FADA Journal - December 2017

Office Bearers contents

President PRESIDENT’s MESSAGE 7 Strong Wholesales on Low Base of Previous Year

JOHN K PAUL INDUSTRY TRACK 8 November Brings Cheer to Auto Market
Popular Vehicles & Services Pvt Ltd
Kuttukaran Centre, Mamangalam, Kochi INDIAN ECONOMY 10 Macro Data Roundup - Gradual Growth Recovery;
Tel: +91-484-234 1134 / 7872 / 5013 Macro Stability in Check
E-mail: [email protected];
CONSUMER CASE STUDIES 12 NCDRC : Tata Engg & Locomotive Co. Ltd & Anr - Petitioner
[email protected] Versus
Niravbhai K Purohit - Respondent
Vice President
INSIGHT 15 Forecasting the Future of Auto Retailing
ASHISH KALE - Automotive News
Provincial Automobile Co. Ltd
Kingsway, Near Railway Station, Nagpur 18CRM Empowered People Engage Customers
Tel: +91-712-391 1129 / 1150 - MVS Prasad, Prashaste
E-mail: [email protected];
OPINION 23 GST Puts Heavy Commercial Vehicles in Fast Lane
[email protected] - CRISIL

CEO

SAHARSH DAMANI
Federation of Automobile Dealers Associations
805, Surya Kiran, 19, K G Marg, New Delhi
Tel: +91-11-6630 4852, 2332 0095
E-mail: [email protected]; [email protected]
Web: fada.in

ADVERTISERS’ INDEX UPGRADES & VARIANTS 35 • Hero Motocorp Unveils New Passion PRO, Passion XPRO and
Super Splendor
Back Cover
V E Commercial Vehicles • Bajaj Introduces 2018 Pulsar Black Pack Edition in India
60
Front Inside Cover
Tata Capital Financial Services NEWS BASKET 37 • Hyundai Next Gen VERNA Bags ‘ICOTY 2018’ Award
• Ford-HMDA Sign MoU to Explore Integrated Mobility Solutions
Back Inside Cover
Tata Motors 2 • Tata Motors Delivers First Batch of Tigor EV to EESL

• Mahindra Presents Petrol-Powered XUV500

3959 COMPETITION LAW Competition Law Updates - G R Bhatia

Inside Pages 3 NADA MUSINGS 40 Major developments affecting Automobile Industry in US
• Mahindra & Mahindra Financial Services 4
• AMPL 6 SURVEYS & STUDIES 43 Entertainment & Navigation Features Increasingly Drive
• Popular Vehicles & Services 42 Overall Vehicle Appeal, J D Power Finds
• Maurya Motors 42
• Prime Honda 45 FUEL WATCH 47 5 Oil Price Predictions for 2018 - OIL-PRICE.NET
• Marikar Group 46
• Satyam Centre of Professional Excellence 51 SALES REPORT 52 Vehicle Sales & Exports and Y-o-Y Growth - November 2017
• Carazoo Online Solutions 54
• Bagga Link 55
• Shriram Transport Finance 58
• United Group of Institutions

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Editor: G K Ahuja



President’s Strong Wholesales on Low Base of Previous Year
Message
Rural sentiments remain positive while new segments drive sales

Dear dealer colleagues,
The 286th council meeting of your Federation was held on 15th December 2017 along with second edition
of ‘Vyapar’ in the financial capital of the country, Mumbai. This time, apart from the Council Members,
newly appointed State Chairpersons were specially invited to voice their local concerns. This is in line
towards building F A D A a single point of contact for dealers in Automobile Retail Industry across the
length and breadth of the country. You would be happy to know that we are reigniting F A D A Academy
and Mr C S Vigneshwar, Anamallais Agencies, Coimbatore has been appointed as its Director. The
F A D A Academy programs will prepare current and future dealer leadership to build front end and
back end processes, improve customer and technical operations and enhance financial results of each
department of the dealership. To begin with, the academy will conduct 12 Knowledge Sessions across
the country in the next calendar year.
Vehicle ownership in India, which is estimated at 28 per 1,000 at the end of FY17, is near an inflection point, similar to that
seen in markets such as China, South Korea, and Japan in the past. Rapid growth in vehicle ownership in these countries was
supported by greater-than-8% growth in GDP, close to what we are seeing in India now. Thus, it is believed that India’s passenger
vehicle (PV) market is in the midst of a structural growth cycle and is likely to see a 12-14% CAGR over the next 5-10 years,
underpinned by 6-7% annual growth in GDP. Two-wheeler growth is likely to stay around a 10% CAGR, given higher ownership
levels. However, scooter growth could be much stronger at ~15-20% driven by rural preferences and a growing number of
working women. M&HCV growth is likely to remain strong (15% YoY in FY19) due to the enforcement of overloading restrictions
and improving industrial activity.
For the month of November, PV segment sales grew the fastest since July on the back of a low base effect caused due to last
year’s demonetization exercise. Total passenger vehicle sales grew 14.29% to 2.75 lakh units during the month, helped by a
44.6% rise in utility vehicle sales. Dispatches in the passenger car segment, however, increased by just 4.4% to 1.81 lakh units.
Reverting to initiatives of F A D A, I am happy to inform that the Federation along with its State Chapters have been sending
GST Representations at both Central and State level to make its voice heard. In fact, we are now being called by various
ministries which are keen to speak to us and understand our point of view. This shows that we are on the right path and I hope
that sooner or later we will be able resolve our GST issues.
Regarding recent guidelines by IRDAI on motor vehicle insurance, F A D A has been looking at various options. I must assure
that we will leave no stone unturned to resolve the concerns of dealer fraternity.
For the first time, F A D A in association with SIAM is organising Dealer’s Day on 8th Feb’18 exclusively for dealers on the first
day of Auto Expo. It will be a huge occasion to meet respective OEMs and discuss Auto Retail’s way forward. In line of Auto
Expo, F A D A has been organizing its biennial event “Auto Summit”. The forthcoming one on 9th Feb’18 will be the 10th Summit
and this time we will make it even larger with more than 1000 participants attending the same. The industry is now entering
the next orbit of development, where one will witness several groundbreaking technologies driven by regulatory initiatives
and standards. The fact that the future of automobile industry belongs to autonomous and e-mobility, this Summit’s theme
has been aptly selected as CONTROL OUR DESTINY. Along with the Summit, we are also organizing F A D A Awards, powered by
Autocar Professional. This is India’s only platform which recognizes and rewards the excellence in automotive retail. You are
hence requested to kindly nominate your dealership for this prestigious award as the last date for nominations is not far away.
Seeing the huge response and interest expressed by dealer fraternity, F A D A is taking a delegation of 50 plus dealers to attend
NADA 2018 Convention from 22-25 Mar’18 in Las Vegas. I strongly recommend that you attend the same and witness how the
future of auto retail is shaping up. For more details, please get in touch with F A D A Secretariat at [email protected].
By the time this issue reaches you, we will be embracing the year end festivities. I hope that this new year brings in best of
times for all of us at the Automobile Retail Industry.
With best wishes for the new year,
Yours sincerely

John K Paul

77 DDeecceemmbbeerr22001177

Industry Track November Brings Cheer to Auto Market

The Indian auto market maintained the same pace in The sought after small car portfolio of the company hit a rough
November that it had gained during the course of festive patch too. Sales of mini segment cars, including Alto and
season in October. The monthly auto sales report for WagonR, witnessed a 1.8% decline to 38,204 units during the
November 2017 saw Indian auto players post double-digit month under review from 38,886 units in November 2016.
growth numbers. Even the sales of company's flagship mid-sized sedan Ciaz fell
Commercial Vehicles, for instance, have witnessed a robust by 26.2% to 4,009 units during the month.
growth led by medium and heavy commercial vehicles. The Meanwhile, the compact segment of Maruti Suzuki featuring
Centre recently announced a number of infrastructure as well offerings like Swift, Estilo, Dzire and Baleno went on post
as road and highway projects to boost the economic growth, growth of 32.4% in November. Sales of company's utility
and the effect is clearly becoming visible. vehicles, including Gypsy, Grand Vitara, Ertiga, S-Cross and
Even in the passenger vehicle segment, several car makers compact SUV Vitara Brezza increased by 34.0% to 23,072 units
reported double-digit growth. in November, from 17,215 units in the same month of 2016.
GDP in the Q2 period, July to September 2017, also grown at Hyundai Motor India Ltd (HMIL) sold 44,008 units in domestic
6.3%, a positive indicator of the economy coming back to market during November 2017, up 10.0% (November 2016:
normalcy, especially after it plunged to 5.7% in Q1. This augurs 40,016 units). The company’s exports at 14,002 units during
well for the industry. the month, however, slow down by 18.0% y-o-y. Rakesh
The two-wheeler market, the bellwether of the rural economy Srivastava, Director - Sales & Mktg, HMIL, said “Hyundai
as well as urban demand, is also picking up. volume of 44,008 units is a growth of 10% with strong
While domestic sales saw healthy growth for all carmakers performance of the newly launched bestseller Next Gen Verna
active in India, exports seem to have taken a hit over the course along with GRAND i10, ELITE i20 and CRETA.”
of last month. Even Maruti Suzuki's export figures remained UV major, Mahindra & Mahindra was back in positive territory
grounded with meagre 0.8% growth rate. Toyota was the worst in November and registered domestic sales of 38,570 vehicles,
hit with exports falling by over 45.0% during November. growing by 18.0% vis-a-vis 32,564 vehicles a year ago. The
Contrastingly, Ford India was able to post over 36.0% growth company’s passenger vehicles segment (which includes UVs,
in exports, which is also the best by the company in India. Cars and Vans) sold 15,990 vehicles in November 2017, as
against 13,143 vehicles during November 2016, a growth of
Passenger Vehicles Sales Speeding Up 21.6%. In the M&HCV segment, M&M sold 792 vehicles for
the month, a growth of 122%. Exports for November 2017
The buzz is gradually getting back into the passenger vehicle stood at 2,531 vehicles, a de-growth of 6%.
(PV) market and the improved sales numbers in November Rajan Wadhera, President, Automotive Sector, M&M, said,
2017 are proof of that. "We are happy to be in a positive growth phase for November
Total passenger vehicle sales in domestic market at 275,417 2017, which is usually a lean period post the festive season.
units in November 2017 grew by 14.29% from 240,983 units Our passenger and small CV growth for the month of November
during the same month last year. have been very encouraging at 21% and 29% respectively, while
Maruti Suzuki India (MSI), which is aiming at a target of 2.0 the M&HCV segment continued to grow very well."
million unit sales annually by 2020, set the tone for passenger Riding on strong growth momentum of new generation cars,
vehicle sales momentum during the month. The company another home-grown player, Tata Motors sold 18,832
clocked a 14.0% uptick in its domestic passenger vehicle sales passenger vehicle, including cars, utility vehicles and vans in
that stood at 144,297 units in November 2017, compared to domestic market during November 2017, which marked a
126,220 units a year earlier. growth of 38.14%, vis-a-vis 13,633 units in November last year.

December 2017 8

DOMESTIC SALES GROWTH DURING NOVEMBER 2017 VIS-A-VIS NOVEMBER 2016

Industry Track

Honda Cars India Ltd (HCIL) clocked sale of 11,819 units in Y S Guleria, Sr VP - Sales & Mktg, HMSI, said, “Definitely
India, witnessing a strong growth of 47.2% in November 2017 demonetisation last November created a low base effect but
(November 2016: 8,029 units). The model-wise domestic sales the demand in November was visible. While the Activa legacy
break-up of HCIUL in November was as follows: WR-V - 3,521 goes, the new scooter Grazia ensured that excitement
units, City - 3,315 units, Jazz - 2,039 units, Amaze - 1,976 units, continue even after festival. Motorcycle sales momentum
BR-V - 793 units. was led by rural demand.”
Toyota Kirloskar Motor (TKM) sold a total of 12,734 units in TVS Motor registered growth of 11.1% with sales (including
the domestic market in November 2017, growing by 12.6% exports) increasing from 219,088 units in November 2016 to
(November 2016: 11,309 units). N Raja, Director & Sr VP, Sales 243,323 units in November 2017.
& Mktg, TKM said, “Toyota has sustained a positive growth The Pune-based bike maker, Bajaj Auto notched up 11.0%
since last three months. With maximum utilization of Plant 1 increase, selling 263,970 units in November.
and maintaining lean inventory, we are trying to reduce the Popular motorcycle manufacturer, Royal Enfield clocked 21.3%
waiting period of Innova and Fortuner for our customers.” uptick in its domestic sales that added up to 67,776 units in
Ford India reported a growth of 13.1% in domestic sales y-o- November this year (November 2016: 55,843 units).
y to 7,777 units in November 2017 compared to 6,876 units a Domestic sales of India Yamaha Motor at 52,455 units in
year ago. Anurag Mehrotra, President & MD, Ford India, said, Nov’17 were slugging vis-a-vis 51,106 units, a year ago.
“November was all about the new Ford EcoSport, which is Suzuki Motorcycle India Pvt Ltd (SMIPL) reported 37.2% rise
winning the hearts and minds of customers, not only with its in its total sales at 49,535 units in November as against 36,094
introductory price but the whole host of features.” units in the same month last year.
Renault India, clocked domestic sales of 7,800 units in
November 2017, witnessed a steep 18.78% decline from 9,604 M&HCVs assist CV sales on the road to recovery
units a year ago.
Likewise, Volkswagen India also registered a negative Commercial vehicles are back on the growth trajectory, with
percentage rate of 14.65% y-o-y to 3,426 units in November. a step up of 50.43% in domestic sales at 68,846 units in
November 2017 as compared to 45,767 units in November
Festivities continue into November for 2W 2016. M&HCVs contributed maximum to CV growth with the
sale of 28,459 units this month as compared to 17,499 units
The year 2017 is nearing its end. Two-wheeler OEMs had stellar in Nov’16. The segment grew by 62.63%. However, passenger
sales during the festive season and most of them carried the carriers in this segment have de-grown 23.17%.
positive momentum in the November sales as well. The total Tata Motors’ commercial vehicles sales in domestic market in
two-wheeler sales in domestic market rose by 23.5% to November 2017 were at 33,632 units, a growth of 71%
1,535,277 units from 1,243,246 units vis-a-viz November 2016. compared to 19,641 units in November 2016.
Hero MotoCorp Ltd (HMCL) registered six lakh-plus sales for Ashok Leyland posted a huge surge of 51% in November 2017
the seventh consecutive month this fiscal (FY’18). Hero with total sales of 14,457 units, compared to sales of 9,574
MotoCorp sales tally 605,270 units in the month of November vehicles in the same month last year.
2017, registering a growth of 26% over the corresponding Commercial vehicle sales of Mahindra & Mahindra (M&M)
month last year (November 2016: 479,856units). Driven by in the Indian market aggregated 15,554 units in November
HMCL’s iconic brands – Splendor, Passion, HF Deluxe, Glamour 2017 – up 22.3% y-o-y.
motorcycles and its range of scooters – Maestro Edge, Duet V E Commercial Vehicles sold 4,916 units in November 2017
and Pleasure, the company sold 525,224 units of motorcycles as compared to 3,176 units in November 2016, recording a
and 80,046 units of scooters in November 2017. growth of 54.8%. This includes 4,062 units of Eicher brand
Growing faster than industry, Honda Motorcycle and Scooter and 189 units of Volvo brand.
India’s domestic sales up 44.3% to 432,124 units in November With 80% of goods falling under the 12% and the 18%
2017 compared to 299,414 units in November 2016 while the brackets leading to a fall in prices, GST will enhance consumer
exports surged 6.14% to 27,667 units compared to 26,066 units buying power without real increase in incomes, spurring
in the same period last year. HMSI motorcycle sales grew 56% demand across sectors. It will yield ‘better value for money’
from 96,338 units in November 2016 to 150,606 units in this for car buyers, increasing automobile industry demand. The
year same month. The sales of HMSI scooter segment, led by Government and auto industry are combining their efforts
Activa and Grazia, clocked a healthy 39% increase to 281,744 to dispel any issues customers might face
units in November 2017.

