FADA Journal - October 2017

Office Bearers contents

President PRESIDENT’s MESSAGE 7 Starting Fresh Innings with Renewed Optimism
INDUSTRY TRACK 8 Festive Season Brings in Cheers for Auto Market
JOHN K PAUL
Popular Vehicles & Services Pvt Ltd OPINION 11 M&HCV and LCV Trucks Continue to Register Healthy Growth: ICRA
Kuttukaran Centre, Mamangalam, Kochi - 682 025
Tel: +91-484-234 1134 / 7872 / 5013 INSIGHT 12 The Future of Mobility in India - McKinsey & Co.
E-mail: [email protected];
SURVEYS & STUDIES 19 New Vehicle Purchase Behaviour in India Influenced
[email protected] by Digital Proliferation - J D Power

Vice President ARTICLE 21 Wall Street Warms to Detroit’s EV Vision

ASHISH KALE OFFICE BEARERS 24 John K Paul Re-Elected as President of F A D A
Provincial Automobile Co. Ltd
Kingsway, Near Railway Station, Nagpur - 440 001 FADA NEWSLINE 30 Dealers have to Reinvent Themselves to Stay Relevant
Tel: +91-712-391 1129 / 1150 in Changing Times
E-mail: [email protected];

[email protected]

Secretary General & Editor, FADA
Journal

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

ADVERTISERS’ INDEX UPGRADES & VARIANTS 35 • Hyundai Introduces TUCSON with Intellimatic ‘4WD’
NEWS BASKET • Nissan Motor India Launches redi-GO GOLD 1.0L
Back Cover • VW Introduces New Passat Starting at Rs. 29.99 Lakh
V E Commercial Vehicles PERSPECTIVE
60 37 • Hero Motocorp Sets New Global Benchmark with
Record 2 Million Unit Sales in Q2
Front Inside Cover 2 • Volvo Launches First Locally-Assembled 'XC90'
Tata Capital Financial Services • Bookings for New Honda CBR650F Open
• New Dzire Scores the Fastest 1-Lakh Sales Mark in
Back Inside Cover 59 Indian Automobile History
Tata Motors • Tata Motors Opens New CV Dealership in Ahmedabad
• Isuzu Motors Inaugurates New Dealership Facility in Nagpur
Inside Pages • Leasing of Vehicles Purchased, Leased Prior to July 1, 2017
to Attract 65% GST
• Mahindra & Mahindra Financial Services 3
42 The Auto Industry’s Real Challenge
• Bagga Link 4 - Strategy&

• SKF Group 6

• Satyam Centre of Professional Excellence 10 45 NCDRC : Ram Singh - Petitioner
Versus
• Prime Honda 18 CONSUMER CASE STUDIES Kunal TVS Auto Centre & Ors - Respondents
COMPETITION LAW
• Marikar Group 20

• Autobix 23 47 Competition Law Updates

• HPCL 33 & 51 - G R Bhatia

• Mahindra Trucks and Buses 34

• Shriram Transport Finance 38 48 Major developments affecting Automobile Industry in US

• Maurya Motors 46 NADA MUSINGS

• AMPL 50

• Carazoo Online Solutions 54 SALES REPORT 52 Vehicle Sales & Exports and Y-o-Y Growth - September 2017
• Popular Vehicles & Services 55
• United Group of Institutions 58

For Advertisement query, please contact Printed and Published by G K Ahuja on behalf of Federation of Automobile Dealers
Ankush Sethi at [email protected] Associations, 805, Surya Kiran, 19, Kasturba Gandhi Marg, New Delhi-110001.
Printed at Sita Fine Arts P Ltd, A-22, Naraina Industrial Area, Phase-II, New Delhi-110028.
Editor: G K Ahuja



