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Aiming
New Heights Binod Agarwal, President Dear friends, At the outset, I regret to note the sad demise of Mr M Ct Muthiah, Past President, FADA on 18th September 2006. In his death, FADA, automobile dealer fraternity and the society have lost an illustrious businessman, a great human being, a mentor, a guide, a philosopher and a friend committed to the cause of retail automobile trade and social welfare. While sending our heartfelt condolences to the members of bereaved family, we pray to the Almighty that the Departed Soul may rest in an eternal peace. I convey my greetings and good wishes to all of you on the occasion of Navratris, Dussehra, Durga Puja, Diwali and Id-UI-Fitr. This is a long festive season in India marked by fun, frolic and gaiety. This is also a time when the people of India are on a spending spree, which means that apart from a lot of fun and celebrations, we also have a business opportunity for the industry and trade. I am sure, you must be having a good time with the increased tempo of sales activity. The sales trends of September typify the high spirit and upbeat mood of Indian industry, trade and consumer. All the segments of Indian automobile industry have witnessed a double-digit growth. The task on our hand is to consolidate and sustain the momentum, which should not be difficult in the backdrop of excellent run of Indian economy for the fourth consecutive year. If the latest data released recently by CSO is anything to go by, India is poised to attain 8%+ GDP growth in the current fiscal. The GDP growth at 8.9% in the first quarter is not only better than the 8.5% recorded during April-June 2005, it is also the highest first quarter growth since 2000-01. Small wonder, automobile sales continue to maintain their upward movement. I am sure, the scenario is going to get better and we should expect the sales to change gear and move into overdrive in the remainder of the year. The trend of rising global petroleum prices - one of the major concerns of industry and, for that matter, Indian economy in an otherwise buoyant scenario, is showing sign of reversal. The crude prices have, of late, started moving southward to reach .below $60 per barrel. The industry, oil companies, consumers and the Government are certainly heaving a sigh of relief to see the downward trend of crude prices that were threatening to fuel inflation and jeopardise all growth projections. However, we need not be euphoric as uncertainty over oil prices continues to loom. India, being dependent on imports for 70% of its petroleum requirements, can ill-afford an oil shock at this stage when the economy is firmly on fast track. It is heartening to note that long stride made by the Indian automotive industry - be it growth rates, localisation, technology upgradation, management practices, cost competitiveness, or exports - is being taken note of by the Government. The draft Automotive Mission Plan (AMP) 2016 brought out by the Government is an evidence of the growing realisation that automotive industry has to play a vital role in the sustained growth of economy. The draft AMP envisions contribution of auto sector in the country's GDP going up from the current level of 5% to 10% and aims to make India a manufacturing & export hub for small cars, MUVs, two-wheelers and auto components by 2016. The AMP also identifies challenges and potential bumps on the road ahead, viz. quality management, manufacturing competitiveness and productivity, trained manpower availability, roads, power, rail & port infrastructure, emission and road safety, R&D, testing & design facilities, etc. There is no gainsaying that automobile retail trade and service industry comprising a network of 6,500 automobile dealers & their service stations engaged in sale, service/repair and spares of 2-Wheelers, Passenger Cars & MUVs, Commercial Vehicles including buses, trucks and off-road vehicles, and Tractors, is an essential link in automotive business and a significant stakeholder. This segment of automotive business has invested over Rs. 22,000 crores, provides direct employment to about 4,00,000 people and contributes around Rs. 25,000 crores by way of VAT, CST, service tax, road tax and other levies to the Central & State exchequers. Its spin-off on insurance, finance and oil sectors needs no reiteration. However, we find that the role and challenges of auto retail do not find a mention in the AMP. For example, there is no provision for automobile dealerships in the town planning of major cities. Automobile dealerships especially with 3-S facility comprising sales, service and spares under one roof as a composite activity can neither operate from commercial areas nor from industrial areas. Similarly, there is no law, which mandates manufacturer to provide service and spares for a reasonable time after the launch of a model of a vehicle. Currently, in case a manufacturer exits the business or stops production and supply of parts all of sudden, it is the dealers who have to bear the brunt of customers' wrath for non-provision of service and spares. The same way, the termination of relationship between a manufacturer and his dealer is a painful experience and results in disputes and litigation in addition to colossal waste of resources spent in creating dealership infrastructure and stocking inventory. There is a need to enact auto franchise laws as in the USA or otherwise govern the relationship, rights and duties of manufacturer, dealers and customers. There are host of other issues, such as, VAT on sale of pre-owned vehicles by the registered dealers in organised sector; streamlining the registration procedures; rationalising the registration fees & road taxes and bringing in uniformity across States; creating adequate, good quality roads and parking facilities within cities and towns; managing the condemned vehicles or the vehicles falling in disuse on completion of their useful life by way of some scrapping policy and norms, etc., which merit attention of the Government for sustainable growth of automotive industry, trade and other associated businesses. I am hopeful that the Government will afford FADA an opportunity of hearing and incorporate the challenges and recommendations concerning automobile retail trade and service industry before the final version of AMP 2016 is brought out. Automobile dealer fraternity is willing to pitch in and contribute its mite in our common objective to make Indian automobile industry a manufacturing powerhouse and global sourcing hub. I shall welcome your valuable inputs and suggestions. Wishing you a Very Happy, Productive & Prosperous Festive Season, Yours sincerely, Binod Agarwal |
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