Sustaining Momentum S P Shah, President Dear friends, There has been a lot of action and excitement within FADA and auto market during the last month. Riding on festive spirit, auto market sustained its growth momentum of the previous 2-3 months, during the month of October 2009 as well. What is heartening is that commercial vehicles made a smart recovery after being down for over a year. Asian tigers, especially China and India, are helping the global economy drive back to growth track. While severe recession has gripped the world, India and China have been able to survive the worst economic and financial meltdown in the last seven decades. Data emanating from Europe and America are comforting for countries across the world including India. There is no room for complacency though, as the recovery signs are feeble and do not point to a definite revival. As far as India is concerned, RBI has estimated India's GDP at 6% with an upside bias in spite of vagaries of Monsoon and consequent fall in agriculture output. Similarly, CMIE has revised upward its earlier estimate of GDP growth from 6% to 6.5%. Uncertainty is gradually ebbing out and the business & consumer sentiment is constantly improving. This is good for the economy as a whole and automotive industry & retail trade in particular. However, we cannot rest on our laurels and sit back relaxed. Dark clouds are lurking on the horizon in form of rising inflation levels, particular in the case of food & other essential items of daily use. Likewise, petroleum, commodity and raw material prices are constantly on the rise. Although RBI has restrained itself in tweaking with the key rates in order not to rock the gradual recovery process, if inflation keeps rising unabated like it has done during the last few months, monetary tightening measures cannot be wished away. The Government's revenue has taken a big hit due to slowdown in the economy and stimulus packages rolled out in October and December last year. Reduction in excise duty as a part of the stimulus measures and lower imports due to subdued sentiment have led to a steep fall in the indirect tax collections. Faced with the revenue crunch, there are already reports of the Government winding down the sops announced in the stimulus packages. There are also reports of the public sector banks doing away with the special interest rates announced for vehicle loans, which can put a spanner in the growth of auto market. The saving grace is that the industrial production has been witnessing resurgence since July this year and is gradually moving towards high growth path once again. This portends well for the auto market in the short and medium runs. Coming to the activities of FADA since my previous message, we had a very hectic schedule throughout the month. FADA has sent a representation to SBI Chairman in response to the reports that SBI might increase the interest rates on vehicle loans, especially special interest rate of 8% on car loans offered by the bank. FADA has also submitted a comprehensive note on the changes required in the Motor Vehicles Act to make the legislation in tune with the current and emerging needs. Major suggestions made in the Memorandum submitted to the Union Ministry of Road Transport & Highways are: Periodic inspection & certification of all vehicles including personal vehicles; Delegating power of registration of new vehicles to automobile dealers and doing away with the requirement of physically taking vehicles to RTO before registration; Dispensing with the requirement of approval of new models by Transport Departments of various States; Uniformity in road tax across the country; Liberalisation of the provisions of registration commercial vehicles and trade certificates, etc. We held a regional meeting of automobile dealers at Nagpur recently at which about 30 automobile dealers were present. The meeting witnessed lively discussion. My advice to dealers present at the meeting was to organise automobile dealer fraternity at the local and regional levels. It needs no emphasis that regular meetings at the local and regional levels and sharing of ideas & experiences benefits everybody. There are over 170 Groups 20 within NADA. Each group comprising 20 automobile dealers meets regularly to exchange ideas & data. Best practices emerging from the discussion are identified as benchmarks for adoption and replication by other dealers. FADA has also taken initiative in the past to form such groups at different places in India. However, the response has not been encouraging. While members attended one or two meetings initially, there was a declining interest among members thereafter. As a result, the groups had to be discontinued for lack of interest and attendance. However, we are persisting with this initiative and would render all necessary support and help if automobile dealers are willing to form such groups at the local and regional levels. 249th meeting of FADA Council was held on 13th November 2009 at Mumbai. A day earlier, i.e., on 12th November, a team of FADA members held meetings with few banks and insurance companies. The meetings were very fruitful and helped a great deal in promoting a better understanding on tackling challenges and growing together in larger interest of sustained growth of all players in value chain. The meetings also helped in eliciting support for FADA's 6th Auto Summit in January 2010. Needless to mention, as the sales margins keep shrinking with each passing day, my fellow dealers have to pay increased attention to allied business opportunities to stay viable and profitable. It is, therefore, imperative that we engage with allied businesses to increase revenues from retail channel partners, viz., accessories, oil, paint, tyre companies, etc. This was a major outcome of the deliberations of Council at its recent meeting in Mumbai, in addition to the review of the progress of preparations for Auto Summit 2010. In view of the growing importance of allied business activities in the revenue model of automobile dealerships as strongly emphasised during the discussion at the Council Meeting, a separate workshop on the subject has been scheduled in the programme of Auto Summit 2010. I am happy to inform that the programme of FADA's mega biennial event - 6th Auto Summit 2010 scheduled for 8th & 9th January 2010 is shaping up very well. We had already received the confirmation of Hon'ble Union Minister of Road Transport & Highways - Mr Kamal Nath, who has kindly agreed to inaugurate the Summit and to deliver the inaugural address. We are overwhelmed by the response. The confirmations from other eminent speakers representing industry, allied businesses, renowned management consulting firms, and our sister organisations abroad are pouring in. There is an equally overwhelming response from various companies and organisations, which have committed their support to Auto Summit 2010 by way of their sponsorship and/or partnership with the event. We, in FADA, express our sincere thanks and gratitude to SIAM for associating with the Auto Summit 2010 as in the past. The Auto Summit offers a unique opportunity for automobile dealers and other stakeholders in auto business to enrich their experiences. I, therefore, urge my fellow dealers to participate at the Summit along with their senior managers and co-dealers of their city/ towns in large numbers to benefit from the enlightened deliberations likely to take place at the Summit. Last but not the least, my fellow dealers may be aware that Auto Monitor and FADA have jointly instituted annual awards to recognise and reward automobile dealers excelling in auto retail. The nomination forms have been despatched to all automobile dealers. Kindly arrange to send in your nomination positively. The last date for receipt of nominations has been extended up to 30th November 2009. While the competition is open to FADA members, automobile dealers who are not members of FADA can also send in their nominations. They should also send their application for membership paying the requisite membership fees for being considered for the award. Details are published elsewhere in this issue. Let us make this event a roaring success like Auto Summit. With best wishes, Yours sincerely, S P Shah