President’s Message Starting Fresh Innings with Renewed Optimism

Dear friends,
At the meeting of F A D A Council held on 5th October 2017, I had the
privilege of being re-elected as President of this esteemed organisation for
one more year. I convey my sincere thanks to F A D A Council and members
at large for reposing their faith and confidence in me.
There is no gainsaying that the path ahead for auto retail business is full
of new challenges. My fellow dealers are still struggling with the
complexities of GST. While the months of August and September have been
reasonably good for auto sector, the sales numbers do not necessarily
reflect the reality at the retail level, barring few brands. As I understand,
my fellow dealers are saddled with huge stocks in anticipation of festive
sales. As the implementation of GST has acutely affected the small
businesses, there is uncertainty in the market whether the impressive sales
volumes will be sustainable after the festive period is over.
Addressing concerns of members of automobile dealer fraternity, arising
out of GST is our first priority. In view of the huge contribution made by auto retail trade and service industry in the national
and State economies in terms of employment and revenue generation, we need to leverage our strength to influence policy
formulation conducive to growth. The auto retail business essentially provides employment to local people in every nook
and corner of the country and, as such, promotes inclusive growth.
Needless to mention, F A D A has come a long way since its humble beginning in 1964. The membership of F A D A has grown
manifold, particularly in the last ten years or so. However, many of our dealer friends, especially in countryside and far flung
areas, still continue to be out of the ambit of F A D A. Our second priority during the year ahead would be to further strengthen
the membership base and to bring those of my fellow dealers who are not members as yet, into the fold of F A D A. I would
appeal to senior members across the country to support our efforts to increase membership of F A D A.
We stepped up our interaction with the Government, industry, allied businesses and other stakeholders during the last year.
We shall continue our endeavour for further deepening our relations and building rapport with all stakeholders in automotive
business.
As you are aware, F A D A has been organising Auto Summit – a mega biennial convention of automobile dealers, coinciding
with Auto Expo, since 2000. The event that has got better and bigger over the years brings together automobile dealers,
industry, government, consultants and academia on a common platform to deliberate and find workable solutions for the
current and emerging challenges.
I am happy to inform that the next (10th) Auto Summit of F A D A will be held on 9th February 2018 at Hotel Le Meridien, New
Delhi. The Summit has, as in the past, been timed with Auto Expo 2018 organised by SIAM, CII and ACMA. F A D A is making
arrangements for special invites for automobile dealers to participate at the Inauguration and to visit Auto Expo on the
preceding day, i.e. 8th February 2017, as there is huge rush of crowd on other business/public days.
We took a large delegation of F A D A members to participate at 2017 N A D A Convention & Centenary Celebrations. The
participation was not only an enriching experience, it also built bonding and fellowship among the delegation members
from various parts of the country. We would like to take a larger delegation under the banner of F A D A to 2018 N A D A
Convention & Expo scheduled during 22nd to 25th March 2018 at Las Vegas. Interested members may please get in touch with
F A D A office.
By the time this issue reaches you, the long festivities will be over. Hope, you would have had blast and made most of the big
ticket spending by the people during the festivals.
With best wishes,
Yours sincerely,

