Rising Oil Prices – A Major Challenge Binod Agarwal, President The sales figures for the month of April 2006 have come in. Auto industry continues to be on a steady growth path in keeping with the expectations. However, the ominous clouds in the form of rising international crude oil prices that have breached $70 per barrel are looming large over the horizon. A significant hike in the retail prices of petroleum products, which were revised in September last year is on the cards, as the oil marketing companies might not be able to carry on the baggage of their losses any longer. While the industry has had a good run in spite of the increase in petroleum prices last year, a massive hike is likely to put a spanner in the wheels and spoil the party. The international situation involving Iran over its nuclear programme is leading to uncertainty and making the matters worse for the oil importing countries including India that is heavily dependent on the imports for its domestic petroleum requirements. We have, therefore, to keep our fingers crossed and to be guarded in our optimism and hope that the situation on oil front does not go out of control. India and the Indian industry have weathered many a storm in the past. I am sure, we shall stand up to the challenge and forge ahead surmounting the crisis like situation facing us today. The spiralling oil prices apart, there are a host of other challenges that the automotive business have to contend with. The increase in road tax and other taxes on motor vehicles, effected by various State Governments from time to time, is one of the other major factors impeding the growth of automotive business. The incidence of taxes on motor vehicles is not only high, but also varies from State to State. Compounding the problems are complex and cumbersome provisions and procedures relating to registration of vehicles. Also, there is no well-defined roadmap for addressing the issue of pollution - vehicular or otherwise. Different State Governments have come up with different measures, largely, arising out of the directions of the Hon'ble Supreme Court and High Courts. While we, as citizens, are equally concerned over the problem of environment pollution and road safety, these knee-jerk measures add to the confusion and chaos resulting in no tangible benefit. To discuss the whole gamut of issues affecting the road transport and automotive industry, a team of FADA members, including myself, held a meeting with Mr L K Joshi, Secretary, Department of Road Transport & Highways, Government of India, in his office at New Delhi on 17th April 2006. Other officials of the Department present at the meeting were: Mr Saroj Kumar Dash, Jt Secretary (Transport); and Mr S K Mishra, Director (RT). Some of the suggestions put across to the Secretary, Road Transport & Highways included: Bringing in uniformity in road tax across all states within India; delegation of registration of non-transport vehicles to automobile dealers on the lines of schemes adopted by the Delhi and Rajasthan Governments; dispensing with the requirement of taking vehicles to RTOs for inspection before registration; periodic inspection and certification of all vehicles including non-transport vehicles and involving non-Government agencies in this task; and association of FADA in various committees handling matters relating to Motor Vehicles Act and Central Motor Vehicle Rules. I am happy to inform that the Secretary, Road Transport & Highways was quite positive and appreciated the submissions and suggestions made by FADA. He agreed to consider favourably most of the suggestions put forth at the meeting. As you are aware, it has always been an endeavour of FADA to work in partnership with all stakeholders for sustainable growth and development of automotive business as a whole. As a part of this endeavour, FADA has been in regular dialogue with SIAM - a body of automobile manufacturers, and meeting the individual manufacturers from time to time to discuss and exchange views on matters of mutual interest. Accordingly, a team of FADA members held a meeting with Mr Madhur Bajaj, President, SIAM along with Mr Dilip Chenoy, Director General, SIAM at New Delhi. The submissions made by FADA members at the meeting were well received. As a result of this regular interaction, there is a better understanding and appreciation of the issues of concern to both manufacturers and dealers. SIAM President agreed with the suggestion for periodic meetings between the office bearers of SIAM and FADA to keep the dialogue going. With a view to establishing contacts with members in various parts of the country, an interactive meeting was organised at Bangalore. The interaction was lively, and helped in identifying issues and problems affecting retail automobile trade at the local and State level. I also had an opportunity of meeting with Mr Eric Leblanc, Managing Director, Volvo India Pvt Ltd in his office at Bangalore recently. The discussion was quite meaningful and gave an insight into the emerging scenario in commercial vehicle segment. The competition is going to hot up and the vehicle technology is likely to witness a quantum jump in this segment with the entry of a number of global players. As the road infrastructure improves and market expands, more global auto majors are likely to join the fray. There is no doubt that road infrastructure development programme will lead to the deepening of commercial vehicle market in India, translating into larger volumes of sales especially of higher tonnage multi-axle vehicles. An interesting development is taking place without being noticed much. While I am of the view that the Railways and the road transport play a complementary role in the national economy, the road transport has to sit up and take note of the aggressive marketing of freight movement undertaken by the resurgent Railways. The competition is good in a way that it keeps both the road transport and the Railways on their toes and does not allow complacency to set in. Needless to mention, the competition and free market have done wonders for the Indian industry as a whole. The entry of global commercial vehicle majors and the resultant competition are also expected to bring about a significant change in the bus body design, specifications and standards. There is a lot of excitement in the market and the transport operators, companies engaged in activities involving a lot of movement of goods across the country and the travelling people, perhaps, could not have asked for more. We look forward to the unfolding of that exciting phase in the commercial vehicle segment. Please keep sending your suggestions and inputs for further strengthening FADA and its activities. I shall particularly welcome your suggestions on two major services started by FADA, viz. (i) Conduct of training courses by FADA to train Service Supervisors, Spare Parts Supervisors and Sales Executives for dealerships and their workshop operations, under a Pilot Project covering the cities Mumbai and Pune; and (ii) Helpline Service for FADA Members under which FADA provides clarifications and legal positions and practices on various tax and other matters affecting the dealership operations. With best wishes, Yours sincerely, Binod Agarwal