Driving Back to Growth Path? Pradip R Kamdar, President Dear friends, You must have had a great time and a lot of fun and gaiety during the festival season. While Diwali is an occasion to rejoice and submerge in festivities, it is also an opportunity, particularly for those in business, to consolidate and improve the toplines and bottomlines, when the people are on a spending spree. Hope, you would have had the best of both - festivity and business. It must have been satisfying especially when viewed against hitherto not-too-buoyant mood in the automobile market in the current fiscal. The figures for the month of October 2007 show that the auto sales are gradually coming back on growth track, though the performance does not point to a runaway growth witnessed in the previous two years. As it appears, the buoyancy has been brought about by a slew of new models and upgrades introduced in the market of late. Therefore, we need to be a bit cautious in interpreting the sales performance of October as a pointer in the short-term or long-term. My guarded optimism also stems from the fact that there are dark clouds looming on the horizon with global crude oil prices threatening to breach $100/ barrel mark. Although economy, overall, has surprisingly been doing very well and clocking over 9% growth so far in this financial year in spite of high interest regime and credit squeeze, there is a lot of uncertainty and apprehension whether the high growth trajectory would be sustained if the Government decides to hike the prices of petroleum products. The Government has so far resisted the pressure to increase prices of petroleum products for fear of its fueling inflation and for various other compulsions. However, it is becoming increasingly difficult for the Government to hold the price line as the crude prices, currently hovering around $95 per barrel, head towards $100 per barrel bleeding the oil companies. I am keeping my fingers crossed. Tardy pace of infrastructure development is another area of worry. Having said this, however, Indian economy has been able to stand up to numerous challenges and continues to march forward against odds, thanks to the continuing good performance of services and manufacturing sectors. Inflation dropped sharply to a low of 3.07 per cent due to a slow rise in prices of fruit, vegetables, and some manufactured products during the week ended September 6, 2007, having remained below 5 per cent for 18 weeks. Direct tax collections have registered a growth of over 40 per cent for the period 1st April to 15th October 2007. Indian growth story continues unabated. Standard and Poor has estimated the Indian economy to grow by 8.6 per cent for the FY 2007-08. It estimated that agriculture might grow at a higher rate 3.4 per cent; industry might slow down on account of higher interest rates at 9.2 per cent. Inflation is expected to end the year with an average of 5 per cent. The number of dollar millionaires, or high net worth individuals (HNI) in India has risen to 20.5 per cent taking the number above one lakh. A majority of Indian HNI are in the age group of 41-55 years. Strong growth in the HNI numbers was mainly due to the 8.8 per cent GDP growth in 2006, along with a satisfactory stock market. Reserve Bank of India's mid-term review of "Macroeconomic and Monetary Developments" for the year 2007-08 released in October, also points to the fact that the Indian economy continued to maintain strong growth momentum during the first quarter of 2007-08, underpinned by sustained performances of the manufacturing and services sectors. According to the estimates released by the Central Statistical Organisation (CSO) in August 2007, real GDP growth was 9.3 per cent during the first quarter of 2007-08 as compared with 9.6 per cent during the same period in 2006-07. Since the country has witnessed a good coverage of monsoon, there is no reason why a GDP growth of 9% cannot be attained. The continuing good performance of Indian economy portends well for the auto market. High interest rates that have been a major factor putting the brakes on growth and slowing down the market are showing no signs of softening. The credit availability crunch particularly for two-wheelers has compounded the problem. However, buoyant economy and rising income levels should help boost the auto sales. Slowly but surely, the signs of recovery are becoming visible. Regarding FADA's activities, as you would have read in the previous issue of FADA Journal, FADA's biggest biennial event, viz. Auto Summit 2008 is scheduled for 14th & 15th January 2008, coinciding with Auto Expo, at New Delhi. The programme of Summit is shaping up well. We expect, practically, all manufacturers to address and interact with the participants at the Summit. Top honchos of allied businesses are also expected to grace the occasion, as also the senior Government officials, renowned economists, academia and management experts. We, in FADA, are indeed honoured that Mr Kamal Nath, Hon'ble Union Minister of Commerce, has kindly consented to inaugurate the Summit and to deliver the Inaugural address. My sincere thanks and gratitude to him and other distinguished speakers and panellists who have sent in their confirmation. The logistics for the Summit are being organised. We have received an encouraging response from the sponsors, which I gratefully acknowledge. The previous four Summits were a grand success and created a tremendous awakening in the areas of customer satisfaction, viability, marketing, relationship management, etc. The Summits also helped in sensitising various stakeholders on various issues of concern to retail automobile trade and automobile workshop operations. The 5th Summit is being mounted on an equally grand scale. We have changed the format of programme inasmuch it will be more interactive as reflected by three separate interactive sessions on two-wheelers, passenger cars and commercial vehicles planned as a part of the 2-day programme. I appeal to my fellow dealers and my friends in allied businesses to make most of this opportunity and participate in large numbers. Registration form and programme details have been sent by post and are also published elsewhere in this issue. In spite of the fact that the hotel and other costs have risen steeply, we have kept the registration fee low with a view to enlisting the maximum participation and making the deliberations meaningful and representing the views of various segments of auto market across the country. This is an occasion not to be missed. We are also in the process of inducting more members into Council of FADA and constituting various Committees so that the activities are carried on in structured and systematic manner with each committee focussing on specific agenda. Any member willing to contribute in the activities of FADA and promoting the interest of automobile dealer fraternity is welcome. I seek your support and cooperation in further strengthening various activities and steering FADA to newer heights. Please feel free to give your suggestions and inputs. With best wishes, Yours sincerely, Pradip R Kamdar