John K Paul

7 October 2017

Industry Track

Festive Season Brings in Cheers for Auto Market

Vehicle sales rode on festive spirit to record a decent 10.0% 50,028 units with growth of 17.4%, on the multiplier effect of
growth in September 2017. Witnessing all-round buoyancy, phenomenal performance of newly launched Next Gen VERNA
total domestic sales across all segments, including 2/3- with sales of over 6,000 units, along with strong pull for
wheelers, passenger vehicles and commercial vehicles, CRETA, ELITE i20 and GRAND i10 in this festive season.”
added up to 2,490,034 units in September 2017 vis-à-vis
2,263,620 units a year ago. UV major, Mahindra & Mahindra registered domestic sales of
25,327 passenger vehicles in September, growing by 23.5%
Passenger vehicles speeding towards a new high in vis-a-vis 20,537 units a year ago. The company’s mainstay,
FY’18 UVs, including Scorpio, Bolero, XUV500, TUV300 and KUV100
accounted for the bulk of the company’s passenger vehicle
Passenger vehicle sales, aided by new models and Navratris sales in domestic market, which numbered 24,109 units,
that is considered auspicious period for buying assets in reflecting a healthy 23.5% increase y-o-y.
major part of the country, remained on growth trajectory. Rajan Wadhera, President, Automotive Sector, M&M said,
Total passenger vehicle sales in domestic market at 309,955 “At Mahindra, we are very happy with our September 2017
units in September 2017 grew by 11.3% from 278,428 units performance with our passenger & commercial vehicle sales
during the same month last year. having grown at 23% & 19%, respectively. We are particularly
Maruti Suzuki India (MSI), which is aiming at a target of 2.0 happy with the performance of our Scorpio brand, which has
million unit sales annually by 2020, set the tone for passenger had its highest monthly sales in September, since inception.”
vehicle sales momentum during the month. The company Another home-grown player, Tata Motors sold 19,334
clocked a 9.6% uptick in its domestic passenger vehicle sales passenger vehicles, including cars, utility vehicles and vans
that stood at 150,521 units in September 2017, compared to in domestic market during September 2017, which marked
137,277 units a year earlier. an 18.2% uptick vis-à-vis 16,351 units in September last year.
Domestic sales of the company’s compact cars - Swift, Celerio, The growth was driven by the company’s latest offerings -
Ignis, Baleno and Dzire - witnessed a whopping 44.7% surge Tiago, Tigor and Hexa.
to 72,804 units in September 2017 (Sep’16: 50,324 units), on Honda Cars India Ltd (HCIL) clocked domestic sales of
the back of continuing robust demand for the premium Baleno 18,257 units, witnessing a growth of 21.4% (Sep’16: 15,034
hatchback and the new Dzire sedan. The new Dzire has turned units). The modelwise domestic sales break-up of HCIL in
out to be a trump for Maruti Suzuki, quickly becoming the September was as follows: City (6,010 units), WR-V (4,834
largest selling car in India displacing Alto that had been units), Brio (504 units), Jazz (3,001 units), Amaze (2,561
reigning supreme for over 17 years. The quartet of Gypsy, units), BR-V (1,298 units), CR-V (31 units), and Accord
Ertiga, Vitara Brezza and S-Cross in UV segment contributed Hybrid (18 units). Commenting on the numbers, Yoichiro
19,900 units (+8.0% / Sep’16: 18,423 units) to the company’s Ueno, President and CEO, HCIL, said, “Honda Cars India is
domestic sales tally. Domestic sales of the entry-level witnessing one of its fastest growth years in sales, backed
hatchback duo of the Alto and Wagon R were down 13.3% to by strong performance of our latest models, City and WR-
38,479 units, while the premium Ciaz sedan saw its sales V. We have had a good start to the festive season. With the
decline by 14.4% y-o-y to 5,603 units during the month. MSI’s festive purchase on full swing, our sales outlook for the
two vans, Omni and Eeco together sold 13,735 units in the season is very promising.”
Indian market during September, crawling up by just 0.9%
(Sep’16: 13,618 units).
Hyundai Motor India Ltd (HMIL), the No. Sales (Domestic + Exports) during September 2017 viz-a-viz September 2016

2 passenger vehicle player in the
country, sold 50,028 units in domestic
market during September 2017, up
17.4% (September 2016: 42,605 units).
The company’s exports at 12,257 units
during the month, however, slumped by
26.2% y-o-y. Rakesh Srivastava, Director
- Sales & Mktg, HMIL, commented,
“Hyundai achieved landmark sales of
123.26