9 December 2017

India Economics

Macro Data Roundup – Gradual Growth Key data releases (Nov-17 vs Oct’17)
Recovery; Macro Stability in Check
Current YoY Previous YoY
Growth indicators: External demand gathering
momentum IP* 2.2% 4.1%

• Industrial production: IP growth slowed in October Exports 30.5% -1.1%
partly on account of festival related holidays. The
monthly data tends to be volatile and therefore it is Imports 19.6% 7.6%
preferred to look at a three months trailing trend,
which has been on an improving path over the last Non-oil non-gold imports 22.6% 4.9%
three months.
Rabi sowing~ 1.0% -1.4%
• Export growth: Export growth accelerated to 30.5%
YoY in November 2017 after a contraction last month. CPI 4.9% 3.6%
While higher commodity prices have helped, non-
commodity export growth rose to the highest in last WPI 3.9% 3.6%
seven months.
CAD (US$bn) # 7.2 15.0
• Non-oil non-gold imports: Non-oil non-gold import
growth (as a proxy for domestic demand) accelerated Source: CEIC, GOI, F A D A Research
to a six month high of 22.6% in November 2017, with *IP current month is Oct’17 and previous is Sep’17
capital goods imports turning positive after two ~Rabi sowing current is for week of Dec 15, previous is week of Dec 8.
months of contraction. #CAD current is for QE Sep’17, previous is Jun’17.

• Rabi sowing area: Area under cultivation for winter Macro stability: Price stability worsened at the margin,
crop (Rabi) picked up pace, growing by 1% Year-over- external stability maintained
Year for week ended December 15. Area under • CPI: November CPI inflation accelerated to a 15 month
cultivation for wheat, which is the main Rabi crop,
saw a decline of 2% YoY while area under pulses rose high of 4.88% YoY. Inflation was expected to edge
by 9%. higher on back of vegetable price spike, however the
upside surprise was driven by a faster momentum in
core inflation, which rose to 5% in November.
• WPI: November WPI inflation accelerated to a 7
month high of 3.9% YoY versus 3.6% in October. The
rise was driven by higher food inflation (driven by
vegetables/eggs). Inflation in the non-food non-fuel
segment also rose.

December 2017 10

India Economics

• Trade deficit: Trade deficit was largely steady at US$ BJP has fared poorly in the rural areas in which it won 44
13.8bn (8.4% of GDP annualized) in November versus of the 98 rural seats in 2012. Encouragingly, the vote share
US$ 14bn (8.6% of GDP annualized) in October. of BJP rose to 49.2% from 48.3% in 2012; however, this is
still trailing the peak of the 2014 general elections.
• Current account deficit: Current account deficit
narrowed to US$ 7.2bn in quarter ended September State election calendar Current ruling party
2017 (1.2% of GDP) from US$ 15bn (2.5% of GDP) in Congress
quarter ended June 2017, helped by a lower trade Date State
deficit and higher services exports and transfers. Feb/Mar’18 Mizoram

Outlook Feb/Mar’18 Meghalaya Congress

• Gradual recovery keeping macro stability in check: It is Feb/Mar’18 Nagaland Naga People’s Front (NPP)
expected the growth recovery to gradually gather pace
and expect GDP growth at 7.2% in FY19 from 6.7% in Feb/Mar’18 Tripura CPI(M)
FY18. It is also expected that consumption, public capex
and exports to be the main drivers even as private capex Apr/May’18 Karnataka Congress
remains in repair mode. Inflation is expected to edge
higher until June 2018 (to ~5-5.5%), partly due to a low Nov/Dec’18 Madhya Pradesh BJP
base. It is also expected that RBI will keep rats on hold,
while incrementally sound more hawkish given the Nov/Dec’18 Chhattisgarh BJP
upside in near term inflations trajectory. It is believed
that a gradual growth recovery should keep inflations Nov/Dec’18 Rajasthan BJP
drivers in check, justifying a pause in rates.
Source: Election Commission, F A D A Research
Gujarat retained, what next?
• Urban voters still back BJP, demonetization and GST
seem to be non-issues: BJP maintained its stronghold
in urban areas, winning three fourth of the urban seats,
indicating that demonetization and GST have not swayed
voters away from them. Taking Surat as an example, as
it is dominated by small businesses most impacted by
demonetization and GST, BJP won 15 out of 16 seats.

• What does it imply for policy reform? Quieter times

ahead, focus to shift to rural: With the BJP winning both
the state elections in Gujarat and Himachal Pradesh,

political stability has to be reinforced. However, as the

winning margin has narrowed in Gujarat with a poor
showing in rural areas, it is expected that it is likely that

the government will focus more on the rural and the

agriculture sector with measures such as MSP prices for
more crops, buffer stocking for crops trading below MSP,

• BJP retained Gujarat and won in Himachal Pradesh: With public investment in agriculture mainly related to
state election campaigns dominating the political discourse storage facilities as well as having a greater focus on
in the last two months, the final results were at the lower implementation of rural infrastructure projects (rural

end of the exit polls. The election results for Gujarat are more road and rural affordable housing).

important, given that PM Modi hails from the state and • Focus back to key economic events over the next three
results were going to be analyzed in the backdrop of policy months: With the Gujarat election event no behind,
measures such as demonetization and GST implementation. focus should turn back to important economic events –

• BJP wins Gujarat with fewer seat margin compared with bank recapitalization, the union budged in February, GST
collections etc. It is likely that the government will focus
2012, with loss of seats in rural areas: BJP won 99 seats,
in the 2017 State Elections, lower than the tally of 115 more on implementation of announced reforms in FY19
seats won in 2012. Specifically, the results indicate that
rather than any other “Big Bang” announcements

11 December 2017

Consumer Case National Consumer Disputes Redressal Commission, New Delhi
Studies

Dr S M Kantikar, Presiding Member

M/s Tata Engg & Locomotive Co. Ltd and Anr (now Tata Motors Ltd) - Petitioners

Versus

Niravbhai K Purohit – Respondent

Revision Petition No. 1159 of 2010 Decided on 17.07.2017

(Against the Order dated 05.02.2010 in Appeal No. 1081/2008 of the State Commission Gujarat)

Consumer Protection Act, 1986 – Section 15, 17, 19 and 21 – Automobile Manufacturing Defect – District Forum allowed
complaint by relying upon expert opinion and directed OPs to pay cost of car with 8% interest alongwith Rs. 10,000 towards
mental agony and costs of Rs. 2,000 – District Forum also awarded Rs. 4,028 towards repairing expences – State Commission
dismissed appeal on ground that defect was not ordinary because problem was persisting despite service and replacement
of vital parts – Repairs conducted by OP were not Manufacturing Defects – Defects were cured whenever Complainant
approached dealer during warranty period – Inspection report also did not show any iota of evidence that there was
Manufacturing Defect and needs nay replacement of instant vehicle – Impugned order set aside and complaint dismissed.
(Paras 4, 5, 12 and 13)

Important Point

Ordinary defects in vehicle cannot be considered as Manufacturing Defects.

Order

1. Dr S M Kantikar, Presiding Member - This revision changed. On 18.4.2007, the engine oil filter, fuel filter,
petition has been filed under Section 21(b) of the ailment etc. were changed but there was no total
Consumer Protection Act, 1986 against the order improvement.
dated 5.2.2010 passed in First Appeal No. 1081 of 3. Thus, alleging Manufacturing Defects, Complainant
2008 by Gujarat State Consumer Disputes Redressal filed a complaint before the District Consumer Dispute
Commission (in short, ‘the State Commission’) Redressal Commission, Junagadh (herein after
whereby the State Commission dismissed the appeal. referred as District Forum). The complaint was
resisted by the OP before the District Forum by filing
2. The relevant facts for the disposal of the revision written version and denied the allegations.
petition are that the Complainant, Niravbhai K 4. The District Forum vide its order dated 8.8.2008
Purohit, purchased Tata Indigo LX II motor car on allowed the complaint by relying upon expert opinion
23.1.2007 from OP 1/ Tata Motors Ltd. It was alleged and directed OPs to pay the cost of the car i.e. Rs.
that soon after purchase and after run for the distance 5,12,380 with interest @8% p.a. alongwith Rs.10,000
of 201 kms., there was a problem of fuel meter, noise towards mental agony and costs of Rs. 2,000. The
in door of the car. The car was sent to OP 2-Jay Ganesh District Forum also awarded Rs.4,028 towards
Auto Centre for repair on 27.1.2007. Again, there was repairing expenses.
problem of gear shifting and reverse light. The car was 5. Aggrieved by the order of District Forum, the OPs
sent on 31.3.2007 to OP 2. After repair, car was preferred first appeal before Gujarat State Consumer
delivered to 07.3.2007 and it was stated to OP 2 about Dispute Redressal Commission, Ahmedabad (herein
the problem in fuel meter and odometer (speed), after referred as ‘the State Commission’). The State
which had to be changed along with fuel tank unit. commission dismissed the appeal on the ground that
On 19.3.2007, the Complainant was travelling to the defect was not ordinary because the problem was
Vadodara by his car. The car stopped in midway, which persisting despite service and replacement of vital
was taken to service center wherein the repair of the
timing belt of motor car and injection nozzle were

December 2017 12

Consumer Case Studies

parts. The State Commission also observed that within have failed to find out the negligence against the
four days from the date of purchase, the car was sent Petitioner. Hence, in absence of any evidence of
for repairs and within four months, the car was negligence, there was no question of granting
repaired 7 to 8 times. compensation.
6. Heard learned counsel for the parties. Learned 8. The rival arguments advanced by learned counsel for
counsel for the Petitioner, Aditya Narain vehemently the Complainant are that the car started problems
argued that the District Forum and the State after two days of purchase. It has visited the
Commission have ignored the warranty clause. There workshop of the dealer for 7-8 times within a span
were no inherent mechanical defects in the car. of six months. On 19.3.2007, the car had major
Learned counsel further submitted that the problems problems. It stopped on the highway while going on
alleged by the Complainant were duly carried out by a tour out of Gujarat. During second service also,
th e dealer. Th e defects canno t be termed as car had many problems and regarding necessary
Manufacturing Defects. The car was duly attended repairs, the Complainant informed OP No. 2 that it
at the workshop by the dealer to the fullest had problems of gear shifting, A/c air flow, clutch
satisfaction of the Complainant. Due to negligence of chattering, steering wheel vibration, tyre balancing
Complainant himself by using adulterated fuel, the and alignment, as mentioned in the complaint (at
vehicle developed alleged defects. Regarding the page 162). Due to such huge repairs, the
Manufacturing Defects, learned counsel relied upon Complainant was not willing to take the car from the
the judgments in Maruti Udyog Limited versus custody of OP No.2. Hence, since 14.5.2007, the car
Hasmukh Lakshmichand & Anr III (2009) CPJ 229 (NC) was in the custody of OP 2. The Complainant
and Classic Automobiles versus Lila Nand Mishra & abandoned the case because of it vehicle having
Anr I (2010) CPJ 235 (NC). The counsel further manufacturing defect since beginning. Hence, he
submitted that the fora below have failed to follow sought the replacement of vehicle with brand new
up the legal mandatory procedure of referring the one.
vehicle to independent expert agency in terms of 9. I have perused the warranty clause 2, it is stated that:
Section 13(1) (c) of the Consumer Protection Act, “2. Our obligation under this warranty shall be limited
1986. Thus, the fora below has clearly overlooked to repairing or replacing, free of charge, such parts
and ignored the terms of the warranty. The counsel of the car which, in our opinion, are defective, on the
submitted that the affidavit and cross examination of car being brought to us or to our dealers within the
Deepak Tiwari was not considered and it was wrongly period. The parts so repaired or replaced shall also
interpreted, who was an engineer (BE Mechanical). be warranted for quality and workmanship but such
The Complainant abandoned the vehicle and did not warranty shall be co-terminus with this original
take the delivery after repairs. The vehicle was warranty.”
extensively used, had covered 17,301 kms. between With respect to abandonment, learned counsel for
23.1.2007 to 14.5.2007, which means the vehicle ran the OP submitted that it amounts to negligence of
on an average 156 kms per day. Therefore, had there Complainant because the Complainant cannot judge
been a manufacturing defect would be a defect the on his own case and by abandoning the vehicle and
vehicle cannot function. not taking the delivery after the repairs, is guilty of
7. In this regard, the learned counsel relied upon Classic negligence. He relied upon the judgment in the case
Automobiles versus Lila Nand Mishra & Anr I (2010) of Manager, Premanchal Motors Pvt Ltd and Punjab
CPJ 235 (NC). Also, the counsel relied upon the Tractors Ltd through Manager versus Ramdas & Ors.
judgment of Hon’ble Supreme Court in the case of In that case, this Commission took a stern view on
Telco Ltd versus Gajanan Mandrekar AIR 1997 SC abandonment .
2774 wherein it has been held that extensive usage is “10. In our considered view, as an ordinary practice
one of the relevant factors to be considered in the such abandonment of a new vehicle soon after its
case of a consumer dispute for grant of damages and purchase or after repairs, at the premises of the
further that if the vehicle in dispute had been manufacturer or the dealer concerned, is not prudent
suffering from any kind of defect then the same could
not have been plied upto such an extensive mileage
of approx. 190 kms/day. Therefore, the lower fora

