An Year with Highs & Lows Pradip R Kamdar Dear friends, At the outset, my heartfelt sympathies for those families, who lost their near and dear ones and also for those who were injured in the dastardly terrorist attack in Delhi recently. I am sure, we, the people of India will stand up to the challenge and defeat the nefarious designs of the terrorists resolutely. I have completed one year in the office of President of this august organisation, which has been adorned by doyens of auto retail trade in the past. It is because of the painstaking efforts of these eminent personalities that FADA and automobile dealer fraternity today have come to be recognised as important stakeholder in the growth of automobile market in India. Hats off to them. When l took over last September, the automotive market was on a downward curve, a scenario not witnessed for the last 3-4 years. However, the things started to look up towards the end of previous year. Two-wheelers that had been the worst hit by the economic slowdown aided by the internal and external factors, bounced back with a decent performance as the new financial year ushered in. Car and commercial vehicle sales maintained steady growth for the first two months - April and May 2008 but started tapering off thereafter. The sales during the first two months promised a lot and rekindled a hope for turnaround of auto market only to downtrend from June 2008. Spiralling inflation brought about by rising crude oil and commodity prices worldwide has chiefly played the spoilsport for the economy and auto industry. In spite of monetary tightening measures adopted by the RBI, inflationary expectations are not subsiding. Although the inflation level has started to inch downward recently, it is too little to make any significant impact. The inflation sitting at over 12% currently is still well beyond the comfort zone. What is worrisome is that even the Government and economists do not see it climbing down to single-digit level before the end of this year. Attendant ills in the form of auto finance crunch and higher lending rates are squeezing demand on one hand and increasing the cost of dealership operations on the other. For automobile dealers, it is certainly not a position they would like to be in. The problem for automobile dealerships is that they cannot play around much with their cost structure, for, most of the expenditure under various heads of dealership operation is inelastic and cannot be reduced. As the market matures and grows, the number of models and their variants also increase. Dealerships have to have in their inventory all such models and variants, as also their spare parts. Similarly, in an intense competitive environment, marketing effort has to be sustained to keep the sales kicking. With increasing tempo of economic activity leading to growing urbanisation and tightening of environment & safety laws, the real estate and compliance costs continue to rise unabated. While the current scenario is not something to write home about, there are straws in the wind that send out positive signals. One, although the economy slowed down to 7.9% in the first quarter - the lowest growth rate since 2004, the investment-GDP ratio at 32.3% suggests that the investment activity is still quite buoyant. The industrial production is picking up as the quick estimates for the month of July 2008 indicate. Two, the international crude oil prices are on their downward spiral, having reached below $100/barrel from the peak of $147/barrel in July 2008, which is expected to softer the prices. Three, middle income households in India continue to grow, which portends well for two-wheeler and passenger car markets. Four, a bonanza awaits the Government employees in the form of higher salaries and arrears arising out of the implementation of the Sixth Pay Commission recommendations, which will lead to the increased spending. Industry leaders, experts and analysts remain buoyant on Indian automotive market in the medium and long terms, so do I. Looking back at the activities of FADA during the last one year, it gives me a sense of satisfaction that we have been able to maintain the pace of activities set in motion by the previous Council. The year witnessed the increased tempo of activity on international relations front. FADA's relations with National Automobile Dealers Association (NADA), our sister organisation in the USA got further strengthened with the visit of Mr Albert Gallegos, Director - International Affairs, NADA to India to participate at our Auto Summit 2008 held in January 2008. Besides, two delegations from France and Netherlands comprising automobile dealers in these countries visited India and had interaction with FADA. NADA has offered to organise a workshop on Indian auto industry at their next Annual Convention in January 2009. On the invitation of NADA, a delegation of FADA members would be participating at their Annual Convention in New Orleans. We had our mega biennial event, i.e. 5th Auto Summit in January 2008 at New Delhi coinciding with Auto Expo. It was heartening to see the overwhelming response of the Government authorities, leaders of industry & allied businesses, academia & experts, media and automobile dealer fraternity. The two-day convention witnessed engrossing deliberations on variety of issues of concern to the Government, the industry, the trade and the society at large. The issues affecting the auto retail, namely, manpower, customer satisfaction and sustaining growth & profitability formed the core of deliberations. The wide spectrum of speakers drawn from various fields provided wider perspective to the discussion. The Auto Summit has become an important platform for all stakeholders to mull and brainstorm the current & emerging scenario and to find ways and means of standing up to the challenges and tapping new opportunities for sustained growth of automotive business. It is also an occasion for automobile dealers from across the country to meet each other and share their experiences. I am grateful to the Minister of State for Industry, Dr Ashwani Kumar, our Chief Guest, who agreed to inaugurate the Auto Summit and to deliver the Inaugural Address. It is all the more gratifying that he acceded to our request at the last minute, as Mr Kamal Nath, Union Minister of Commerce & Industry, who was originally scheduled to inaugurate the Summit had to suddenly go to China as a part of the PM's delegation. I also acknowledge with thanks the support extended from time to time by other authorities in the Central & State Governments. My sincere thanks are due to Mr Ravi Kant, President, SIAM, Dr Pawan Goenka, Vice President, SIAM and other leaders of industry, who were always appreciative and responsive to the concerns of automobile dealers. I also thank Mr Dilip Chenoy, Director General and other officials of SIAM for their unstinted support to FADA's activities. It would not have been possible for me to carry forward the agenda effectively but for the support and cooperation of my colleagues in the Council. I owe a big 'thank you' to all members of the Council. My special thanks to past presidents, namely, Mr Surender Nath, Mr Ramesh Suri, Mr K P Jhunjhunwala, Mr Bharat Sanghvi, Mr Ravi Poddar, Mr Arun Sanghi, Mr Rakesh Jain, Mr Vinay Nevatia, Mr Kailash Gupta, Mr Ajit Chordia, Mr Deshnidhi Kasliwal, Mr Jayendra Kachalia and Mr Binod Agarwal, as also to my Vice President - Mr S P Shah, who stood by me and were always available with their support and guidance. I shall be failing in my duty if I do not acknowledge the support extended by FADA, Secretariat ably headed by Mr Gulshan Ahuja. The Secretariat always rose to the occasion in spite of heavy demand paced on them from time to time. Last but not the least, I am grateful to my fellow dealers and esteemed members of FADA spread over the country for having reposed their confidence in me and given me an opportunity to contribute my mite in furthering the objectives of FADA and interests of auto retail. I wish my worthy successor all the best and hope that under his stewardship, FADA will scale new peaks. Before signing off, I am happy to inform that FADA has its 44th Annual Session scheduled for 27th September 2008 at New Delhi. I express my gratitude to Mr M Takedagawa, President & CEO, Honda Siel Cars India Pvt Ltd, for having consented to be the Chief Guest on the occasion and to give us the benefit of his address. I am also thankful to Mr Nalin Mehta, CEO, Mahinda Renault and Mr Ankush Arora - our Guest Speakers, who have agreed to make presentation and to interact with the participants at the Annual Session. With best wishes, Yours sincerely, Pradip R Kamdar