October 2017 8

Industry Track

Toyota Kirloskar Motor (TKM)’s sales tally in the Indian company’s two-wheeler exports too witnessed a robust 30.5%
market stood at 12,3354 units during September 2017, y-o-y growth to 43,694 units during the month.
growing marginally by 2.2% (Sep’16: 12,067 units). N Raja, Bajaj Auto was back in positive territory in September for the
Director and Sr VP, Sales & Mktg , TKM, said, “We revised the first time in CY2017. The Pune-based motorcycle
price of our products on September 12, 2017 in line with the manufacturer sold 247,418 units in September 2017, up 7.3%
cess hike, which nearly reflects the prices in the pre-GST over 230,502 units in September 2016.
scenario. We are happy that our customer demand had Royal Enfield continued its dream run, selling 69,393 units in
minimum impact of the cess hike and the festive season has domestic market during September 2017, which reflected a
ushered in a positive growth in the domestic sales. With growth of 21.8% y-o-y.
demand on the rise, the current waiting period for the Innova India Yamaha Motor was the only major two-wheeler player
Crysta has gone up to around 6-8 weeks and Fortuner to 10- to have recorded a negative growth in September 2017, with
12 weeks respectively.” its domestic sales skidding by 7.8% to 82,444 units in
Meanwhile, Ford India’s domestic sales at 8,769 units in September from 89,423 units a year ago.
September 2017, slipped by 2.8% from 9,018 units a year Suzuki Motorcycle India sold 50,807 two-wheelers in domestic
ago. The company attributed the drop in sales to the new market during September 2017, clocking a healthy 37.1%
model launch planning, along with ongoing constraints in increase (September 2016: 37,057 units).
the supply chain.
Commercial vehicle sales shift gears
Two-Wheelers stay on course
Commercial vehicle sales are back on the track in Q2 FY2018
Two-wheeler sales sustained the momentum in September. after the turbulent previous quarter. Building on the
Total two-wheeler sales in the Indian market at 2,041,024 momentum of July and August, CV sales in the Indian market
units grew by 9.1% y-o-y during the month. at 77,195 units in September 2017 recorded an impressive
Hero MotoCorp despatched 720,739 units (including exports) 25.3% jump vis-à-vis 61,621 units in September last year.
in Sep’17, surpassing the 7-lakh-unit mark in a month for the Consolidating the gains of previous two months, Tata Motors
first time, which the company said was a global benchmark. witnessed a massive 30.1% surge in domestic sales of its CV,
Domestic sales at 703,473 units grew by 7.5% y-o-y, while the which aggregated 34,631 units in September 2017, compared
exports fell by 15.3% y-o-y to 17,266 units during the month. to 26,610 units a year earlier. The company commented that
Ashok Bhasin, Head of Sales, Mktg and Customer Care, Hero the sales grew on the back of strong ramp-up in production,
MotoCorp, said, “With close to three weeks still remaining in growing demand for new product launches and usual higher
the festival season, we have set an all-time record by selling off-take during the festival season. Additionally, the sales
over a million motorcycles and scooters in domestic retail were also boosted by strong growth in e-commerce segment
sales in the festive period so far, further consolidating our sales and growing demand under Swachh Bharat drive.
market leadership.” Likewise, the second largest player in the Indian CV market,
After the highest ever single month sales crossing 6-lakh mark Ashok Leyland registered a strong 24.9% growth in domestic
in August, Honda Motorcycle and Scooter India (HMSI) sales, clocking 13,755 units in September 2017 (Sep’16:
continued to fire all cylinders in the month of September. 11,009 units).
HMSI’s domestic sales stood at 569,822units (versus 539,473 Mahindra & Mahindra came up with an impressive
units in Sep’16), while exports continued to glide over 30,000 performance as well. The company notched up a 19.4% growth
mark at 32,110 units (compared to 29,355 units in Sep’16). in domestic commercial vehicle sales that stood at 19,201
The company, in the process, surpassed 6-lakh-unit mark for units in September 2017 vis-à-vis 16,081 units a year ago.
two months in a row (Aug’17 and Sep’17). VE Commercial Vehicles sold 5,084 Eicher branded trucks
Y S Guleria, Sr VP - Sales & Mktg, HMSI, commented, “On and buses in the domestic market during Sep’17, posting a
Dussehra alone, Honda’s retails crossed 1 lakh mark for the stellar 22.6% increase (Sep’16: 4,148 units).
first time ever. This is the first time ever that over one million While the sales of 2-wheelers and passenger vehicles have
Indians are already celebrating with their new Honda two- stayed on course, the smart recovery in commercial vehicle
wheeler this festival, while Dhanteras and Diwali are yet to sales is encouraging inasmuch, as the CV sales are barometer
come in October.” of the economic activity in the country. This augurs well for
TVS Motor reported bumper domestic sales at 307,160 units the auto market and economy as a whole
in September 2017, up 20.9% (Sep’16: 253,974 units). The

