A Fresh Guard Nikunj Sanghi, President Dear friends, At the outset, I am grateful to FADA Council, Past Presidents and members at large for continuing to repose their faith in me by re-electing me as President of this august body for one more term. That casts an onerous responsibility on me to live up to your expectations. Having played the first innings with a sense of fulfilment, the second outing in the middle throws up a new challenge, especially with ever increasing expectations of automobile dealer fraternity. I take this opportunity to assure my fellow dealers that I shall put in my best to prove equal to the task entrusted to me, with your cooperation and support. It is a matter of satisfaction for me that we were able to sustain the increased tempo of activities during the year gone by. A regional summit of automobile dealers in Jaipur, a two-day motivational and orientation programme for the generation next, who are waiting in the wings to take over the mantle of managing their family dealerships, an engrossing workshop on strategic HR, 2nd edition of Automotive Dealership Excellence Awards (ADEA), formation of Automotive Skills Development Council (ASDC) with SIAM, ACMA and FADA as its Founder Members, and appointment of a consultant to guide FADA members on service tax issues and procedures, to my mind, were the highlights of the year. We also had the flipside in that we could not make a significant headway in some of the areas. Let me assure you, it was not because of the lack of intent or seriousness on our part. There were constraining factors, largely beyond our control, which impeded the progress of these activities in spite of our earnest endeavours. The case in point is the Vehicle Safety Inspection Programme for in-use passenger vehicles, which was undertaken by FADA jointly with SIAM and its offshoot SAFE. Some of the FADA members, who had agreed to set up Vehicle Safety Inspection Centres, did not show much interest subsequently. The support from other quarters was also found wanting. The formation of auto retail organisation at the global level, which we had set out to achieve, has also not made the desired progress. However, we have renewed our efforts that are expected to result in an international organisation of auto retail taking a concrete shape very shortly. The dealer viability and profitability is another matter, where FADA has not been able to make much progress at the Association level for the reason that manufacturers largely view it as a bilateral issue between OEMs and their dealers inter se. However, we, in FADA Council, have undertaken an exercise to do a comparative study of revenue and profitability models of different franchises within various segments of auto market. It would arm FADA with facts and figures to highlight the issue cogently at various forums. The problem we face is that while most of the members vociferously talk about the declining profitability of automobile dealerships, when it comes to giving or sharing the data with FADA, there is indifference on their part. Only a tiny fraction of automobile dealers show interest and respond to the questionnaire sent by FADA. We cannot have a cake and eat too. My fellow dealers must come forward to give information as and when sought. FADA is nothing but a body of automobile dealers. We can achieve positive results only if the members actively participate. Sale margins and exit policy, to my mind, are the core issues and will continue to be high on our agenda during the next one year. There are host of other issues at the local & State level, which bedevil the automobile dealers day in and day out. In particular, cumbersome vehicle registration procedure is a cause of concern for most of the automobile dealers I have interacted with in the last few years during my visit to various places. Similarly, taxes on motor vehicles are not only abnormally high but also vary from State to State, which not only stifle the growth but also lead to undue diversion of trade from one State to another and unhealthy practices. We, in FADA, have been emphasising a uniform, rational tax regime for motor vehicles - be it road tax, VAT or any other tax, in our meetings with SIAM and Government authorities. We shall continue our endeavours in this regard. I am hopeful that with the introduction of GST, most of the anomalies and tax related concerns would get addressed. I remain optimistic that the GST regime will see the light of the day and kick in from 1st April 2012 as proposed. Another priority area for me as President and new Council is to reach out to and engage with FADA members spread across the country. Keeping in view the size and geographical spread of India, it is a gigantic task. I am, therefore, of the view that regional associations of automobile dealers at various places must be strengthened. You will kindly appreciate that it is well nigh impossible for FADA office bearers to visit each and every town and city. These local associations can act as link between FADA and its members all over India. We would also like to involve the younger generation of automobile dealers in the affairs of FADA. That was precisely the idea we had organised an exclusive programme for young automobile dealers at Aamby Valley in December last year. One of the objectives of the programme was to initiate the younger automobile dealers into the activities of FADA and prepare them for the leadership role within FADA in the future. We plan to organise more such programmes during the year. There is no gainsaying that FADA has made long strides since its inception in 1964. However, I do realise that a lot more needs to be done to make FADA more meaningful to its constituents and to secure due recognition for the significant contribution made by auto retail in the growth & development of automobile industry, in particular, and the national economy, in general. To sustain the increased pace of activities and to secure the recognition for the auto retail, it is important and necessary that FADA is further strengthened financially and in terms of its membership base. I, therefore, seek your support, among other things, in bringing more automobile dealers into membership strength of FADA. I am sure, with the kind of respect you command and influence you have, all automobile dealers in your area will become members of FADA, if you personally approach them. Two immediate events that are engaging our attention at the moment are: (a) Auto Summit 2012 and Automotive Dealership Excellence Awards (ADEA 2011). Preparations are afoot in right earnest to mount these events at grand scale. The details of Auto Summit 2012 and ADEA 2011 are published elsewhere in this issue. I appeal to my fellow dealers to participate overwhelmingly in these two major events of FADA. As regards the auto market scenario, the going so far in this financial year has not been something to rave about. The passenger vehicle segment, in particular, has been hit hard by the hike in interest rates and fuel prices. In spite of the apex bank single-mindedly waging a war to combat stubborn high inflation by way of monetary tightening from time to time since March 2010, the inflation is showing no signs of softening. What is worrisome is that the inflation has started inching up again after a brief downward movement and is threatening to breach 10% barrier. On the other hand, the index of industrial production is witnessing a rollercoaster ride. The industrial production figures released of late are not comforting either. The recent increase in petrol price by over Rs. 3 and repo rate by 25 bps is yet another blow to the market sentiment. The auto market was banking on the ensuing festive season and the number of new offerings on the anvil to revive the demand. However, the fact that IIP grew by just 3.3% in July comes as a dampener and can put paid to our hopes. The cold comfort is that the economists, by and large, are not reading too much in the depressing industrial production numbers, due to volatility and wild fluctuations in capital goods output. However, even after excluding capital goods output numbers, the growth of industrial production at about 5.8% does not make an enthusing reading. While industrial output during the month of July 2011 does not boast of flattering numbers and the inflation continues to be the bugbear of business and common man alike, I am still hopeful that on the back of good monsoon and new launches, passenger vehicle sales will rebound in the remaining part of this financial year. We shall nowhere be near the growth levels of the previous two years, though. Look forward to your inputs and guidance. With best wishes, Yours sincerely, Nikunj Sanghi