick in the sales of commercial vehicles. However, there are positive developments that give rise to the cautious optimism. One, the Sensex that rallied in April continues its upward movement to cross 13,000-mark. Although it would be premature to assume that Indian stock market has come out of the bearish mood, macro indicators coming out from many economies give the impression that the worst of the economic downturn is behind us. China's manufacturing has rebound for the first time in nine months. In the US, the pace of decline of factory output has slowed. In India, industrial output expanded for the first time in five months in April according to ABN AMRO Bank Purchasing Managers' Index. The production growth in the six core infrastructure industries for the month of March 2009 stood at 2.9 per cent, the highest since September 2008, indicating some amount of recovery in the Indian economy during the month. Secondly, inflation and commodity prices remain benign. Though the petroleum, cement and steel prices have started inching up, there is no cause for alarm. Somewhat correction in commodity prices is but natural as the economy recovers and gathers steam after a lull. Thirdly, the Indian economy is not significantly dependent on exports. It is essentially the domestic demand that drives the economy. As the stock market picks up and the crisis of confidence blows over, the Indian auto industry is likely to witness a surge in pent-up demand sooner than later. The downside in the whole scenario is that the industrial, construction and infrastructure development activity continues to be sluggish in spite of stimulus packages and other policy measures announced by the Government. Due to global downturn, the exports have been witnessing free fall for the last six months with March witnessing a whopping 33% decline. All this does not bode well for commercial vehicle segment. There is no gainsaying that having democracy has a cost. With polls being spread over five phases, the governance had, to a large extent, been hamstrung by the election code for the last 2 months. It comes as a whiff of fresh air that a new, stable Government headed by Dr Manmohan Singh has returned to power. Since UPA has emerged with a largely clear mandate to rule the country for the next five years, we hope that the new Government will act decisively on various pressing issues, which the previous Government precariously placed in terms of numbers was not able to do owing to the pulls & pressures of various coalition partners including the Left. While congratulating Dr Manmohan Singh on his second term as the Prime Minister of this great country, I am sure, the new Government will come up with immediate further measures to give a fillip to the auto industry, especially the commercial vehicle segment that has been reeling under the economic downturn for the last 8 months and is showing no sign of coming back to the positive growth path. It goes without saying that the fate of commercial vehicles is inextricably linked with the pace of economy in general and industrial & infrastructure development activities in particular. I am sanguine that the new Government will address the issue of economic slowdown on a war footing and that there will be a tangible action on the ground, particularly in the area of infrastructure development. Regarding the activities of FADA since my previous message, as the members largely were busy with the closure of financial year, we could not meet. However, FADA has already started a Green Dealership Movement, the details of which were published in the previous issue and are also repeated elsewhere in this issue. I would request my fellow dealers to come forward to join this movement in a big way. If you have already initiated Green Measures at your dealership and in the city/ town where your dealership is located, kindly do inform FADA of the steps taken to promote Green Environment so that we could publish the same for other members to replicate. Such CSR initiatives on the part of automobile dealer fraternity will also help us send across a message to the Government and the society at large that automobile dealers, as responsible corporate citizens are contributing their mite in promoting social cause. We are proposing to hold a Regional Convention of Automobile Dealers at Hyderabad on 18th July 2009 coinciding with an Auto Show being organised by Andhra Pradesh Automobile Dealers Association during 17th to 19th July 2009. We also propose to hold FADA Council meeting preceding Regional Convention, on 17th July 2009. The detailed programme will be published in the next issue of FADA Journal. I look forward to the participation of automobile dealers and other allied businesses at the proposed Regional Convention in large numbers. Kindly feel free to send your suggestions and inputs. With best wishes, Yours sincerely, S P Shah