It is very disappointing to say that we have witnessed the worst festive season in last decade. Semi-conductor shortage which was already a full blown crises showed its true colours when in spite of an above healthy demand, we could not cater to customer’s need as SUV, Compact-SUV and luxury categories witnessed huge shortage of vehicles. On the other hand, entry level cars saw subdued demand as customers in this category continued to conserve money due to their families healthcare needs.
The 2W category continues to face the brunt of low sales with entry level category being the biggest spoilsport. The rural distress in retails coupled with frequent price hikes, triple digit fuel prices and customers conserving funds for healthcare emergencies kept the demand low. In fact, walk-in’s and customer inquiries were also ultra-lean during the said period.
In CV, while entry level and SCV’s have already grown post unlocking and due to intra city goods movement, M&HCV is now showing strength due to low base and infrastructure projects coming up in different states. Buses as a category is yet to see any revival in demand.
With normalcy returning in business, the 3W category has started to witness usual demand. This aided with extreme low base of last year, is also helping 3W post a healthy growth. It is noteworthy to mention that we are witnessing a tactical shift from ICE to EV’s as EV share in 3W has now crossed the 45% mark. This also shows that 3W is the first category which will see the fastest electrification.
Even though the festive period is now over, there is still a huge backlog of order in the PV segment. If PV OEMs are able to realign supply with demand, we can still see a good year end retail. 2W inventory levels have reached 40-45 days period and is a cause of great concern for all 2W Dealers. I hence request all 2W OEMs to work towards bringing down the inventory to 21 days. I also urge them to roll out attractive schemes for customers so that demand especially in the entry level category can be revived.
Coming to the activities of your Association, I had already mentioned earlier that we are working towards getting Auto Dealers Protection Act implemented and towards this FADA held a Press conference in New Delhi sometime back to create awareness about the important role played by our community in keeping India on the move and therefore the safety net, which it requires from the host of issues in Dealership Agreements that can be bucketed as following:
1. Lack of standardized duration of agreements and uncertain renewal mechanisms
2. Unfair termination and no exit clauses
3. Lack of support to Dealers for realising return on investments, including unclear repurchase obligations in case of an OEM exit and lack of consultation while appointing multiple Dealers in the same territory
4. Lack of clear indemnity provisions
5. Lack of flexibility for Dealers in taking business decisions - prohibition from selling competitor products, inability to procure accessories or consumables from outside the OEMs ambit and unreasonable sales targets which are often biased and non-transparent.
The issues mentioned above has adverse rippling effect on the customers, employees and dealer community.
We are at present having discussion with MP’s and MLAs and sensitizing them about the issues which we are facing with. We are also informing them about the lakhs of skilled employment which we generate at our Dealerships and workshops without displacing them from their home locations and the ill effect of dealership closing down and its impact on the employees and the customers. We are hopeful that with sustained push, we will be able to push our issues which will get heard at the highest levels. In this matter, I request for your support in aligning with influential people of our society who in turn will support our cause for a stable and more robust Auto Retail in India.
Friends, FADA is also working on a Model Dealer Agreement so that the agreement can be well balanced and it acts as a win-win for both the stakeholders. While we are at the last leg of its preparation, once done, we will run it past OEMs and sensitize them about all the necessary and legitimate changes which are required to be made in the OEM – Dealer Agreement.
I am happy to announce that FADA will be holding its 12th Auto Summit in February 2022. This time, the theme has been chosen as Auto Retail: Fit, Frugal and Future Ready. During the same event, we are also bringing the next edition of Dealership Excellence Awards viz FADA Awards 2021 which will recognise & reward the best Dealers in its category. The details of both are being worked out and I shall be sharing more as the program gets finalised. We will also inform you on the date when we open nominations for FADA Awards.
Friends, FADA has been taking delegation of its members to attend NADA Convention every year in the USA. This year, the NADA convention 2022 is being held in physical format at Las Vegas from Thursday, March 10, 2022 to Sunday March 13, 2022. I am happy to share that many of you have come forward and showed your interest to join the FADA Delegation and visit NADA Convention.
As the disruptions in Auto Retail is now at our face, EVs are already changing the way a Dealership needs to operate. In this regard, NADA 2022 will bring tons of learning for all of us. Please do join us as Auto Retail Industry in the US is ahead of India by at least 4-5 years and hence what is showcased at the convention is the future of automotive - the latest dealership strategies and emerging industry trends as well as the legal and regulatory updates which we all need to know.
Keeping abreast of changes helps us in day to day management of our businesses efficiently and profitably. Being FADA member you can avail special NADA Registration fee. Those interested may write to firstname.lastname@example.org to get the link for submitting consent form. Along with the convention, we are also planning Dealership visits so that we can get a first-hand experience on the best practises which our brothers in USA are doing.
As always, I look forward to your inputs, suggestions & whole hearted support in various initiatives which your Association has been taking to strengthen our fraternity.
Please take care and Happy Selling!