Switching Gears
Pradip R Kamdar, President
Dear friends,
This is the first time I am writing this message as the President of this august body of automobile dealers.
I express my sincere thanks and gratitude to the members of Council for electing me as the President to steer the affairs of FADA for the next one year. I am also grateful to Past Presidents and automobile dealer fraternity for reposing their confidence in me.
As I start my innings in this exalted office, I am bit unnerved when I see the roll of honour. This office in the past has been adorned by the doyens of retail automobile trade with impeccable credentials, who set high standards of work ethics and led from front to take this organisation to newer heights. I am fortunate that most of these forerunners continue to be actively associated with this organisation. It gives me a sense of relief and makes my task easier as I can always count on their wisdom and guidance. I am also fortunate to have been an understudy to Mr Binod Agarwal, my predecessor for about two years, which provided me tons of experience. Being the Vice President for two years has given me an insight into the working of the organisation and the issues affecting the automobile dealer fraternity. I am hopeful that with the support, guidance and cooperation of these senior members, my colleagues in Council and you all, I shall prove equal to this onerous task.
It needs no reiteration that the dynamics of retail automobile trade are changing at alarmingly fast pace in the intense competitive scenario and old management techniques and tools are losing their relevance by the day. The new paradigm of automotive business, where competition and survival is the buzzword, has brought forth a host of challenges for automobile dealers.
The very viability of automobile dealerships is under severe stress. Customer expectations are getting sky-high on one hand, the manufacturers insist on world-class facilities at the showrooms and workshops, on the other. Compounding the problem is the shortage of trained manpower, with automobile dealerships, finance & insurance companies and retail sector vying to woo manpower with hefty compensation packages. While the costs of dealership operations are rising to alarming proportion, the sale margins are shrinking, as the competition intensifies with each passing day and the manufacturers come up with the promotional offers to retain and increase their market share.
There are a number of other challenges that have become a bugbear for automobile retail trade and service industry. As the land use laws stand today, the automobile dealerships with 3-S facility under one roof can operate neither from commercial areas nor from industrial areas. Similarly, incidence and cascading effect of various taxes account for over 50% of the price of vehicles in India. Multiplicity of taxes apart, these taxes on motor vehicles vary from State to State, adding to confusion and complexities in compliance.
Non-Uniformity in and complexity of procedures for registration of vehicles is another area of concern. The cumbersome procedure of taking the vehicles to RTOs for physical inspection not only delays the registration, it also adds to the problems of traffic congestion, air pollution and road safety. In addition, there is a risk of new vehicles getting damaged while being driven to and from RTOs. The system of registration of new vehicles by the automobile dealers has been running smoothly in Delhi for the last ten years and in Rajasthan for over three years now. The Maharashtra Government has also introduced the system recently on a selective basis. The system needs to be replicated all over the country. It will obviate unnecessary movement of unregistered new vehicles on roads, reduce the workload in the RTOs and ensure on-the-spot delivery of vehicles to the customers. A Win-Win for all!
Grey areas in service tax, sales tax on warranty parts, FBT and plethora of taxes at the local levels are the other major issues of concern to auto retail, which are impediments in the way of sustained growth.
FADA, as the apex organisation of automobile dealers, is alive to the major concerns of automobile dealer fraternity, and has initiated a number of in-house measures to help automobile dealerships tide over some of these challenges.
FADA has started a Helpline service with a view to clarifying members' queries on various issues, including the technical and procedural issues connected with registration of vehicles, taxes on motor vehicles, environment protection laws and a number of other laws applicable to automobile dealerships. This service has been a resounding success as reflected in the large number of queries received by FADA with regard to various matters connected with the dealership operations.
To address the problem of trained manpower in its own humble way, FADA set the training courses rolling in association with reputed institutes to train Service Supervisors, Spare Parts Supervisors and Sales Executives at select cities. Although the response has not been encouraging, we are open to extending the programme to other cities, if the local members come forward to associate with it.
Other major FADA initiatives, viz. G10 programme and undertaking a study of the business model of dealerships of different automobile companies are aimed at identifying the benchmarks in various areas of dealership operations and improving the dealer viability.
I intend to carry forward these initiatives with all seriousness and strengthen them further during the year ahead.
Needless to mention, the auto retail and service industry - having invested Rs. 22,000 crores, employing directly 4 lakh people and contributing significantly to the Central and State exchequers, is an important link in the value chain in the automotive business and a major segment of the organised retail sector. Spin-off of auto retail activity on finance, banking and insurance sectors needs no overemphasis.
The Government of India with the support of industry has come out with a vision document, namely, Automotive Mission Plan 2016. This document has been hailed as one of the well-researched, realistic documents in tune with the current buoyant mood. The AMP envisages the turnover of the auto industry to reach about $140 billion by 2016, thereby doubling its contribution to the country's GDP from 5.2% currently to 10.4%.
The AMP also visualises the passenger car market to reach over 4.00 million units and expect two-wheelers to sustain double-digit growth in the next 9 years. Such phenomenal growth will create additional 25 million jobs in automotive companies and in other parts of vehicle value chain such as servicing, repairs, sales and distribution chains.
While these figures are music to our ears, managing growth is a big challenge for all of us. When we talk of market growing threefold, it would mean dealership network would also have to be expanded to cater to the increased demand and wider customer base.
There are a host of challenges to be addressed if the targets contained in AMP are to be realised. The need of the hour is partnership among all stakeholders, including the government, the industry and the trade in taking India through the growth pang to become an automotive powerhouse in the global arena.
I would urge my fellow dealers to continue to provide their inputs and suggestions so that we are on the right track and are able to serve the interest of auto retail and service industry effectively.
With best wishes for the festive season,
Yours sincerely,
Pradip R Kamdar
|