13 December 2017

Consumer Case Studies

conduct on the part of a consumer, even if the D Upadhyaya on 15th July 2010 at 3.00 pm at our Jai
consumer has justified grounds for serious Ganesh Auto Centre Workshop, Junagadh.”
dissatisfaction with the performance of the new 11. The Complainant expressed his inability to attend the
vehicle or even after its repairs. In the best of same. Therefore, the OP has made another attempt
circumstances, such abandonment is entirely to the and re-scheduled the date of inspection on 17.6.2010
disadvantage of the consumer for the vehicle can only at the same time and at the same place for the joint
deteriorate if left in the so-called care of an indifferent inspection of the vehicle by M D Upadhyaya. Even
dealer who too may have his own reasons to feel though, the Complainant was not present on the date
aggrieved that his repairs bills and garage charges of inspection. The vehicle was inspected by the
remain unpaid.” Surveyor on 17.7.2010 in presence of the Manager,
As per the order dated 26.3.2010, the Petitioner Customer Support of Tata Motors, Ahmedabad;
undertook to repair the vehicle, made the vehicle Manager, Jai Ganesh, Tata Dealer at Rajkot at
roadworthy and filed a certificate of roadworthiness Junagadh and submitted the inspection report.
and fitness from an independent automobile engineer 12. It is pertinent from the report that the vehicle had
that it was completely repaired and free from any run 17,597 kms. There was no oil leak from the
defect at the cost of the Petitioner itself. There was engine, gear box and rear axel. No damage to the
extensive usage of the vehicle. It transpired from the body paint. The chasis frame was found to be ‘OK’
speedometer that from 23.1.2007 to 14.5.2007, the and finally, he submitted the report :
vehicle had covered 7,301 kms. per day. In this context, “after inspection of the vehicle (lying since 24 month
this Commission in the case of Classic Automobile at Jai Ganesh Junagadh) and its components, I
versus Lila Nand Mishra I (2010) CPJ 235 (NC) held that observed that there is no defect noticed during test
“Manufacturing Defect would be a defect without drive of the said vehicle which may effect the
which a vehicle cannot function.” Also, the Hon’ble performance or running of the vehicle. As per my
Supreme Court in the case of Telco Ltd versus Gajanan experience of more than 30 years in Automobile field,
Mandrekar AIR 1997 SC 2774 observed that “extensive I do not find any defect which may be attributed as
usage is one of the relevant factors to be considered manufacturing defect in the vehicle. I hereby state,
in the case of a consumer dispute for grant of damages ppine and certify that the vehicle is absolutely in road
and further that the if the vehicle in dispute had been worthy condition and there is no defect found
suffering from any kind of defect then the same could existing, in the vehicle during course of my inspection
not have plied upto such an extensive mileage of at this juncture.
approx. 190 kms/day. Also, this Commission in its I state that the observation given above are solely
recent judgment in the case of Hyundai Motor India based on the Service Record, Complaints, Job Cards,
Limited versus Surbhi Gupta & Ors, RP No. 2854 of etc. made available to me from your end and physical
2014, was of the view that had there been some Inspection & Test Drive of the said vehicle and nothing
inherent Manufacturing Defect in the vehicle, it would has been suppressed and/or concealed with.”
not have been possible for the vehicle to run for about 13. On the basis of entirety and foregoing discussion, I
48,689 kms. for over a period of more than three and am of the view that repairs conducted by the OP were
a half years. not Manufacturing Defects. The defects were cured
10. This Commission on 26.3.2010 directed for the whenever the Complainant approached the dealer
inspection of the car in question by the registered during the warranty period. The inspection report
surveyor. Accordingly, OP wrote a letter dated also did not show any iota of evidence that there was
14.7.2010 to the Complainant stating as follows:- Manufacturing Defect and needs any replacement of
“Sub: Inspection of your vehicle number GJ11S 2800 the instant vehicle. Hence, relying upon the
Dear Mr Nirav Bhai Purohit, precedents of Hon’ble Supreme Court and this
We hereby inform you that as per the instruction of Commission, impugned order is hereby set aside and
Hon’ble National Commission we have arranged for consequently, dismiss the complaint.
the inspection of your car by registered Surveyor M
Revision Petition Allowed

December 2017 14

Automotive News

Forecasting the Future of Jamie LaReau and
Auto Retailing Hannah Lutz
of Automotive News

A new department - mobility - alongside parts, Service will remain an important part of the business.
service and F&I Dealerships will look quite different physically.
There will be fewer of them.
Dealers have been lulled asleep by the franchise model," says While there's no certainty that all of the predictions will come
one dealer principal. "Dealers have had the luxury of being true, it is certain that today's dealership model — based
reliant on the manufacturers to set the pace and to lead the primarily on selling one vehicle at a time to individuals and
charge." then servicing those cars and trucks - won't emerge unscathed
That's a recipe for failure in a future where the role and in a world of shared, autonomous, electrified vehicles.
business model for auto retailing change drastically — toward
mobility services and away from straightforward vehicle sales Here's what an industry observer may see in 2030.
— he warned.
"Dealers that will be successful will partner or lead" in New mobility
determining what the "future of retail looks like," he said.
The following predictions are based on interviews with dozens Autonomous vehicles started with long-haul trucks around
of dealers and other auto-retailing-related experts. Most spoke 2020. About 10 years later, self-driving cars dominate American
off the record. roadways.
There was broad agreement on several points: In this new world, some consumers want group leases on one
The sales and financing part of the business model will self-driving car to share or to buy monthly subscriptions that
change. allow them to switch from one kind of vehicle to another as
their needs change day to day. In addition, large fleets have
emerged, offering ride-hailing services to either their members
or the general public.

15 December 2017

Forecasting the Future of Auto Retailing

As those alternative ownership models have burgeoned, "There'll be more shared autonomous vehicles than
fewer and fewer consumers want to lock themselves into personally owned" ones, Cariss predicted. "You don't need
the high cost, limited daily choice and general hassle of to own one. They'll be very expensive, so they will be shared
private vehicle ownership, especially those living in metro and pooled. Based off all that, we said, 'Let's invest in a
markets. subscription company.'"
To be sure, dealerships for some performance and off-road Those who can afford to own a personal autonomous
brands linger, selling cars and trucks — and memberships vehicle pay one base price no matter which distribution
at private tracks where those buyers can get behind the center they buy it at, reflecting the almost identical vehicles
wheel — to a dwindling pool of individuals who like to ordered en masse by the large fleets. The idea of dickering
drive. over price is now antiquated, almost barbaric, a practice
of bygone times. Interior accessories are the major price
New business differentiators.
Also gone are third-party lead providers such as TrueCar
To stay in business, dealerships have had to reinvent Inc.
themselves, adding more products and services to their
portfolios. Dealerships that have survived added mobility Making money
to their stores as a separate department, alongside parts,
service and finance and insurance. Dealerships have Those dealers who shifted their thinking away from selling
become more independent. They still work with a tangible asset — a car or truck — as the primary means
automakers, but they've had to diversify. of profit thrived.
For the most part, the dealerships of 2030 are fleet Consider that the average transaction price of a vehicle was
management and distribution centers. They have the about $30,000 in 2017. That means in a year when 17
capital to invest in new tools and training for service million vehicles were sold, the auto industry was about a
technicians to adapt to electric, autonomous vehicles' $510 billion business.
service and maintenance requirements, as well as those of Not bad, but peanuts compared with what came when
rapidly proliferating drones. personal car ownership dwindled and subscription
For most dealerships, the business splits roughly into transportation plans ruled the day.
thirds. In 2017, AAA estimated the average car cost about 60.8
Mobility services account for about 30 per cent of revenue. cents a mile to drive. It also estimated there were 260
That includes fleet and subscription-plan management and million cars on the road traveling an average of 15,000 miles
services. Another 30 to 40 per cent is in service. a year. On a dollars per mile basis, that made the auto
The final 30 per cent or so comes from those consumers industry potentially a $2.37 trillion business, said Jim Press,
who own a personal vehicle but monetize it by renting it president of RML Automotive in Dallas and former president
out when they aren't using it, as some European car-sharing of Toyota Motor North America Inc.
companies did in the 2010s. The sale and service of those "That's the way the dealers of the future will look at the
vehicles most resembles the business model that auto industry," Press predicted.
retailers followed for a hundred years, but that model now
includes other revenue, depending on how involved the 'A gold mine'
dealership is in the in-vehicle data streams and content
sales related to those consumers. In 2017, Press started work on a plan to segue into fleet
ownership and management as RML prepared to become
Subscriptions more of a mobility company rather than a car-sales
operation. He decided RML eventually would make money
About 5 to 10 per cent of consumers opt for a ride-hailing selling subscription plans that allow consumers to hail a
subscription plan instead of buying a car. Holman car when they need one. RML would make more money
Automotive Group Inc., of Mount Laurel, N.J., partnered than it did under traditional car sales, Press forecast.
with Cox Automotive's vehicle-subscription platform "If my cost is $1 a mile and I can charge $1.10 a mile, there's
Flexdrive in 2017 based on its belief that people would gross in there. I can make a profit," said Press. "It doesn't
prefer to rent the use of a car over owning one at some matter if it's diesel or electric. It's all commerce."
point, said Bill Cariss, Holman's chief strategy officer.

December 2017 16

Forecasting the Future of Auto Retailing

Also, what about large numbers of consumers moving in Brick and mortar
and out of various vehicles all day, every day? That's a lot
of eyeballs. How do these consumers pass the time while Huge, shiny showrooms with OEM-mandated improvements
they are driven wherever they need to go? are extinct. Dealers no longer need those elaborate
"You can watch advertising, entertainment; you can plan showrooms to store vehicles; boutique showrooms, akin to
your vacation," predicted Press. "If I sell the service, it's my smartphone and cellular-service outlets of the 2010s, suffice.
subscription deal. Then I get a cut of that. If I signed up Cars flow in and out of the dealership for service or
with Dish, and that's in the car, that's my cut, too. It's a charging, none staying for long. Some dealerships are
gold mine." relatively empty throughout the day as their fleets drop
Indeed, Cariss forecast that dealers turned distribution- off and pick up consumers.
center owners would make a similar amount of money to Many urban dealerships have partnered with large auto-
what they did when they primarily sold cars. But the profits auction sites outside densely populated cities to store fleets
would be spread over a three- to five-year cycle, rather than of pods overnight. In the early hours of each morning, the
coming in one-off sales. autonomous pods leave the auction site and drive themselves
To get there, though, would require more scale, meaning to their home dealership or directly to the consumer's home.
"1,000 cars under subscription," Cariss estimated. Inside the smaller showrooms are fewer employees. The
"With the subscription companies now," he said, "the advances in technology mean the expected sales volume
dealer actually handles all of the pricing and puts their cars per salesperson has doubled from what it was in the mid-
on Flexdrive's subscription. We charge $179 a week for a 2010s, given faster transaction times.
Ford Fusion. [Out] of that, we have to maintain it for three "If you reduce the amount of time it takes to buy a car, the
or four years or whatever the service life is. The pricing is salesperson can be more productive," predicted Rick Ford,
passed back to the consumer." CEO of RFJ Auto Partners in Plano, Texas, which owns 24
dealerships. "So they will sell more units, but they will make
Service less per unit. They can still make the same amount of
money, but they have to sell more."
Service, long the most profitable part of a dealership, has
become increasingly important and therefore is monitored Consolidation
more closely.
Autonomous pods constantly cycle in and out of the While the number of dealership service centers has surged,
dealership, and their near-continuous use means their the number of smaller, particularly single-point, dealerships
mileage adds up — fast. The dealership must track the car has shrunk. Large dealership groups, such as AutoNation
and send it an alert when it needs service. The car then Inc. and Penske Automotive Group Inc., have expanded and
drives itself to the service bay. While much of the process acquired smaller groups and stand-alone dealerships.
is automated, service centers face an ongoing challenge in Through their acquisitions, they have added more service
scheduling service technicians to match the work, which is centers within a short radius to care for vehicles in their fleets.
done 24/7. In 2030, there are 2,250 fewer rooftops and 2,000 fewer
The service business is dominated by repairs and owners. Only those who understood the digital world,
maintenance to vehicles in the distribution center's own adapted to consumers' e-commerce preferences and
fleet, as well as other fleet management companies' delivered customer-centric service thrived. The rest sold
vehicles, more so than customer-pay work. or closed their stores.
The biggest risk to dealerships' profits, of course, has been Initially in that consolidation, buy-sell advisers and brokers
the electrification of vehicles. Electric vehicles require less saw their businesses spike. But ultimately, the buy-sell
service work, and the increase in over-the-air vehicle business withered.
software updates has reduced in-shop work. "There is no future for buy-sell brokers in the next 10 to 15
But distribution centers, which established themselves as years," predicted Sheldon Sandler, founder of buy-sell
the go-to place for drone maintenance and repair, have advisory service Bel Air Partners, in Hopewell, N.J.. "You
seen an ever-rising flow of revenue from that work. have to face reality. It's all I think about. Every car dealer
thinks they are immune to change, but the entire world is
going to change."