9 October 2017



Opinion

M&HCV and LCV Trucks Continue to Register Healthy Growth: ICRA

Growth comes back in the Domestic CV Industry as pent-up demand post GST kicks in; LCVs continue to
benefit from replacement-led demand

Contrary to the first quarter of FY 2018, the domestic gradually improving financing environment. The bus
commercial vehicle (CV) industry witnessed recovery in segment will witness subdued sales on account of weak
sales in Q2 FY 2018, up 21.0% on YoY basis driven by SRTU orders despite stable demand from staffing & school
continuation of healthy demand for LCV (Trucks) as well as segment.
significant improvement in M&HCV (Truck) sales on YoY
basis. The recovery in the M&HCV segment suggests that Passenger Vehicles - Festive season push
the impact of pre-buying (following the change in emission drives wholesale volume growth
norms), GST roll-out and supply chain disruption because
of limited availability of Electronic Fuel Injection (EFI) for Domestic passenger vehicle (PV) sales grew by robust
BS-IV vehicles appears to be waning off. In addition, the 11.3% in Sep-17, as dealers focused on stocking inventory
growth is supported by stricter compliance of CMVR ahead of festive season. In current fiscal, Diwali and
regulations and demand for tipper trucks from the Navratri festival advanced by 2 weeks, which resulted in
construction sector. However, in contrast to improvement stellar volume growth in Sep-17 and the momentum is likely
in truck sales, the bus segment is yet to show signs of to be maintained in Oct-17 as well. Moreover,
improvement (down 20.6% in 6m FY 2018 on YoY basis) on demonetization related shock punctured demand
back of sharp decline in SRTU orders. The competitive momentum in Nov-16 and Dec-16. In absence of any
intensity in the CV segment continues to be high. external shock, demand momentum is expected to remain
Outlook: Domestic CV industry sales expected to recover strong in Q3FY18 on account of low base of last fiscal.
post GST implementation Sep-17 also marks as end of Chevrolet brand in India, as
The domestic CV industry ended the fiscal 2017 with a GM pulled out its plug from domestic market due to weak
marginal growth of 4.2% (in unit sales) in comparison to sales and mounting losses. In terms of market share, MSIL
the previous year. The slowdown in growth momentum was continues to dominate the industry with 50%+ market
triggered by combination of factors including waning share. With the launch of Nexon, TML claimed 4th slot, where
replacement demand, uncertainty related to pricing of it is facing stiff competition from Honda. Exports declined
vehicles under GST and relatively subdued industrial for second consecutive month, with major players like Ford
activity to support CV sales. The industry grappled with and Nissan witnessing steep 40%+ decline in exports
demonetisation in the third-quarter and also witnessed volume. Ford has attributed decline in volume to supply
fairly subdued demand in the last quarter, even as transition related constraint as well as transition phase during new
to BS-IV emission norms was expected to result in pre- model launch (refreshed Ecosport), whereas Nissan has
buying. This coupled with limited availability of BS-IV shifted its new generation micra production (for European
vehicles, CV sales, especially M&HCV (Trucks) and Buses market) to France. All three sub-segments i.e. passenger
dwindled sharply in Q1 FY2018. Nevertheless, ICRA expects car (-9.1%), utility vehicle (-52.0%) and van (-12.7%)
that industry will find its momentum back a) aided by witnessed weakness in exports during Sep-17.
increased thrust on infrastructure and rural sectors in the Outlook: Domestic PV volume growth pegged at 9%-10%
recent budget, b) potential implementation of fleet for FY2018
modernization or scrappage program, and c) higher demand Domestic PV sales exceeded 3 million mark during FY17,
from consumption-driven sectors and e-commerce logistics which was in line with our expectation. Considering strong
service providers, especially for LCVs and ICVs. Given these growth in compact UVs and premium hatchbacks, overall
considerations, ICRA expects the domestic CV industry is realization of industry improved by 5-8% in FY17, which
likely to register a growth of 6-8% in FY 2018. The M&HCV coupled with healthy volume growth expectation, augurs
(Truck) would register growth of 1-3% during the year, as well for OEMs. Given the low penetration levels in the
lower sales in Q1 FY 2018 will be offset by pent-up demand country, the long-term prospects of the industry remain
post GST. The LCV (Truck) segment will grow at a healthy favourable. We expect domestic PV sales to grow by 9%-
pace aided by a) replacement-led demand, b) greater demand 10% during FY2018 and we maintain a 9%-11% CAGR
from e-commerce focused logistics companies, and c) estimate over the next five fiscals

11 October 2017

Insight

The Future of Mobility in India - McKinsey & Co.

