Home Promising Future for Confident Automotive Sector   The galaxy of speakers comprising the Union Minister of Road Transport & Highways, industry leaders, professionals and management consultants present at the Auto Summit 2004 were of the unanimous view that the Indian automotive industry was poised for a big leap forward. Auto Summit 2004 - the 3rd All India Convention of Automobile Dealers was held on 17th January 2004 at Hotel Taj Palace, New Delhi, which attracted around 800 delegates representing automobile dealerships, automotive industry and others connected with automotive business. In his address as the Chief Guest at the Inaugural Session, Major General B C Khanduri,Union Minister of Road Transport & Highways said that the National Highway Development Programme was estimated to cost about Rs. 58,000/-. The total expenditure on various road projects undertaken by the Central Government would entail a whopping amount of Rs. 98,000/-. "From 1947 to 1997, India built 556 kilometres of 4-lane roads, or around 11 kms every year, we are now building 11 kms daily, spending Rs. 40/- to 50 crores every day. No project of this magnitude and scale has ever been attempted earlier. National highways are not only arteries of the economy, but also the backbone for cultural exchange, social quality, national unity and integrity. The Golden Quadrilateral project when completed will result in a saving of Rs. 8,000/- per year for the road users by way of faster commutation, time savings, better fuel efficiency & productivity and averting damage to the vehicles," he added. Major General Khanduri pointed out that the massive road infrastructure development has led to all-round growth, including the growth of auto sector. He was confident that the Indian manufacturers would now take to making world-class vehicles comparable to the best in the world, which was otherwise a constraint due to poor road conditions obtaining in India. Earlier welcoming the participants, Mr Vinay Nevatia, Chairman, Convention, FADA noted that from the last two Auto Summits, automobile dealer fraternity had gained profusely from partnerships between all sectors that move the wheels, i.e. the manufacturers, the government, allied industries, services sectors and above all the customers. Experience confirms, come what may, synergetic relationships has to be made a way of life in order to achieve maximum benefit for individual dealers and the industry as a whole. 21st century will accelerate the trend of making the lifecycle of products and services shorter while making the sales cycle longer and complex. Consumers would become less loyal to a particular product or brand or service. For this new tribe, words, like, pedigree, faith, benevolence etc. will be replaced by the slogan, profit. Yet, there will still be a paramount need of a stable partnership. There is a need to feed the system with human values, because at the end of the day both the seller and the buyer are and will remain human beings. Mr Deshnidhi Kasliwal, President FADA, in his address said that 'Consolidation of Partnerships and carrying them forward', seemed to be the only way to forge ahead and to meet the threats & challenges facing all of us today and fresh challenges emerging on the horizon. In spite of the all-pervasive 'feel good' factor present today, all vehicle manufacturers and automobile dealers inter se are vying with each other in wooing the customer and the competition is getting more intense with each passing day. All stakeholders in automotive business chain are feeling the need for partnership, as the inter-dependence is becoming the order of the day. Speaking on the role and activities of FADA, Mr Kasliwal pointed out that FADA was alive to the issue of dealer viability in this competitive environment and had taken a number of measures, including the starting of B2B section in FADA Website; credit card mechanism for vendor suppliers to dealers; negotiations with oil companies for lube oil requirements of Automobile Dealers at competitive rates, etc. Mr Jagdish Khattar, President SIAM and MD, Maruti Udyog, in his keynote address underlined the importance of automotive industry in terms of its weightage in GDP; its contribution to the Central & State kitties by way of various forms of revenue; its far-reaching backward and forward linkages; and its potential for employment generation and as a spearhead of modernisation & growth of other sectors. In this context, he noted that 70 to 80% of the inputs that go into the making of a passenger car are sourced from outside including small scale and middle level industry. Mr Khattar opined that India was on the threshold of global recognition and set to become a manufacturing hub. He visualised a tremendous opportunity for all players in automotive business, as the present passenger car penetration at six per thousand is one of the lowest in the world and even below 12 cars per thousand in Sri Lanka and Pakistan. He pointed out that the happy coincidence of four drivers of the growth of passenger car industry, namely, easy availability of cheap finance, lower taxes, infrastructure development, and overall growth trend in economy was happening in India. He interpreted the theme of Summit - "Consolidating Relationships" as "Traveling together on the path of opportunity, on the path of growth and on the path of global recognition". He lauded FADA's proposal of adopting a Code of Ethics for the automobile dealers, who, he said, were doing a commendable job of community development. Mr R Gopalakrishnan, Executive Director, Tata Sons Ltd exhorted the players in automotive business chain not to be complacent and be always prepared to cope with downturn. He said that straight line is not the common pattern but an exception. He advised automobile dealers to look beyond business and pay equal attention to their social obligations. Mr R Seshasayee, MD, Ahok Leyland, said that challenges of liberalisation and globalisation, coupled with cyclic booms and busts, had been a blessing in disguise and resulted in the change of mood and mindset of Indian industry so much so that the Indian industry had started feeling that it could conquer the world. With commoditisation of products resulting from intense competition, he saw tough task ahead for automobile