17 December 2017

Empowered People Engage
Customers

MVS Prasad
CEO & Founder

• Money that we invest in a business makes us the owner do. But knowing is not enough. What matters is the successful
• Neither money nor experience can make us a leader implementation of the plan by the team. The result is the
• Purpose, passion and perseverance with a commitment bottom line and not a great idea or intent. Here comes the
‘emotional intelligence’ which is an essential pre-requisite for
and sense of urgency form the core of leadership. a manager to drive implementation. People display
• Our knowledge and experience make us a manager tremendous sense of commitment and urgency, when they
“Leader knows the way, shows the way and walks the way.” are well understood and handled.
EMPOWER THE GENERALS. THEY WILL EMPOWER THE But are we looking at that?
SOLDIERS Are the managers groomed on the behavioral skills before they
In a typical dealership 10 managers drive the performance of are promoted or immediately after appointed?
200 people. Now every manager is a key stake holder in making This is the irony. I am aware of the challenge a dealership faces
things happen for the dealership. The teams will be as good in attracting and retaining talent. Be it in compensation, work
or bad as the managers. culture and career progression, dealerships are inadequately
A Manager ought to have functional and behavioural skills to placed to get professionals on board.
effectively handle the team and get the best out of them. The all-important HR function in most of the dealerships is
60% of the CEOs of Fortune 500 companies have more people restricted to attendance, leave, salary, issue of appointment
skills than business skills. letters and statutory compliances like PF, ESI, etc. HR in
Business skills are a factor of knowledge and experience. A dealerships works more like a personnel department. Low
seasoned functional manager knows what to do and how to productivity, high attrition and rising recruitment & training
costs stand testimony to the poor state of people management.

December 2017 18

Customer Relationship Management

Only when we accept ‘what is’, our mind is free to act and Therefore, it is critical for a dealership to establish the
create ‘what we want’. We need to be conscious of the fact behavioral and business competencies required across
that, given the limitation of fixed salaries that a dealership designations and functions. Interpersonal relationship, team
can afford to pay, we can’t get stars like Amitabh Bachchan, management and collaboration, personal effectiveness are
Kapil Dev and Rocket Singh in our system. But we have the some of the key behavioral skills needed by the managers to
option of putting in place right systems, processes and work effectively manage their teams and achieve the goals. Once
culture that would transform the ordinary people into stars. the required competencies are established, business and
If you believe that customer acquisition, retention and behavioural competencies of each employee should be
contribution are the keys to profitability, you are 100% right. mapped with the desired skills.
But it comes through your people only when you empower Competency mapping helps us in identifying the skill gaps of
them. Empowered people engage customers for life. each individual across the organization. This exercise is a pre-
requisite for enablement of people.
Empowerment Enablement
Enablement is making people master of their jobs. No human
Is at the core of human excellence. It brings spirit to the body. on the earth will go to his reporting manager and admit “I am
I often joke with my dealer brethren that we do the last thing not good in my work. Can you help me in improving my
first which is the root cause of high attrition, low productivity knowledge and skills?” Everyone is scared to talk about his
and poor quality. I am talking about ‘enforcement’ which is own inadequacies. It is our responsibility to identify the gaps
the last link in the implementation chain but more often than and fill the same through a robust learning and development
not used as the only means to achieve something worthwhile intervention.
by dealerships. Here I am not talking about the ritual of a stand-alone training
Enrollment program for 2 days in a year. The learning program has to be
Enforcement is dictating people what to do. Enforcement designed and customized with the right mix of holistic, relevant
means authority, commandment, rule, policy, compliance and and engaging content with an appropriate blend of learning
penalty. Enforcement is necessary and should be used to methods and mediums for the target group. Further there has
control when the vehicle is over speeding or moving wayward, to be a pre-program and post-program assessment followed
but not to get the vehicle started. An initiative gets started by a post-training implementation plan. The intervention
with enrollment and not enforcement. needs to create a balance between customized learning needs
Enrollment means alignment, involvement and harmony. of the individual and operational impact.
People perform at their best when they are provided with the Skill mapping and competency development are therefore
right perspective and clarity on how their role fits into the critical for the productivity and profitability of a dealership.
overall organizational vision. Enrollment also starts with ‘what’ Delegation
but doesn’t stop with ‘what’. It is about communicating to all After the assessment and enablement, delegation is the key
the stake holders: to empowering people with functional freedom and authority
• What needs to be done? - The initiative commensurate with accountability. It is a fundamental shift
• Why to be done? - The purpose of change from “I shall do everything myself’ to “I shall get it done by
• How to be done? - Solution comes from the collective my team”.
Delegation without assessment is risky. However, if the
wisdom of all the stake holders performance management system is strong and adequate,
• What are the benefits of doing? (For the customers, errors can be detected and rectified on time. Delegation
doesn’t mean giving away all the rights and powers of the
organization, managers and executives) company to an individual on a platter. It essentially means
Assessment that the dealership clearly defines designation wise authority
Assessment is the only way to know the skill levels of people. limits and puts in place a check and balance system through
Numbers may tell us what has been achieved by a person, surprise audits, daily MIS, maker and checker validation and
but do not highlight the competencies absent or inadequate tracking exceptions in real time. It is all about being tolerant
in that person for the role and responsibilities assigned by to a ‘margin of error’ and intolerant to ‘issues of attitude’.
the organization.

19 December 2017

Customer Relationship Management

Today most dealerships refrain from delegating to the next A mentor mentee framework wherein the weak is mentored
line, due to trust deficit or some bitter experience of the past. by the strong in a pre-defined time period needs to be
It is not because of delegation that you have suffered, but implemented at the dealership. Mentees will be motivated
because of delegating without setting up a robust performance by the support whereas mentors can be rewarded and
management system that shows the mirror every day. groomed for the next position. Successful mentors will be
Non-delegation clips our wings. It doesn’t let us fly high. promoted whenever there is an opportunity. This will mitigate
Motivation the age old problem of promoting a star sales executive as a
Performance differentiation is one of the major contributors team lead without assessing the skills required for that position
to productivity. Incentive is the best differentiator. Incentives and losing both.
are paid out of incremental revenues and hence don’t pinch Enforcement
the dealer pocket like the salaries do. People drawing similar Enrollment, assessment, enablement, delegation, motivation
salaries may get high or low incentives based on the individual and recognition may not achieve the desired results, unless it
performance. Motivation can be through an effective incentive is enforced through a strong performance management
structure and a transparent appraisal process. system which will measure, validate and monitor outcomes
Today many dealers complain about giving incentives despite with a review and feedback process. Enforcement should be
poor performance. The concept of incentives is designed with the last step and not the only means for implementation at
the intent that a company gives when it makes. There can’t the dealership.
be a situation where incentive cost as % of income goes up Implementation Roadblocks
and profit as a % of income comes down. Incentive is a double- Successful implementation is crucial for any new initiative.
edged weapon. It has to be used consciously to achieve However, implementation may get derailed because of the
business objectives and not to become a cost center. Some absence of any of the following:
Dealer Principals complain that despite lucrative incentive
schemes majority of the people are not qualifying. We should be aware of the potential barriers for
Any incentive scheme that doesn’t benefit majority of your implementation in order to identify the root of the problem
employees is no good and doesn’t achieve the purpose of and address it on time without blaming the people for non-
motivating people. Non-qualification for the incentive could implementation.
be due to unscientific targets or lack of skills to achieve the
targets. We are responsible for both the situations. Some of The Essence
the dealerships incentivize people only on numbers and not To get what you want, fulfil what people need.
on customer satisfaction which is the most important
parameter. Only penalties are levied on customer complaints. Because wants are individual and needs are universal.
Similarly, Net Retained Income, which is the key driver of
profitability doesn’t figure in the incentive parameters in most What people need
of the dealerships even for Team Leaders, managers.
Incentive structure needs to be built on Profitability, Safety Security Communication
Productivity and Customer satisfaction with appropriate Understanding
weightages for different parameters. Achievement Enablement Co-Operation
Profitability: Turnovers, Margins and Net Retained Income
Productivity: Volumes and Penetration Recognition & Reward
Customer Satisfaction: Employee wise CSI score
Recognition and Reward
Nothing works like peer pressure. Creating an environment
of peer competition through internal benchmarking is the
need of the hour. Internal benchmarking identifies the weak
and strong in each parameter and rewards the top
performers.

December 2017 20

Attention: 2018 India Dealer Satisfaction Study
Members

Dear Automobile Dealers,
We wish to inform that for the eighth consecutive year, J D Power Singapore Pte Ltd is conducting the Dealer Satisfaction
with Manufacturers of Passenger Vehicles, Two-Wheelers and Commercial Vehicle study among dealers in India in
association with the Federation of Automobile Dealers Associations of India (F A D A).
We invite you to kindly participate in this study in the interest of auto retail and automobile dealer fraternity.
As dealers, you have to work within a dynamic marketplace, where you may need the support and direction of your
OEMs (Principals/Manufacturers). The primary objective of the study is to measure your satisfaction with the OEM that
you represent so as to increase the quality of service and level of support that the OEMs can provide to you. In addition,
the study also examines your views on a variety of issues relevant to the automotive industry and the retail distribution
system, which are of importance to both manufacturers and dealers. Hence, your frank opinion is very valuable to this
study.
The study is an opportunity for you to share your opinions with automobile manufacturers’ top management, dealer
councils and board of directors. By participating in the survey, you will be taking a role in ensuring that manufacturers
hear the voice of the dealer.
This survey will be conducted through a telephonic interview and should take approximately 45 minutes to complete.
For questions requiring operational knowledge, you may consult with the appropriate staff members before answering
or pass on their name and contact details to the interviewers, who will contact them separately.
We would like to assure you that all information collected will be reported at an aggregate level. Individual dealer
information will be kept confidential and will NOT be released without prior approval.
The survey is being conducted by Kadence International on behalf of J D Power Singapore Pte Ltd. If you have any
questions, please send an email to: Jacqueline Teo at [email protected] or Anita Rao at [email protected]
Please note that the survey will be conducted in the months of January to March 2018. Your participation during this
period is greatly appreciated.

Engagement of GST Consultant

A GST consultant – Ms Puloma Dalal, FCA based in Mumbai, has been engaged by F A D A on retainership to help
members deal with the complexities of GST law and procedures. She will, on reference made by FADA, guide and give
legal opinion on various issues relating to GST as applicable to automobile dealers.

F A D A will forward the queries raised by members to Ms Puloma Dalal for her opinion.

While Ms Puloma Dalal will, essentially, give legal position and clarification, supported by case law, on various GST
issues raised by F A D A members, those wanting to engage her as counsel to fight their cases in litigation, will have to
pay separately as per terms that may be mutually agreed to.

Members seeking clarification or legal position relating to GST as relevant to automobile dealers, may send their
queries to Federation of Automobile Dealers Associations (F A D A), 804-805, Surya Kiran Building, 19, K G Marg, New
Delhi - 110 001 (E-mail ID: [email protected])

21 December 2017

Attention: Members

Government Circular on Unauthorised Fitment of Crash Guard /
Bull Bar on the Motor Vehicles

Ministry of Road Transport & Highways (MORTH) issued an advisory to all Principal Secretaries and Transport Commissioners
of all States/UT Administrations on December 7, 2017 stating that strict action be taken against any unauthorised fitment of
Crash guard/Bull bar on the Motor Vehicles.
In fact when F A D A office bearers met Abhay Damle, Joint Secretary, MORTH of December 13, 2017 they were informed that
for any unauthorised such fitment the dealer shall be penalised for Rs. 1 lakh per default per vehicle.
Below circular for information.

