The world is experiencing one of the deepest recessions since the Great Depression in the 1930s owing to the novel coronavirus and India's GDP is expected to contract 9.6% in the fiscal year that started in March. However, India is likely to bounce back with an impressive 8.8% growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China’s projected growth rate of 8.2%, the IMF said in its latest ‘World Economic Outlook’ report. I am sure this cannot happen without Auto Sector firing from all cylinders as we contribute 8% to India’s GDP and 49% to Manufacturing GDP and hence I think that the worst is now behind us.
With the Government’s persistent effort to unlock India, the month of September continued to witness Automobile Registrations on a rise as compared to previous months. Passenger Vehicles for the first time saw positive growth coming back on YoY basis after 6 months. Tractor sales continued its dream run as Kharif sowing witnessed record progress of area covered till date when compared to last year. With good Rabi season resulting in good disposable income, rural market also saw its rub off effect on 2-Wheeler, small passenger vehicles and small commercial vehicles.
The month of October & November brings with itself the much awaited festival season of Navratri, Durga Puja & Diwali. With no more lockdown as announced by the Central Government, FADA anticipates a high growth period during these two months for Automobile Sales in India. With Banks and NBFCs also gearing up with various festival offers to woo retail customers, Auto Sales is expected to witness a renewed growth and may close at par with last year. Passenger vehicles and two wheelers are anticipated to lead the way.Also, Q3 is expected to be the best period for this financial year.
This coupled with steps announced by Hon’ble Finance Minister to stimulate consumer demand, including advance payment of a part of the wages of Central Government employees during the festival season and more capital spending will certainly help to bolster the pandemic-hit economy.
The government will also shore up investment by spending extra Rs 340 Cr on roads, ports and defence projects and offering Rs 12,000 Cr in interest-free 50-year loans to state governments for spending on infrastructure before March 31,2021 will be a boon for M&HCV segment which is reeling under pressure since more than 2 yrs now.
Coming to activities in FADA, for registration of BS 4 vehicles in Delhi-NCR, your association has filed an application in the Supreme Court to allow registration of vehicles which had been sold prior to March 31, 2020 and details of which had been uploaded on Vahan portal up to March 31, 2020. The matter is yet to be listed. We shall be keeping all informed regarding the progress in the matter.
In other states, where details of the BS IV vehicles had been uploaded on Vahan before April 1, 2020 there the registration process is now nearing completion. However, we understand from our State Chairpersons that in some States where Vahan portal was not operative between March 27-31, 2020 and due to which details of sold BS IV vehicles could not be uploaded, in such cases we are in consultation with our legal team to file a writ in SC. As soon as the data collection process is completed, we will file our petition.
Meanwhile, in many States dealers of particular OEMs are also taking an initiative by jointly approaching their respective OEMs to take back the unsold BS 4 vehicles lying in their inventory. Rest assured, FADA would do it’s best to help its members in most feasible manner.
Recently, another International Auto Manufacturer, Harley Davidson announced its sudden exit from the country and informed its channel partners regarding non-renewal of dealer agreement as it intended to exit India. When FADA was informed by its members, we immediately wrote to the Department of Heavy Industry and through the press highlighted that in the absence of proper guidelines/ Franchisee Protection laws, such sudden exits by the MNCs were becoming a norm inflicting huge financial loss on the dealers leading many to closure and job losses. It also erodes the trust in the minds of the customer which the dealership had worked hard to build.
To put a spoke in the sudden exits made by the OEM’s in future (Harley Davidson being the fourth to do so) and to safeguard , protect and provide a level playing field to our members- in line with what is being followed internationally, FADA has begun the work for introducing Franchisee Law in the country. To this end, FADA has already prepared a white paper and the same is getting vetted by its legal counsel so that the work for creating the draft law could begin immediately.
FADA has also started working on Model Dealer Agreement with its legal counsel which dealers may use as base paper at the time of signing/ renewing agreements with their principals. This model agreement is being drawn on the lines channel partners in other countries enjoy with their OEMs.
After successfully conducting 2020 FADA Covid Support Satisfaction Study, FADA plans to do larger surveys on Dealer Satisfaction Study & Customer Satisfaction Index and for these, steps are being initiated. These survey’s not only educate the dealers but also help the OEMs understand the customer and dealer pain points and also best practises which are being followed by their counterparts in the industry to keep both the customers and dealers satisfied.
Recently, I was invited by ACMA to attend their town hall meeting where 70-75 ACMA members participated including their 35 EC members. This is the first time FADA President was invited to ACMA town hall.Not letting the opportunity go, I shared with them retail industry’s perspective on Auto market for the upcoming festive season and our community’s major concerns. I also reiterated the need to send a joint representation by all 3 major auto stakeholders viz., SIAM, FADA & ACMA to highlight industry’s concern and measures that will help Auto Industry come out of this gloom.
To help strengthen FADA at grassroots levels, our Vice President - Mr Manish Raj Singhania &Treasurer - Mr Sai Giridhar along with the Secretariat are having continuous dialogues with State Chairperson for early appointment of Regional Directors, appointment of State Representative to the newly formed 2 Wheeler Vertical and for 100% implementation of faceless & paperless registration process in the States by educating them about the successful working of this in the state of Rajasthan. Soon, your State Chairpersons will be holding meetings with senior officials in the State Transport Department to have this system implemented making the entire system transparent and corruption free.
Friends, the 2W vertical has a peculiar problem of Multi Brand Outlets (MBO) which in many states is creating a problem for our 2W dealers. Under the aegis of our Secretary Mr C S Vigneshwar who is spear heading this initiative, I would like to appreciate the work done by our State Chairpersons especially Mr Rajavel from Tamil Nadu where RTOs are now raiding MBOs and vehicles are being seized. The RTOs are also suspending TC’s of dealers who are supplying such vehicles and even in many cases may even terminate the same. Work towards this direction is also starting in New Delhi and Gujarat under the leadership of Ms Garima Misra, State Chairperson - Delhi and Mr Pranav Shah, State Chairperson - Gujarat.
Though, we are making every effort to iron out dealer concerns, I look forward to hear from you what more FADA cando for strengthening the voice of dealer and helping the community earn the creditability and respect it so rightly deserves for contributing in Nation Building be it by way of paying taxes, providing employment, skilling and up-skilling work force near to their homes & making the customer feel comfortable and satisfied. Please feel free to write to me at email@example.com
While we hope for a good festive season this time around, I will like to put a word of caution here. With the current inventory full to the brim, please avoid building any further inventory as this may lead to a disastrous situation similar to last 2 festive seasons when sales were well below our expectations.
Wishing You, Your Team&Your Family a Very Happy & Prosperous Navratras
President – FADA