dealerships in terms of understanding the needs of customer, product differentiation and adding value to their customers. An important issue raised by Mr Seshasayee was that dealers must look beyond domestic territories and attempt at setting up dealerships abroad. Mr R C Bhargava, Director, Maruti Udyog and CEO, RCB Consulting - a consulting firm, speaking at the Concluding Session painted a rosy picture of the road ahead. He said that good monsoon; falling interest rates leading to cheaper finance availability; continuation of reform process, albeit at a slow pace; and improvement in international relations, including relations with Pakistan, which had given confidence to foreign investors, were some of the main factors driving growth. He felt that after the completion of impending elections, the reform process was likely to get a big push, which would further spur the growth. Ms Rama Bijapurkar, a Market Strategy Consultant at the Business Session II on Consolidate for Competitiveness noted that, with road connectivity increasing by leaps and bounds, increasing commercial activities, rising income & aspiration 'levels and public transport system being as poor as ever, the demand for private vehicles was on the rise and it was here to stay. Demand was also rising due to competitive prices, variety of choices and easy finance availability. However, she sounded a note of caution, saying that every silver cloud has a dark lining. Today, we have more of a common man and demanding customer. Also, we have more dealers per company, which is leading to fierce competition at the dealer level resulting in margin squeeze through a variety of ways. Customers want more but at lower price, manufacturers are investing less but expect more from dealers, dealers are expected to invest more to tackle the complexity of trade. Added to that, there are bigger players who play the price-volume game resulting in margin squeeze for the small ones trying to keep up with the Jones. This enhanced competition is resulting in a major transformation at the industry level. As observed by Mckinsey & Booze Allen Research, "The transformation of the business of selling cars and trucks is happening at an incredible pace-promising to change forever an industry noted for high cost, poor service and extremely unpleasant selling processes." The entire basis of competition has shifted from product to service relying heavily on total customer experience. It is important therefore to do some introspection today to avoid tomorrow's pain. Dealers must stop thinking about themselves just as an extended arm of the manufacturer, but as a customer owning services company in automotive space. Automotive dealers must create a strong services brand of their own and look at capturing value from the wide range of value pools available in the market, such as, used car business, car & 2-wheeler rentals, financing, insurance, driving classes and downstream services. This requires aggressive and innovative thinking on providing customers with total value package around benefit and cost bundles. Some thoughts must go into improving service quality by focusing on value for money for the customer in keeping with the image of company. Other eminent speakers at the Summit included: Mr Aditya Vij, President & MD, General Motor India; Dr V Sumantran, Executive Director, Tata Motors; Dr Amit Mitra, an economist and Secretary General, FICCI; Mr Lalit Suri, MP and President, Hotel Association of India; Dr Mohan Agarwal, Management Professor, California Polytechnic State University; Mr V Vaidyanathan, Sr General Manager & Head Retail Group, ICICI Bank; Mr Naveen Kshatriya, MD, Castrol India; Mr Gurmukh Singh, Management Consultant. As a precursor to the Auto Summit, FADA organized an Interactive Session on Dealer-Manufacturer Partnership a day earlier on 16th January 2004, which was moderated and chaired by Mr Madhur Bajaj, Vice President, SIAM and Vice Chairman, Bajaj Auto Ltd. Other representatives of manufacturers at this Interactive Session were: Mr K Saito, Director (Marketing & Sales), Maruti Udyog; Mr Ramesh Adige, Director, Fiat India; Mr Rajeev Chaba, COO, General Motor India; Mr Vinay Piparsania, Vice President (External Affairs), Ford India - representing 4-wheeler segment; and Ms Sulajja Firodia Motwani, Jt Managing Director, Kinetic Engineering; Mr S K Taneja, Executive Director, Yamaha Motor India; Mr Deepak Mokashi, General Manager (Sales) - representing 2-wheeler segment. Mr Murad Ali Baig and Mr Adil Jal Darukhanawala, both eminent auto journalists and analysts represented the media. The interaction was quite lively and helped in clarifying various queries raised by the automobile dealers. The Summit was a grand success in that around 800 participants from across the country had quite an educative and enriching experience through interaction with wide spectrum of speakers, including industry leaders, CEOs of allied businesses, internationally renowned Management Consultants and the Union Minister of Road Transport & Highways, spanning over two days. In a run-up to Auto Summit, FADA, had also organized a Seminar on "Hazards of Night Driving" on 14th January 2004 at India Habitat Centre, New Delhi, in co-operation with Institute of Road Traffic Education (IRTE), Central Road Research Institute (CRRI) and Delhi Traffic Police. The distinguished speakers at the Seminar included Mr Qamar Ahmed, It Commissioner of Police (Traffic), Delhi; Prof P K Sikdar, Director, CRRI; and Mr Rohit Baluja, President, IRTE. Mr Qamar Ahmed dwelt on his experiences of vehicle traffic in Delhi and the causes resulting in accidents, while Prof P K Sikdar made a presentation on the importance of traffic engineering for road safety. Mr Baluja brought home through a film shot a few days earlier, the utter neglect on the part of various agencies and users in adhering to basic rules of road safety. He pointed out that Delhi loses 1800 precious lives every year due to road accidents. The grand finale of the Summit was the Cultural Evening with music & dance performance by the troupe of Krishna Kumar Kunath, popularly known as "KK", famous playback singer, who has lent his voice to some of the leading actors in musical hits of the decade, such as, Maachis, Devdas, Road, Humraaz, Dil Chahta Hai, etc.