December 2017 22

Opinion

GST Puts Heavy Commercial CRISIL Research
Vehicles in the Fast Lane

Tonnage growth of large HCVs to be more than twice that of Moreover, larger, integrated logistics players are gaining
lighter counterparts traction which is also contributing to the shift.
Changes in the logistics industry driven by the Goods and In the first 8 months of this fiscal, large HCVs with gross vehicle
Services Tax (GST) will keep demand for large (>25 tonne) heavy weight (GVW) over 25 tonne saw growth of more than 45% in
commercial vehicles (HCVs) buoyant, with their tonnage tonnage compared with a decline of more than 10% for their
growth expected to be at 10% over the next 2-3 years lighter counterparts (<25 tons GVW).
compared to 3-4% growth foreseen for their lighter Binaifer Jehani, Director, CRISIL Research, said, “As hubs get
counterparts (<25 tonne). bigger, and more concentrated for a few industries, preference
That’s because, as logistics ‘hubs’, or regional warehouses, get will shift to much higher-tonnage HCVs (towards 37T multi-
larger following the implementation of GST, average payloads axle vehicles and higher-tonnage tractor-trailers). Also, new
will increase. Hubs cater to ‘spokes’, or local warehouses. product offerings by OEMs in the higher tonnage intermediate
Large HCVs comprise more than 50% of all CVs sold by tonnage. commercial vehicles (ICVs) segment will continue to grain
Prior to GST, central state tax was levied if the state in which traction along the spoke routes.”
the final sale happened was different from where the The shift will not play out for industries where warehousing
warehousing or manufacturing happened. Therefore, in order decisions are driven by a need to be closer to dealers.
to achieve tax efficiency, large companies typically maintained Introduction of new models will be needed to fill the gaps that
a warehouse in almost every state. emerge - necessitatinghigher investment inproduct development.
After GST, companies are moving towards larger warehouses A reduction in transit times because of GST – led by removal
with their location driven by logistical efficiencies rather than of bottlenecks at checkpoints – will further improve the
tax concerns. Indeed, many are re-designing their supply efficiency of logistics players and reduce the fleet size
chains, which will reduce warehouses by up to 40% – from requirement. Nevertheless, improving industrial activity, and
more than 30 to about 18-20 over the next few years. focus on infrastructure and rural economy will partly offset
Then there are factors such as stricter overloading norms, and these downside pressures on CV sales.
better fuel efficiency, which are also aiding the shift to higher- Manish Gupta, Director, CRISIL Ratings, said, “Players with
tonnage CVs. Operating costs per tonne are lower for larger stronger product profiles in ICVs and HCVs stand to benefit –
vehicles at high utilisation levels, owing to better fuel and this will support their credit profiles – while those unable
efficiencies and lower fixed costs. These factors have driven to adapt to the shift towards higher tonnages will come under
growth of large HCVs over the last 3 years. stress.”

23 December 2017























Upgrades & Variants Hero Motocorp Unveils New Passion PRO,
Passion XPRO and Super Splendor

In keeping with its aggressive product features, such as, Digital-Analog meter with digital fuel gauge,
strategy, Hero MotoCorp Ltd (HMCL) trip meter, All Time Headlamp On (AHO) and side stand
unveiled three new motorcycles – the indicator.
125cc Super Splendor, the 110cc Passion Adding to the style quotient are the five bold metallic colour
PRO and the 110cc Passion XPRO on schemes - Sports redstrong and bright, Black monotone-
December 21. exciting and premium, Force silver metallicbold and vibrant,
Close on the heels of a record-breaking Heavy grey metallic- sober and elegant, Frost blue metalliccool
festive season, the company is aiming to and convenient. The motorcycle is available in both Drum
further augment its dominant market and Disc variants.
leadership through the launch of these The new Passion XPRO
new youthful, powerful, stylish, and The new sharper Passion XPRO offers the right mix of style,
efficient range of motorcycles. There will technology and bestin-class performance. Targeted at the
be a phase-wise launch of the three youth, the motorcycle comes packed with a host of modern
motorcycles in the market, starting and stylish features, including the new sharper fuel tank with
January 2018. flush fuel lid, dynamic shrouds, sporty real cowl, duel-tone
Dr Markus Braunsperger, Chief mirrors, LED tail lamp and digital-analog meter with digital
Technology Officer, Hero MotoCorp, fuel gauge. All Time Headlamp On (AHO) offers superior
said, “Over the recent past, we have visibility and safety.
strengthened our in-house product The new motorcycle comes with a BS-IV compliant 110cc
development capabilities at the Hero Centre of Innovation (Torque on Demand) engine, producing a maximum power
and Technology (CIT). The new motorcycles deliver best-in- output of 7.0 (9.4) kW (PS) @ 7500 rpm and maximum torque
class performance, with advanced features and modern of 9.0 Nm @ 5500 rpm.
styling. We are also gearing up to launch multiple new exciting The motorcycle also features Hero’s intuitive i3S (Idle-stop-
products across segments in the coming months.” start system) and also offers 12% more power and torque
The new Passion PRO than its previous generation. The bike races from 0-60 km/h
Designed for today’s smart generation, the performance- in 7.45 seconds only.
oriented and boldly styled new 110cc Passion PRO is loaded
with an array of convenience, safety and utility features,
which integrate seamlessly to offer improved handling and a
hassle-free riding experience. The modern appeal of the bike
and best-in-class performance promises to offer an enhanced
experience to the customers.
The new Passion PRO draws its unmatched performance from
a BS-IV compliant 110cc TOD (Torque on Demand) engine,
producing a maximum power output of 7.0 (9.4) kW (PS) @
7500 rpm and maximum torque of 9.0 Nm @ 5500 rpm. The
fuel-efficient and cleaner engine offers more usable power.
The motorcycle also features Hero’s intuitive i3S (Idle-stop-
start system) and also offers 12% more power and torque
than its previous generation. The bike races from 0-60 km/h
in 7.45 seconds only.
The boldly styled motorcycle comes packed with a host of
style elements including the new muscular Fuel Tank with
Flush type Cap, modern & sleek signature rear Tail Lamp.
In addition, the motorcycle offers a slew of safety and utility

35 December 2017

Upgrades & Variants

The motorcycle will be available in both drum and disc than its previous generation. The bike reaches a maximum
variants and in five premium dual-tone colour palettes – speed of 94 km/h.
Sports red with black – powerful and warm, Black with sports The motorcycle also comes packed with a series of utility and
red – strong and popular, Black with techno blue – vibrant comfort features, such as All Time Headlamp On (AHO), side
and youthful, Black with heavy grey – elegant and sober, Force stand indicator, wider rear tyre, updated seat profile and side
silver with black – cool and bright. reflector, largest under seat storage in class with additional
The New Super Splendor storage in front under the tank, etc.
The powerful commuter - new Super Splendor comes with a To add to the style-quotient, the motorcycle comes with
new air-cooled, 4-stroke single cylinder OHC 125cc TOD chrome finish muffler, sleek tail light, silver finish side cover,
(Torque-on-Demand) engine that also features the highly trapezoidal headlamp and modern graphics.
efficient and proven Hero i3S technology. The engine The new Super Splendor comes in five premium metallic
produces a maximum power output of 8.4 (11.4) kW (PS) @ colours – Black with purple graphics, Black with Fiery Red
7500 rpm and maximum torque of 11 Nm @6000 rpm. graphics, Black with silver graphics, Candy Blazing Red and
The motorcycle offers 27% more power and 6% more torque Heavy Grey with Blue graphics.

Bajaj Introduces 2018 Pulsar Black Pack Edition in India

Bajaj Auto Ltd introduced 2018 editon of its Pulsar 150, 180 highlights. The white alloy wheels offers a sporty and
and 220F range on December 12. aggressive look.
Labelled the Bajaj Pulsar Black Pack edition, the new Pulsar Commenting on the introduction of the Bajaj Pulsar Black Pack
150, 180 and 220F commemorate the sale of 1 crore Bajaj edition, Eric Vas, President – Motorcycles, Bajaj Auto Ltd said,
Pulsars. The special edition bikes sport cosmetic updates “Pulsar has been India’s No. 1 Sports motorcycle brand in the
only. The Bajaj Pulsar Black Pack editions feature a new, country since its launch in 2001. Bajaj Pulsar is sold in over 25
premium black paint scheme with contrasting matte grey countries worldwide and is the market leader in most of them.
We are proud to have achieved the milestone of 1 crore Pulsar
customers around the world. To commemorate this
achievement, we present the unique Black Pack edition.”
Technicalities wise, the Pulsars feature the same specifications
as the standard versions.
Bajaj Pulsar 150 is powered by 149cc 4-stroke, 2-valve, Twin
spark BS-IV compliant DTS-i engine that churns out 14PS of
maximum output at 8,000rpm, and 13.4Nm of peak torque at
6,000rpm.
Pulsar 180’s 178.6cc 4-stroke, 2-valve, Twin spark BS-IV
compliant, DTS-i, air cooled engine gives out maximum power
of 17.02PS @ 8,500rpm and peak torque of 14.22Nm @
6,500rpm.
The Pulsar 150 comes equipped with a 240 mm ventilated
front disc brake that ensures a quicker and safer braking each
time. The bike also boasts of a light sensitive digital cockpit
and 12 V full DC headlamp ensuring a constant light beam at
all speeds and great day-night visibility. The beefed up frame
with 1320 mm wheelbase and tubeless tyres further add
strength and stability.
Bajaj Pulsar 220F comes equipped with 220cc 4-stroke, 2-valve,
Twin spark BS-IV compliant, DTS-i, oil cooled engine gives an
output of 20.93PS and torque of 18.55Nm

December 2017 36

News Basket Hyundai Next Gen VERNA Bags ‘ICOTY 2018’ Award

Hyundai Motor India won the most coveted Indian Car of the
Year 2018 (ICOTY) award for the Next Gen VERNA on December
14.
HMIL won 5 ICOTY Awards for its products: VERNA, CRETA,
ELITE i20, GRAND i10 and i10 for the year 2018, 2016, 2015,
2014 and 2008 respectively.
Commenting on the occasion, Y K Koo, MD & CEO, HMIL said,
“We are honoured to win the most prestigious automotive
award – ‘Indian Car of the Year 2018’ for our Make-in-India,
Made-for-the-World product- Next Gen VERNA. The 5th
generation Next Gen VERNA is a true expression of a Superior
Sedan crafted with perfection and excellence in Engineering
with highest levels of refinement. Launched in August 2017,
the Next Gen VERNA has become a trendsetter in the Indian
market and heralded a new chapter in Hyundai’s success story
across the world. Winning the 5th ICOTY award symbolizes the
trust and faith of customers in Hyundai brand.”

Ford-HMDA Sign MoU to Explore Integrated Mobility Solutions

Ford and Hyderabad Metropolitan Development Authority convenient for all. We look forward to working with Ford
(HMDA) signed a Memorandum of Understanding to assess on this Mobility platform and future opportunities.”
the feasibility of a common digital mobility solution for “As a mobility company, Ford is working with cities to help
commuters in the city of Hyderabad on December 15. address growing transportation challenges,” said R.
Mahadevan, Director, Ford Smart Mobility, India. “Partnering
Under the agreement, Ford will collaborate and work with with local development authorities like HMDA and offering
the city authorities to analyze Hyderabad’s existing technology solutions fine-tuned to the needs of the cities
transportation system. Ford will then work with HDMA to means we can help find new ways to make commuters’
design tech-based mobility solutions to improve the commuter journeys seamless.”
experience, and that will optimize efficiency for transport While different modes of public transport such as light rail,
operators, as well as reduce congestion. metro and buses co-exist in Hyderabad, 800 vehicles are added
Speaking after the MoU signing ceremony, MA & UD to the city’s streets each day. Hyderabad’s smart and safe city
Minister KT Rama Rao said, “Hyderabad has a significant project compliments Ford’s vision to provide innovative
advantage due to its excellent infrastructure and solutions to common mobility issues.
connectivity. This MoU with Ford Motor Company would Collaborating with HMDA, Ford will engage with the relevant
further it and make commute within the city more stakeholders and explore solutions in areas such as digital
cashless one-time payments, mobile-based ticketing and smart
card payments for passengers transiting through different
modes of transport. Technology aided solutions can enable
commuters to spend less time when switching between
various modes of transport, improve predictability and
thereby reduce gridlocks.
The study will also analyze how multiple modes of transport
are used by Hyderabad residents every day, in an effort to
identify areas of improvement.

37 December 2017

News Basket

Tata Motors Delivers First Batch of Tigor EV to EESL

Tata Motors delivered the first set of Tigor Electric Vehicles Tata Motors are extremely proud to be part of this project
(EVs) to state-run Energy Efficiency Services Limited (EESL) as and are supportive of the Government’s transformational
part of their initiative to procure 10,000 electric vehicles. vision of auto electrification in India. With Tigor EV, we have
Guenter Butschek, CEO & MD, Tata Motors handed over the begun our journey in boosting e-mobility and will offer a full
keys of the Tigor EVs to Saurabh Kumar, Managing Director, range of electric vehicles to the Indian customers. This tender
EESL, accompanied by the senior management teams from has effectively paved way for connecting our aspirations in
both the companies. the e-mobility space with the vision of the Government.”
The Tigor EV is a full electric, zero emission ‘StyleBack’ that
Guenter Butschek said, “This initiative of the Government of comes with a stunning, break-free and revolutionary design,
India to procure 10,000 electric vehicles is a bold step in terms set to build on the existing Passenger Vehicles portfolio of
of promoting green & sustainable transport solutions. We, at Tata Motors. Specific to the EESL order, the Tigor EV will be
delivered in three trim variants – Base, Premium and High and
will be available in ‘Pearlescent White’ colour with blue decals.
Over the basic requirements of the tender, the Tigor EV, across
the variants, would have FATC (Fully Automatic AC) to provide
maximum comfort to its occupants. Equipped with a single
speed, automatic transmission, the Tigor EV will also allow
the customers to enjoy the driving experience, maximized
efficiency and seamless acceleration. The electric drive systems
for the Tigor EV is developed and supplied by Electra EV – a
company established to develop and supply electric drive
systems for the automotive sector.
Tata Motors is committed to the Government’s vision for
electric vehicles by 2030 and will work in a collaborative
manner to facilitate faster adoption of electric vehicles and to
build a sustainable future for India.

