Back to Growth Path S P Shah, President Dear friends, Hope, you would have had a great festival season The September sales numbers come as a whiff of fresh air. Auto market had been in the rut for over a year. The fact that we are climbing back to the high growth trajectory is a matter of satisfaction for all of us in the auto business. The easing of credit crunch and softening of interest rates coupled with the improvement in consumer sentiment in consonance with the uptick in the economy is no doubt fuelling the growth. The banks, public sector banks in particular, shedding their apprehensions following the global financial meltdown last year, have come forward in a big way to finance auto purchases, for a refreshing change. I see the auto market to sustain its growth momentum in the remaining part of the current financial year. However, commercial vehicles while inching up the growth curve have yet to see the kind of buoyancy witnessed two years ago. Nevertheless, with industrial production, housing activity and infrastructure development picking up due largely to the stimulus packages rolled out by the Government, I am hopeful that commercial vehicles will also be driving in the fast lane very soon. My optimism also stems from the fact that inflation, creeping up slowly though, by and large remains benign and banks are flush with money. It means that we are going to have lower interest regime and greater finance availability in the times to come, although the credit offtake currently remains somewhat subdued. As the business confidence grows, we shall see far more disbursements from banks in not-too-distant future. The only concern is that in case the inflation assumes serious proportion the RBI may tighten the monetary policy. Prices of food and other essential items of daily use are already sitting very high and do not seem to be climbing down. Another cause of concern is that although the auto exports are rising, the exports on the whole have been witnessing decline for a year now, signalling that countries across the world, barring few, are yet to recover from the meltdown blues. With unemployment in the developed countries on the rise, more restrictions on outsourcing may be put in place by these countries, leading to uncertainty in job market in India. All said and done, there is no gainsaying that economic situation in India, as also the business confidence, is constantly improving. Multilateral agencies also rate India as one of the few countries that are doing reasonably well on economic front. According to the International Monetary Fund (IMF), the global economy is bouncing back from the slowdown blues and will clock a growth of 3.1 per cent in 2010. The rebound will be lead by emerging economies, especially China and India, which will grow at 9 per cent and 6.4 per cent respectively. Similarly, Asian Development Bank has revised upward its forecast regarding the growth of Indian economy made in March 2009 from 5% to 6% for the current fiscal. Adverting to FADA's activities since my previous column, new Council that took over on 29th August 2009 has got down to the business in right earnest. There was a feverish activity in the last one month. A FADA team met the Hon'ble Union Minister of Road Transport & Highways, Mr Kamal Nath to invite him to inaugurate the Auto Summit 2010. I am delighted to inform that Mr Kamal Nath has kindly consented to inaugurate the 6th Auto Summit and to deliver the inaugural address. We took this opportunity to take up with the Hon'ble Union Minister two important issues: (a) Introduction of periodic inspection & certification of private passenger cars on the lines of system prevailing in the UK and other developed countries; (b) Inclusion of FADA representative in the Committee constituted by the Union Ministry of Road Transport & Highways for reviewing and suggesting changes necessary in the Motor Vehicles Act and Central Motor Vehicle Rules in tune with the current & emerging needs. I am happy to inform that Mr Kamal Nath responded positively to both the suggestions. Since amendments in the Motor Vehicles Act/Central Motor Vehicle Rules providing for periodic inspection & certification of private passenger cars is likely to take time, as we all know that the Government machinery moves very slow, we have been having dialogue with other stakeholders for introduction of fitness regime for all categories of vehicles without waiting for the changes in law. I am happy to inform that one insurance company with which we had a dialogue has agreed to offer financial incentive in insurance premium in case of passenger cars that are certified by the automobile dealers for fitness on safety parameters. We propose to take up the matter with other insurance companies and also IRDA for fitness-linked insurance premium in the interest of clean environment and road safety. A team of FADA members also had a meeting with Mr Harjeet Singh, President, SAFE to discuss the ways and means of introducing fitness regime for passenger cars. It was suggested that automobile manufacturers and dealers should work together to give shape to the fitness regime. We intend to continue the discussion to make it a reality. We also held a meeting with the Transport Commissioner, Government of Maharashtra to take up with him the matter regarding registration of private vehicles at automobile dealerships as in force in Delhi, Rajasthan and MP. The Transport Commissioner assured that he would study the model 01 Goa where self-registration by automobile dealers has been implemented of late, for introduction in the State of Maharashtra. We are proposing to meet the Chairman and Executive Director of SBI on funding of the dealership infrastructure and working capital. Simultaneously, we are also working on scrappage incentive scheme, which has been highly successful and has fuelled the automotive demand in US and European countries. I am glad to inform that the programme of our biennial mega event, viz. Auto Summit 2010 scheduled for 8th & 9th January 2010 is shaping very well. We expect Government authorities, who-is-who of Indian automotive industry, renowned consultants, management gurus and top officials of the banks, finance and insurance companies to address and interact with us at the Summit. In addition, representatives of automobile dealers associations in the US, Russia and other countries are also expected to participate to make it a truly international event. I urge all my fellow dealers to avail this unique opportunity and participate in the Auto Summit 2010 in a big way. The programme and registration details and form are published elsewhere in this issue. Another important initiative of FADA is the institution of 'Dealer of the Year' Award in collaboration with 'Auto Monitor' magazine. The process has already begun with the dispatch of nomination forms, which my fellow dealers will be receiving very shortly from the Auto Monitor. I am looking forward to an overwhelming response and participation of automobile dealer fraternity in this competition. Selection will be made by a jury comprising the representatives of Auto Monitor and a management-consulting firm, who is acting as a knowledge partner and is involved in laying down the selection criteria and also the selection. The awards will be presented at a glittering ceremony on 8th January 2010 at New Delhi, as a part of the Auto Summit programme. Look forward to your inputs and suggestions. Yours sincerely, S P Shah