Mahindra Presents Petrol-Powered XUV500

Mahindra & Mahindra announced on December 5, the Automotive Division, Mahindra & Mahindra, said "Since
introduction of a new petrol variant of its premium SUV, its launch, the XUV500 has been a trendsetter in the
the XUV500. The petrol powered XUV500 will be available premium SUV segment with a great value proposition plus
in a single variant with a 6-speed automatic transmission head-turning style and a plethora of hi-tech features. The
sourced from AISIN, Japan. Named as the 'G AT' variant, introduction of the XUV500 G AT petrol variant will excite
XUV500 petrol automatic will be competitively priced at consumers who have been eagerly awaiting a petrol
Rs.15.49 lakh (Ex-Showroom, Delhi) and will be available option. The new G AT variant delivers impressive
in select cities with immediate effect. performance that has come to be synonymous with the
XUV500."
Under the hood, the newly introduced XUV500 G AT variant
will be powered by the indigenously developed 2.2 litre The key features of XUV 500 G Automatic variant include -
mHawk petrol engine that generates 140 HP (103 KW) 7-inch (18-cm) touchscreen infotainment system; Logo
power & 320 Nm torque. The XUV500 G AT variant is projection lamp on ORVMs; Static bending headlamps; ESP
equipped with a 6-speed automatic transmission which has with rollover mitigation; Android Auto; Emergency Call;
features like the creep function and manual mode option. Fully automatic temperature control (FATC); Dual airbags;
The XUV500 portfolio will now have a petrol variant along Anti-Lock Braking System (ABS) with EBD; Intelligent light
with a wide range of diesel variants. sensing headlamps; Smart rain sensing wipers; Tyre-tronics;
Cruise Control; Push button start; Passive keyless entry; and
According to Veejay Ram Nakra, Chief of Sales & Mktg - 8-way adjustable driver seat

December 2017 38

Competition Law Autoliv to pay R150m Tokai Kogyo and Green Tokai post their indictment,
Update Competition Commission decided to hold the government to its burden of proof
and go to trial. They felt strongly that they were not guilty
fine over and above EU of violating [US] antitrust law. A US federal court jury of
fine 12 people in Cincinnati, Ohio, reached a unanimous not
guilty verdict for both defendants on 29 November 2017,
Autoliv, the Swedish after almost two weeks of proceedings in court.

Manufacturer of airbags, Supreme Court stays COMPAT order that imposed
penalty on 3 car companies
seatbelt and steering
The COMPAT by its order dated 09.12.2016 concurred
wheels, has admitted to with the findings of the CCI and directed Ford, Toyota
and Nissan, to remove all restrictions imposed through
colluding with agreements on auto parts suppliers so as to open up
market for spare parts, remove all restrictions on supply
competitors: TRW of spare parts by original equipment suppliers to
authorized dealers etc.
Automotive, Takata
On appeal, Hon’ble Supreme Court has stayed the
Group, Toyoda Gosei and operation of the COMPAT’s order and the matter will be
taken up for arguments on 06 January 2018.
Tokai Rika.
Nine Japanese auto-part manufacturers file writ
G R Bhatia, Partner & Head, The companies had taken petitions before the Delhi High Court
Competition Law Practice Group,
part in one or more of four These petitions inter-alia challenge the order of
Luthra & Luthra Law Office cartels for the supply of investigation passed by the Competition Commission of
seatbelts, airbags and India (CCI) under Section 26(1) of the Competition Act,
2002 (Act) and the notices sent by the Director General,
steering wheels to Japanese car manufacturers in the CCI (DG) requisitioning information pursuant to the
order of investigation.
EU. The conduct affected tenders issued by car
The petitioners are primarily aggrieved by the rejection
manufacturers, including BMW and VW, for the of their inspection applications (these are applications
filed before the CCI under the CCI General Regulations,
manufacture and supply of airbags, seatbelts and 2009 to inspect the case records) by the CCI.

steering wheels for various brands. The broad contention of the petitioners is that (a) they
have not been informed whether they are charged
In 2015, Autoliv reached an $81m settlement agreement parties or third parties; (b) by rejecting their inspection
in the US and a settlement with Canadian authorities applications, the CCI is violating the principles of natural
worth $3.2m over price-fixing, market division and justice by not allowing the petitioners to have access to
case material in order to effectively respond to the DG’s
collusive tendering. Meanwhile, the European notices.
Commission fined Autoliv, Tokai Rika, Takata, Toyoda
Gosei and Marutaka a total of €34m for breaching EU The matters were listed on 16th October, 08th, 09th, 10th
and 23rd November 2017 for arguments and have now
anti-trust rules. been adjourned to 04th January 2018

Tokai Kogyo and Green Tokai victorious in auto parts
bid-rigging trial

Two Japanese companies had been indicted in June 2016
by the United States DoJ for allegedly conspiring to rig
bids and fix prices of automotive body sealing parts that

were sold to Honda Motor Company between 2008 and
2011.

This is the first case to be tried as a result of the DoJ’s
ongoing investigation into the auto parts industry – its
largest ever criminal antitrust probe. Under US law, the

government bears the full burden of proving a violation
of antitrust laws beyond a reasonable doubt to 12
jurors who must unanimously agree that the defendant

is guilty.

39 December 2017

Musings Fast and Financed: China’s Well-Funded Auto
Startups Race to Overtake Tesla

Backed by billions from influential investors and armed with their window of opportunity may be narrow; Tesla has
global talent, over a dozen Chinese startups want to make confirmed plans to build a factory in Shanghai, which is likely
dinosaurs of incumbent auto makers. As they start production, to start producing cars in around 2021, and most traditional
their determination is raising the pressure to innovate at auto makers, both Chinese and foreign, have committed to
traditional auto makers. producing electric vehicles and are experimenting with
“Tesla paved the way, now we’re taking this a step further,” autonomous technology and in-car internet services.
said Padmasree Warrior, who runs the US arm of Shanghai- In a sign of the changing times in the auto business, Ford
based NIO, one of the Chinese startups that want to drive the Motor’s Executive Chairman Bill Ford said that the century-
convergence of the automotive and technology industries. old auto maker was transforming itself into a “mobility
“We have a mission to transform mobility.” company, designing smart vehicles for a smart world.” Ford is
Tesla Inc disrupted the automobile industry a decade ago with in talks with Alibaba Group Holding , China’s dominant e-
its shift to electric vehicles. The next phase, automakers are commerce company, to develop advanced mobility services,
targeting is poised to turn cars into “iPads on wheels,” said while VW is holding discussions with Didi Chuxing Technology
Michael Dunne, MD of Hong Kong-based consultancy Dunne Co., the local equivalent of Uber, to design new service models.
Automotive. Despite such developments, the startups believe they can tap
Chinese auto startups - many of them founded just two or growth in China’s premium and electric-car segments - Tesla’s
three years ago - are betting they can leapfrog existing auto turf - and outshine incumbents with radically innovative
makers in creating a new world of electric, networked cars products.
that drive themselves. But they must make enough of a splash That means following the Tesla playbook by coming to market
at a time when some of the game-changing technologies they with a killer brand, said Dunne. But Tesla has “the aura of
advocate, notably self-driving software, are still in the testing Elon Musk standing behind the product,” he said, “and that’s
lab. really hard to match.”
NIO launched its first production car - ES8 SUV -in Beijing Like many Chinese technology companies and auto startups,
having raised $1 billion last month in a funding round led by NIO has an operation in California, with over 300 employees
social-media giant Tencent Holdings Baidu Inc, which developing autonomous driving and other critical software.
dominates Chinese internet search, is another investor. Rivals to NIO are making similar strides. Byton, which is run
NIO Chairman William Li presents the ES8 as a rival for Tesla’s by ex- BMW and Nissan executives, opened a new California
Model X. base in December, having recruited former Tesla and Apple
During the launch event, ES8, which responds to voice staffers to run its team there. Like NIO, Byton plans to develop
commands and has limited self-driving capability, reverse- software in the US but manufacture in China in time for a
parked itself into a battery-swapping facility, which can switch 2019 launch.
the car’s battery pack in under three minutes, enabling it to NEVS, a Sino-Swedish venture which acquired the assets of
match gasoline cars for convenience, claimed Li. The battery bankrupt Swedish auto maker Saab in 2012, started production
can also be fully charged in one hour, and gives the car a 220- on an electric version of the Saab 9-3 in Tianjin in December.
mile range. Another contender, WM Motor, also backed by Baidu and
ES8 starts at around $68,000 before subsidies, while Tesla’s Tencent and run by former Geely Auto executives, finished
Model X, which is subject to import tariffs and is ineligible for building a plant in eastern China in September and plans to
subsidies in China, costs roughly twice that here. Li said the start production in early 2018. WM - or “Weltmeister”- aims
ES8, which is now on presale, is expected to be with buyers in to offer a drastically cheaper alternative to both Tesla or NIO,
the first half of 2018. with mass-market EVs for under $30,000.
Most Chinese auto startups aim to launch in China in 2018 In the expensive business of auto development, many of these
and expect to tackle the US and Europe by around 2020. But newcomers will fall by the wayside, cautioned Dunne.

December 2017 40

Musings TrueCar, California New Cars Dealers Association
Settle Lawsuit

TrueCar Inc. and California New Car Dealers Association agreement reached with TrueCar, together with the other
reached an agreement over TrueCar's billing model, thereby adjustments to its business model made by TrueCar after
settling a lawsuit the association had brought against the third- CNCDA initiated this litigation, satisfactorily resolve our
party vehicle shopping site. previously expressed concerns regarding the existing TrueCar
TrueCar has agreed to change its billing model in California business model."
from a pay-per-sale model with a cap to a flat-fee subscription The California New Car Dealers Association sued TrueCar in
model. The transition will be complete by January 1, 2019. 2015, accusing the vehicle-shopping site of breaking California
TrueCar will also double the indemnity it provides to California laws on dealer licensing, brokering, advertising and disclosure.
dealers who participate on the TrueCar program, to $50,000 The lawsuit sought a court injunction restraining TrueCar from
from $25,000 previously, the statement said. conducting business as a dealer or broker.
In California, TrueCar's current subscription billing model also TrueCar enables its shoppers to fetch guaranteed vehicle prices
includes what it calls a "sales guarantee" as a retroactive from its certified dealer network. In most states, dealers that
adjustment. The flat-fee subscription billing model does away convert TrueCar shoppers into sales pay the site $299 per new
with the sales guarantee. vehicle and $399 per used vehicle sold.
"This litigation afforded us the opportunity to thoroughly "TrueCar is pleased that the litigation has been resolved to
examine TrueCar's user experience and business practices," the parties' mutual satisfaction, and we look forward to
Brian Maas, President of CNCDA, said in a statement. "The continuing to serve our dealer customers in the State of
California," TrueCar CEO Chip Perry said.

Takata Recalls Are Improving, Industry Notes

Collaboration between automakers and dealerships on Takata Buretta and industry officials say uncertainty about parts
airbag recalls has improved in the past 18 months, making it availability has diminished since the survey was conducted as
easier to perform repairs, according to industry officials. automakers worked with suppliers to increase production lines
"There may have been issues early on, but we think those for inflators. Shortages are much less common today.
areas have improved significantly," said Jared Allen, a
spokesman for the National Automobile Dealers Association. Some dealers surveyed complained that financial incentives
Many dealers felt they could do more to spread the word to were insufficient for them to prioritize recall work over other
vehicle owners and complete Takata repairs if automakers service business or make extra efforts to inform customers
treated them as full partners, basedon a survey conducted last year. about the need to have their car fixed. They said margins for
Dealers in Texas and Florida surveyed in May and June 2016 recall repairs were substantially less than what dealerships
said their understanding of local markets could enhance recall earn from other kinds of repairs, including warranty and
outreach efforts with more tailored strategies. They also asked regular service work.
that automakers provide more complete and accurate data
on affected vehicle owners, pay them more for recall repair Dave Conant, a principal at Norm Reeves Honda Superstore
work and communicate better about the availability of in Cerritos, Calif., said American Honda has done everything
replacement parts and loaner cars. in its power to address the Takata recalls.
Many dealerships said they were unaware of critical details
regarding the recalls, which are tied to 13 deaths in the US. In the survey, some dealers said they didn't feel confident
The lack of information ranged from reimbursement for rental about reaching out to customers because automakers' recall
vehicles to estimates of vehicles with open Takata recalls in data is often inadequate. They told the monitor that
their geographic area. information shared by car companies was voluminous, hard
to use and often inaccurate or incomplete. Smaller dealers
said they did not have the resources to conduct proactive
outreach

41 December 2017

MAURYA MOTORS LIMITED

Tata Authorised Dealer for Passenger & Commercial Vehicles

Plot No. C-1, Industrial Area
Patliputra

Patna - 800 013

Phones: 92636 32685 / 92636 39260 / 92346 66948
E-mail: [email protected]
[email protected]

December 2017 42

Surveys & Studies Entertainment & Navigation Features Increasingly
Drive Overall Vehicle Appeal, J D Power Finds

Hyundai Receives Three Segment-Level Awards; Honda Secures Two

Across all vehicle segments, car buyers in India are increasingly In 2017, 63% of all new vehicles sold have driver and front
considering interior & exterior styling and vehicle performance passenger airbags, while 57% have ABS. With airbags and
when purchasing their new vehicle, according to the J D Power ABS fitted into one of every two small cars sold, the rate
2017 India Automotive Performance, Execution and Layout of growth has been steepest in the small car segment.
(APEAL) Study, released on December 19. • Navigation systems are gaining relevance: Seventeen per
“Although fuel economy continues to be a key driver of overall cent of all new vehicles are equipped with a navigation
appeal in India, new-vehicle buyers are increasingly opting for system, up by 9 percentage points from last year. The
added features that enhance convenience and safety,” said proportion of utility vehicles that are fitted with
Shantanu Nandi Majumdar, Director at J D Power. “While fuel navigation systems has doubled (27% in 2017 vs. 12% in
economy is likely to remain a key reason for purchase, with 2016), with nearly half of all new-launched utility vehicles
increasing disposable income, some consumers may be willing now having this as a standard feature. Moreover, there is
to trade-off fuel economy for added performance, convenience a high consumer interest in navigation systems as 80% of
and safety features. Manufacturers that are able to differentiate all new car buyers say they “definitely would” want this
their products on these key attributes are likely to have a feature on their next vehicle.
stronger brand connection with consumers in this market.” Study Rankings
Buyers in the small car segment, which still accounts for half Hyundai receives three of the eight segment-level APEAL
of all new-vehicle sales, are increasingly regarding the audio/ awards. The Hyundai Eon (845) ranks highest in the entry
entertainment / navigation category as a key determinant of compact segment; Hyundai Grand i10 (880) ranks highest in
vehicle appeal, which has a weight of 11% in the overall APEAL
Index. This is also the case for the utility vehicle segment,
where audio/ entertainment/ navigation has been gaining
relevance over the past five years and is among the top five
weighted APEAL categories.
“Increasing adoption of navigation and safety-related features
in vehicles are indicative of growing consumer interest in
connected car technologies and autonomous vehicles,” said
Majumdar. “This is likely to lead the way for these technologies
to be embedded into future vehicle design.”
Following are some of the key findings of the study:
• Vehicles purchased by Upgraders have higher APEAL:

Vehicles that have been purchased as an upgrade to a
previously owned vehicle have an average APEAL score
of 880 points (on a 1,000-point scale), which is 14 points
higher than the overall industry average. Among the
reasons for purchasing such a vehicle, more upgraders
cite exterior design (57%), interior style and comfort (59%)
and quality of workmanship (36%), compared with non-
upgraders.
• Safety-related feature fitment rates increase: Airbag and
anti-lock braking system (ABS) fitment rates have
increased by 12 percentage points and 7 percentage
points, respectively, from 2016. Consumer demand for
these features has been one of the reasons for this growth.

4433 DDeecceemmbbeerr22001177

Surveys & Studies

the upper compact segment; and Hyundai Elite i20/Active dealership-provided alternative transportation this year,
(883) ranks highest in the premium compact segment. compared with 2013 (31% vs. 8%, respectively). Satisfaction
Honda receives awards in two segments: Honda Amaze (883) among these vehicle owners is 73 points higher than among
ranks highest in the entry midsize segment; and Honda City those who did not use this service.
(887) ranks highest in the midsize segment. “Luxury vehicle owners view the service process as an essential
Maruti Suzuki Celerio (865) ranks highest in the compact aspect of car ownership,” said Kaustav Roy, Director at J.D.
segment. Power. “With increasingly stressful daily commutes, time
Toyota receives an award for Toyota Innova Crysta (890), which commitments and other complexities encountered in the daily
ranks highest in the MUV/ MPV segment. lives of customers, owners greatly appreciate attempts made
Mahindra XUV 500 (889) ranks highest in the SUV segment. by dealers to ease the effort required for routine service.
The 2017 India Automotive Performance Executive and Layout Dealers that strive to go that extra mile will be more likely to
(APEAL) Study is based on responses from 8,571 new-vehicle reap the benefits.”
owners who purchased their vehicle from November 2016 Following are additional key findings of the study:
through July 2017. The study includes 83 models from 17 • Higher number of customers receiving all 22 service
makes. The study was fielded from May through September
2017 in 40 cities across India. standards: The study identifies 22 service standards that
The study serves as the industry benchmark for new-vehicle enhance the overall after-sales service experience. Nearly
appeal. The APEAL Study, which examines how gratifying a one-third (29%) of luxury vehicle owners indicate that
new vehicle is to own and drive, is used extensively by they received all 22 service standards from the dealership
manufacturers worldwide to help them design and develop during their most recent service visit—an increase of 9
more appealing vehicles and by consumers to help them in percentage points from 2016.
their purchase decisions. The study measures satisfaction • Dealers improve on customer engagement after the
across 10 performance categories: vehicle exterior; vehicle service visit: More than 8 in 10 (83%) customers received
interior; storage and space; audio/ entertainment/ navigation; a follow-up call from the dealership, an increase of 9%
seats; heating, ventilation and air conditioning (HVAC); driving since 2013. Satisfaction among these customers is 857
dynamics; engine/ transmission; visibility and driving safety; points, which is 63 points higher than among those who
and fuel economy. did not receive the same.
• Satisfaction with dealer service drives customer loyalty:
Mercedes-Benz Ranks Highest Among Luxury Among vehicle owners who are highly satisfied with their
Brands dealer service (overall satisfaction scores of 917 or higher),
92% say they “definitely would” revisit their service dealer
In an another study viz. J D Power 2017 India Customer Service for post-warranty service, compared with only 39% of
Index (Luxury), released on December 12, reveals that Luxury highly dissatisfied customers who say the same.
car owners in India are increasingly seeking convenience when Study Rankings
having their vehicle serviced, with the provision of a more Mercedes-Benz ranks highest in after-sales service satisfaction,
customer-oriented service experience resulting in higher levels with a score of 862. BMW ranks second with a score of 849.
of satisfaction. The 2017 India Customer Service Index (Luxury) Study is based
The study finds that a higher proportion of luxury brand on responses from 241 new-vehicle owners in the luxury
owners are scheduling their vehicle service via appointment segment who purchased their vehicle between May 2015 and
in 2017, compared with 2013 (87% vs. 77%, respectively). August 2016 and took their vehicle for service to an authorized
Furthermore, 17% (vs. 6% in 2013) of luxury car owners were dealer or service centre between October 2016 and August
provided with a door-step service this year, which has 2017. The study was fielded from May through August 2017.
contributed to higher levels of satisfaction. Overall satisfaction Now in its fifth year, the study measures new-vehicle owner
is 61 points (on a 1,000-point scale) higher among owners satisfaction in the luxury segment with the after-sales service
whose vehicle is picked up and dropped off at their home or process by examining dealership performance in five factors:
work by the dealership than among those who take their service quality; vehicle pick-up; service advisor; service facility;
vehicle to the dealership themselves. and service initiation. This study also examines service
Additionally, a higher proportion of luxury car owners used satisfaction in the mass market segment.

December 2017 44

Surveys & Studies

Hyundai and Maruti Suzuki Each Receive Initial Following are some of the key findings of the study:
Quality Awards in Three Segments • Diesel models surpassing petrol models in initial quality:

In an another study viz. J D Power 2017 India Initial Quality While both petrol and diesel models have shown strong
Study, released on November 30, reveals that the number of improvements in initial quality since 2013, the rate of
problems reported per 100 vehicles (PP100) by new-vehicle improvement for diesel models is much higher at 37
owners has declined over the past five years, with declines PP100, compared with petrol models, which have
reported across all problem categories except heating, improved by 8 PP100.
ventilation and cooling (HVAC). • Audio and navigation problems: The number of problems
Overall, initial quality averages 95 PP100 in 2017, a significant reported in the audio, entertainment and navigation
improvement from 115 PP100 in 2013. All problems are (AEN) category in 2017 remains the same as in 2013;
summarized as the number of problems per 100 vehicles however, the type of problems reported by new-vehicle
(PP100), with lower PP100 scores indicating a lower incidence owners in 2017 are increasingly focused on difficult to
of problems and, therefore, higher initial quality. understand/use of Bluetooth; hands-free communication;
Although problems in the engine and transmission category touch screen displays; and navigation.
remain the most frequently reported issues, there has been a • Explanation on the operation of features: Owners who
significant improvement of 9 PP100 during the past five years received detailed explanations on the operation of their
(39 PP100 in 2013 vs. 30 PP100 in 2017). Problem reporting vehicle features at delivery report fewer problems than
has either remained the same or has improved in all other those who do not (95 PP100 vs. 103 PP100, respectively).
categories except HVAC, with new-vehicle owners reporting Study Rankings: Hyundai Grand i10 ties with Ford Figo Next
more problems related to the quality of air conditioning Gen (71 PP100 each) for highest rank in the Upper Compact
effectiveness, compared to five years ago (22 PP100 in 2017 segment; Hyundai Verna ties with Honda City (70 PP100 each)
vs. 15 PP100 in 2013, respectively). for highest rank in the Midsize segment; and Hyundai Creta
“With the advent of the lighter engine and power train ties with Maruti Suzuki S-Cross (76 PP100 each) for highest
introductions by vehicle manufacturers in the last five years, rank in the SUV segment.
the number of engine, noise and vibration-related issues has Maruti Suzuki Alto 800 (103 PP100) and Maruti Suzuki Wagon
declined considerably, resulting in better overall product R (85 PP100) rank highest in the Entry Compact and Compact
quality,” said Kaustav Roy, Director at J D Power. “However, segments, respectively.
the challenge lies in optimizing customer requirements related Toyota also receives awards in two segments: Etios (56 PP100)
to HVAC effectiveness while continuing to provide better in the Entry Midsize segment and the Innova Crysta (77 PP100),
engine power and fuel efficiency. Manufacturers that are able in its debut year, in the MUV/ MPV segment.
to integrate these customer requirements into their overall Volkswagen Polo/ Cross Polo/ Polo GT (69 PP100) ranks highest
vehicle design would likely be in a better position to in the Premium Compact segment
differentiate themselves from the competition.”

MARIKAR GROUP OF CONCERNS

DSK Benelli Motowheels Pvt Ltd - Benelli Motorcycles; Eicher Motors Ltd - Royal Enfield Motorcycles; Honda Motorcycle & Scooter
India Pvt Ltd - Honda Motorcycle & Scooters; Mahindra First Choice Wheels Ltd - Pre-Owned Cars; Nissan Motor India Pvt Ltd - Nissan
Cars and Datsun Cars; Skoda Auto India Pvt Ltd - Skoda Cars; Canon India Pvt Ltd - Canon Products; Gabriel India Ltd; NXT Automart
(India) Ltd - Drivol, Duracell, FIAMM, Bluechem; PETRONAS Lubricants (India) Pvt Ltd; R&R Textile - Ramraj, Ramyyam; TIDC India Ltd;

and Whirlpool of India Ltd - Home Appliances.
Branches: Alappuzha, Aluva, Attingal, Chavakkad, Cochin, Irinjalakuda, Kalamassery, Kollam, Kozhikode, Kulasekharam, Marthandam,

Nagercoil, Nedumangad, Pathanamthitta, Thrissur, Trivandrum and Varkala.
Phone: 0471 - 2477420, 2471814, 2465882 | Hotlines: 9961 88 9000 | Fax: 0471 2462630 | E-mail: [email protected]

45 December 2017



Fuel Watch 5 Oil Price Predictions for 2018

Steve Austin, OIL-PRICE.NET

It is the time of the year again for our highly anticipated oil Of course, Saudi Arabia received a positive jolt with Russia
price related predictions for 2018. As our millions of faithful backing supply cuts (by about 1.8 million barrels per day) for
readers are aware, we have a rather impressive track record - the entire 2018. Yet, one has to look into the joint OPEC and
from predicting the formation of ISIS to the crash of oil prices; Russia communiqué that hints at a revisit to the agreement
from presenting Trump's potential oil policies to the forecast based on market conditions prevailing on June 2018. Point is,
of OPEC's gradual decline. We've been right, and how. So, Saudi Arabia needs Russia, more than the other way around,
without further ado, here are our five oil prices predictions for political, economic and strategic reasons.
for the year 2018. Given that Russia's oil production has surpassed Saudi Arabia,
Russia extends its influence on oil prices and OPEC the Saudi monarchy desperately needs Russia's backing in
You may have read about 'OPEC and Russia,' a lot more in order for OPEC quotas to have any effect on oil prices. For
recent times. How fares the union? Well, it's a rather novel - good measure, since Russia came on board, the global supply
about two years old - alliance based on the aligned interest glut reduced by about 25%. Oil prices have been relatively
between the nations to control global oil prices. However, stable around $50 a barrel throughout 2017. Much of this
other opposing factors will act as a dampener on this duo in stability is due to OPEC's inability to rein in non-member Russia
2018. Yes, the alliance is new and ambitious but brittle. without concessions. Should OPEC provide discounts to Russia
Already, signs of strain are rather too apparent. In 2018, it will and if Putin's country agrees to reduce its output, we predict
sour in glorious ways. Together, OPEC and Russia account for that oil prices may breach the $70 mark in 2018.
about 40 percent of global oil production. As to that, one can Saudi Arabia loses influence, faces turmoil
imagine the ramification of any deal between these two. We predicted last year that turmoil would wash over Saudi
Strategically, on the military side, Russia and Saudi Arabia are Arabia in 2017 if the country continued to spend (and speed)
- quite frankly - enemies. Russia does not want a pipeline through its cash reserves at rates unsustainable in the face of
through Syria (which Saudi Arabia and Qatar sponsored). $50 oil prices. After all, Saudi Arabia needs oil at $80 to balance
Russia supports Iran and Syria (Shia Muslims). On the other its budget. What's happening as 2017 draws close and 2018
side, Saudi Arabia vehemently opposes Syria and Iran with arrives in Riyadh too?
the unconditional military support of none other than USA. Sure, we've read about the considerable social reforms
More importantly, OPEC has operated for years as a pyramid initiated by the Kingdom along with elaborate and progressive
with Saudi Arabia ruling the roost as a despot with unilateral economic overhauls including the major drive to privatize state
decisions on cuts with little to no opposition. Russia may owned oil company, Saudi Aramco. In fact, much has been
conciliate for a while but unlike the Arab countries forming published about this recent "Saudi purge" but with very little
OPEC, Putin's Russia does not take orders from anyone. insight. Peculiar as it sounds, fact is, very little news makes it
At the recent Nov. 30 OPEC meeting, Russia demanded the out of Saudi Arabia on any matter, which should come as no
cartel's quotas be re-evaluated based on current market surprise. Let us not forget that the Kingdom is the last standing
shares. This is because historically production quotas are absolute monarchy, a theocracy with freedom of press rivaling
pegged to "proven" reserves. Unofficially this "quota formula" that of North Korea.
has allowed Saudi Arabia to sell more oil than other members Indeed, former Goldman Sachs chairman Jim O'Neill recently
by claiming enormous reserves while, conveniently, the stated that, "The Saudi government has been implementing
monarchy does not allow any foreign audit. Now Russia - with radical changes, both domestically and in its foreign policy,
larger proven reserves - is weighing in on the OPEC quotas and its reasons for doing so are not entirely clear". Let us shed
and a re-calibration is in order if OPEC wants Russia on the some light on this:
boat. The Saudi purge, culminating in the arrest of Al-Amoudi -
For now this marriage of convenience between Saudi Arabia second richest man in the Kingdom - as well as billionaire
and Russia will subsist but there will come a time when roles prince Al-Waleed bin Talal is publicized by the Riyadh's new
will be reversed. Already, Russia has established control over ruler as an "anti-corruption sweep". Please take note: anti-
a lion's share of Venezuela's oil resources. In addition to that, corruption rather than anti-terrorism.
the ongoing financial turmoil in Saudi Arabia will likely open This is the same semantics used by clerics of Wahabi mosques
the door for Russia's influence on OPEC quotas. extorting - successfully - indoctrinated youths to join and fight

47 December 2017

Fuel Watch

for ISIS against Western values they portray as corrupt and unproductive workforce, amplified by an unsustainable
decadent. Alas, this has resonated well with tens of thousands population growth. This is another sign of unhinged
of youths who join ISIS ranks to replace corruption with a pure desperation from the Kingdom's ruler: arresting
version of Islam. As if. billionaires on charges of corruptions yet demanding
Domestically this "anti-corruption" cleanup serves Saudi billions in bribes for dropping the charges is extremely
Arabia at least 4 purposes. contradictory and reflects poorly on Saudi Arabia's
1. Saudi Aramco's Initial Public Offering (IPO) needs integrity.
As a bonus, most assets held by Al- Waleed bin Talal are in US
transparency if it's to take place in 2018. This open secret companies which provides the Kingdom with much-needed
of an IPO is long in the tooth, nearly 3 years in the making diversification. To its credit, the Saudi Kingdom seems
and is yet to be cleared. As a result, pressure for committed - for lack of other choices - to diversifying its
transparency in mounting. Unfortunately for the IPO, economy. All the while, Riyadh has gradually lost control of
Saudi billionaires have been using Saudi oil revenues as a OPEC since 2014; is being challenged by Russia as the number
piggy bank for years - under the shell of Aramco - with one oil producer; has turned against long-time ally Qatar, has
little to no record book-keeping. As you know, public not ramped up workforce productivity despite promises; has
exchanges demand transparency from all company been delaying Aramco's IPO; is wedging a war bordering on
regarding their financial statements in order to list their genocide, which it cannot afford, in Yemen; is running out of
stock. The high level purge forces the hands of recalcitrant cash and has arrested Alwaleed Bin Talal - a talented financier
big Aramco players to turn over their ownership before with close ties to western politicians.
it's too late so that the IPO can move as planned. Let's All in all, not a good start for 2018. Yet, the worst is to come as
not forget, Saudi Arabia needs this IPO (and the money it's all downhill from here on.
raised) in its efforts to diversify and move away from an Finance will bankroll long-term shift to electric vehicles
oil dependent economy. Teslas are cool. Electric is in. Recently, Elon Musk unveiled the
2. It's a 'hood and wink' attempt. How? We'll explain. It all-electric Tesla semi trucks with a 500-mile range and semi-
allows the new ruler to appease irate Islamists by playing autonomous capacity, which will operate at a cost per mile,
the righteous anti-western-corruption routine once again lower than rail. This is no small feat, as we previously reported,
at a time when the country is cutting social benefits due US rail's 'cost per ton per mile' using diesel fuel is currently
to budget constraints, by seizing the assets of Saudi the lowest in the world. In fact Teslas have outsold Porsches
billionaires with a lavish western lifestyle. for several years in California and as everyone knows California
3. In many ways, the alleged 'purge', presents to western leads the way.
media a vague message, free of religious semantics, while These electric trucks are set to "hit the road," so to speak, in
implying - yet not stating - that the billionaires arrested 2020, which gives those who believe in Elon Musk's vision, an
had anything to do with corruption. Of course, the liberal entire 2018 to invest, finance and build a network of charging
leaning westerners, with their existing and preconceived stations needed for this electric fleet to operate.
negative perception of the oil & gas industry (and the Anyway, how likely are these stations to not only get funded
Middle East) as extremely corrupt, readily approve of a but also built in 2018? Very likely, we say. Why? For the pretty
crackdown on corruption. On the other hand, the obvious trust the names 'Telsa' and 'Musk' carry. Think about
conservative spectrum of western media outlets relayed it. An American entrepreneur building American cars in the
this anti-corruption sting as a crackdown on terror US using American labor! Reflective of the brand, Tesla repaid
funding. What's not to like when blanks are filled out for its federal loans 10 years in advance. Not to forget, Tesla made
you? many of its patents public domain out of sheer altruism.
4. The demand for 70% of rich detainees' wealth in exchange What's not to like about it?
for their freedom is a not-so subtle money-grabbing move And Tesla's semi isn't the lone horse at the stable. Cummins, a
by the new crown prince Mohammad bin Salman. With leading diesel and natural gas engine manufacturer, revealed
calculated steps, he is trying to salvage Riyadh from the a Class 7 electric truck named AEOS, last August itself. AEOS
quandary caused by decades of mismanagement. That can support a 22 ton trailer. Nikolo Motor company, for its
how long he manages to postpone the Kingdom's part, unveiled Nikolo One a hydrogen cell-powered truck, and
inevitable bankruptcy caused by unsustainable spending soon followed it up with Nikolo Two.
levels remains to be seen. Prince Salman, in the act of
clean-up, is attempting to shore up the lifestyle of an

December 2017 48

Fuel Watch

These new generation trucks are good news for Mohammed bin Salman of Saudi Arabia inked a deal allowing
environmentalists. Globally, trucks account for about 8 per Saudi Arabia's sovereign wealth fund to invest $100 billion
cent of green house gas emissions. However, as we pointed dollar in US infrastructure. In the following days, for the brave
out earlier, these trucks need charging stations across the reporting, we received monumental flak from many trolls in
nation. Riyadh. That wouldn't cease us from ferreting out the truth,
Now to the pressing question - who will invest in these be assured.
stations? The bitter irony is that, under the guise of "modernizing" the
We previously reported that during the period 2014-2016, US infrastructure, the Trump administration is, in reality, busy
financial institutions had increasingly favored funding in the process of privatizing power transmission lines in 20
unconventional fields over traditional oil exploration projects. western states currently operated by the Federal Government.
This was due to the near guaranteed payout from fracked wells Among the budget proposals of President Trump was the plan
which, when risk associated with low oil prices was factored to privatize publicly owned transmission assets, chief among
in, made more financial sense than sponsoring expensive long- them the assets of Bonneville Power Administration (BPA).
term offshore exploration projects. Pure economic sense, let's Take the case of BPA itself, the system manages a high-voltage
say. In 2018 this "guaranteed payout" will motivate financial transmission grid that distributes power from 31 hydroelectric
institutions to invest in the low-hanging fruits of the budding dams to provide electricity to more than twelve million people.
electric vehicle revolution. If not, won't they "miss out" on This sell off, along with other assets of the Power Marketing
the bounty up for the take? Administration, is expected to save $5.5 billion. The rub is that
So, are we going to see a radical paradigm shift? Put simply, the saving would roll off slowly over the course of a decade, if
no. We are not talking about a profound shift in funding from it does at all. As things stand, President Trump enjoys a cozy
fracked wells to the EV industry but rather a substantial relationship with Prince M.M.S., swooning so far as to plead
diversification from fossil fuels into EV, an industry which will, with the Saudis to list the IPO of Aramco on the New York
in the long term, take a significant bite out of the share of oil Stock Exchange.
used in transportation. No guesses as to who will buy the assets, then. So, with
Makes business sense, doesn't it? With unrivalled money and dubious effects, this plan will hand over control to the Sandi
influence, oil & gas industry is the biggest in the world. Some Kingdom one of the most important strategic assets and chore
perceive it as strength, others as an opportunity for disruption. engine of American innovation: electrical power in the western
2018 will see the latter category access funding. states, the same - currently inexpensive - power that make
Well, right now, you don't see Teslas at the gas station but Google, Facebook, Data Centers and the Silicon Valley
don't you see more of these (and other makers) on the road competitive. Every which way, expect both your power and
by the day? With solid reasons for optimism, this trend is internet bills to surge in 2018 should this proceed. Meanwhile,
accelerating and the financial world is paying attention. is privatization of the electric grid the norm everywhere? In
Naturally, do expect chains of charging stations to sprout the case of Saudi Arabia, the massive $300 billion privatization
across the landscape soon. programme is moving slower than the slowest snail. As far as
Last month, Royal Dutch Shell acquired Amsterdam based the power sector is concerned, 2018 is earmarked for the said
'NewMotion' which has Europe's largest Electric Vehicles privatization in the Kingdom. The rider is that the companies
charging points with over 50,000 stations. This deal gives Shell would be corporatized before the privatization process takes
immediate penetration into the charging market. NewMotion place. Would that happen to Saudi Arabia in 2050? Possibly.
operates in 13 countries and is already rolling out fast EV Back to the US, with the foreseeable advent of electric vehicles,
charging points to its network of Shell gas stations. As we power transmission lines will play an important and strategic
already know, high voltage charging stations are able to role in the US economy. Handing partial control of it to Saudi
recharge compatible electric vehicle in a few minutes. Arabia is a bad idea.
In 2018 expect other majors to join in the build out of electric Expect this issue to become even more pressing in 2018 as
charging stations - which will in turn compel more sales of awareness spreads.
electric vehicles. Norway hailed as Energy thought leader
The fight over control of the US electrical grid Norway is the biggest oil producer in Western Europe.
Back in June we reported that Blackstone Group LP and Prince According to the latest figures available as of October 2017,
production stood at 1,901,000 barrels of oil on a daily average.

49 December 2017

Fuel Watch

Naturally, the profits ought to be considerable too. But that bold move since in the third quarter of 2017, the oil and
isn't such a big surprise since there are many more countries gas stocks fared brilliantly for the fund with 8.7% return.
with better oil production, right? Notwithstanding, there's The fund owns more than $5 billion in shares of Shell and
some difference when we take the case of Norway. received handsome returns when it became the best
Unlike Saudi Arabia, Venezuela and to some level England, performing stock for the above period.
Norway hasn't squandered away its income from fossil fuel Norway's duality - extracting large amounts of fossil fuels
but has been diligently investing the profit in a sovereign for export, while cultivating and projecting the image of a
wealth fund for years. The fund has been investing heavily post-oil eco-friendly society is a marketing tour-de-force
in stocks owning shares in more than 9, 000 companies which inspires many - much like Elon Musk's Gigafactory.
around the world. In 2018, Norway's sovereign fund is set This comes at a time when the Oil & Gas Industry is facing
to cross $1 trillion. That is, roughly the size of Mexico's a severe image crisis. As westerners are becoming more
economy, making it by far the largest sovereign fund in the and more dubious of manufactured news, Norway's open
world. and altruistic approach which does not reek of propaganda
First and foremost, Norway shows that anything is possible. or cronyism inspires many. Yet Norway's Oil & Gas industry,
Scandinavian self-control and discipline has allowed Norway far from slowing down, is pumping away and the one
to cultivate a dynamic competitive economy in spite of financing this quasi-utopian advancement with no negative
being a major oil producer. Unlike other major oil producers PR.
such as Saudi Arabia and Venezuela, wealth is fairly equally So, come 2018, expect Norway's accomplishments to be
distributed and both genders are first class citizens. echoed even more vividly as people grow wary of fake news,
As a result, Norway is becoming an energy thought leader, lobbyist and Russian-sponsored rumors with political
a shiny beacon everyone looks up to. agendas. By contrast, Norway's O il & Gas industry's
altruistic approach will influence many. We are not talking
Fact: The country is a leader in electric cars. In June, 42% just lifestyle decisions; we are including policymakers and
of new cars sold in Norway were electric, up from 37% in large investors as well.
January 2017. With many new models entering Norway in Conclusion
2018, the figures are set to rise. By contrast only 1% of US In the brand new year, you'll see Russia's star rising along
cars sold are electric. What begs the difference? The 2000 the horizon enough to eclipse OPEC. After years of world
free charging stations in Oslo funded by sovereign fund, dominance, Saudi Arabia's influence will dwindle in the oil
entirely funded by Norway's oil and gas industry, could be world. In the US, Riyadh's investment in infrastructure will
it. It's a shift in funding, with the money flowing from oil & raise many more red flags. On an exciting and cheerful note,
gas to electric. we see on the cards a marked shift towards electric vehicles
In true diversification, Norway has decided to let go of some next year. Distinctly, a phenomenal opportunity to invest
of its oil and gas stock from the fund. Seems like Norway in electric cars and charging stations is up for grabs. The
has learnt its lesson from the oil crash (beginning in 2014) decision, ever as often, rests on your shoulders
as a result of which 50,000 jobs were cut. Nevertheless, a

December 2017 50