Challenges & Opportunities for the Auto Component Industry

The global automotive industry is on the verge of disruption. deep-rooted and immediate impact on the automotive
Digitization, increasing automation and new business models industry. However, it is not the only trend transforming the
have revolutionized other industries, and the automotive industry worldwide.
industry will be no exception to such a revolution. The Indian Disruptive trends in the global automotive industry
automotive industry has started to experience the effects of Four technology-driven trends are disrupting the global
this global disruption. How prepared are automotive automotive industry. These will reinforce each other to effect
stakeholders for this disruption? And how can they ride this a shift in markets and revenue pools, change mobility
change to expand into newer areas? behaviour and build new avenues for competition and
This report outlines the importance and imminence of the cooperation.
disruption, the drivers of electric vehicle penetration and • Electrification: In 2030, the share of EVs could range from
the implications for all stakeholders, especially auto
component manufacturers. Acknowledging the upcoming 40 to 50 per cent of new vehicle sales. Adoption rates
disruption and reinventing the business accordingly is the could be the highest in developed, dense cities with strict
key to managing the changes that lie ahead. emission regulations and higher consumer incentives
(tax breaks, special parking and driving privileges,
E-mobility is here and now discounted electricity, etc.). Penetration may be slower
in small towns and rural areas with less charging
The global automotive industry is on the verge of disruption infrastructure and a higher dependence on driving range.
due to the outcomes of four key technology driven trends— Continuous improvements in battery and charging
electrification, shared mobility, connectivity, and, technology could minimize such local differences, and
autonomous driving. Stricter emission regulations, lower EVs are expected to gain more market share from
battery costs, more widely available fast charging conventional vehicles.
infrastructure, increasing consumer acceptance and better • Shared mobility: Mobility options like car-sharing, bike-
total cost of ownership (TCO) will create new and strong sharing, ride-sharing (carpooling and vanpooling) and
momentum for the adoption of EVs in the near future. on-demand ride services are gaining significant traction
A group of global automotive experts indicated that this in metropolises. Shared mobility offers easy, on-demand
disruption could significantly affect the automotive value availability, the flexibility to choose vehicle type as per
chain—75 per cent believe that new technological players in need and freedom from parking hassles. It also cuts down
the industry might acquire a considerable share of revenues costs related to car ownership, such as maintenance,
and profits from traditional businesses by 2030; 88 per cent service and insurance. In the US, the percentage of vehicle
agree that some OEMs or suppliers may even cease to exist miles travelled in ridesharing cars stood at 1% in 2016.
by that time due to the arrival of EVs. Of the various disruptive • Connectivity: Automotive connectivity comprises four
trends, electrification in particular is likely to have the most relevant functional groups— in-car content and services
(e.g., navigation or entertainment), vehicle relationship
management (e.g., remote diagnostics), insurance (e.g.,
telematics-based insurance solutions), and driving
assistance (e.g., semi-autonomous driving features). The
market for fully or partially integrated in-car infotainment
systems could grow from 18 million units in 2015 to 50
million by 2025, given the convenience offered by such
systems.
• Autonomous driving: Various global automakers and
technology companies are pursuing and investing in the
creation of autonomous-driving vehicles. Traditional
vehicle manufacturers, too, are already taking a slightly

October 2017 12

Insight

different track in their development processes, working and also create dependence on certain global regions to meet
independently and with leading suppliers to develop and fuel needs of the country.
begin implementing technologies that augment driver Electrification emerges, therefore, as an increasingly
behaviour. OEMs across the world are doing this by attractive avenue of exploration, and e-mobility, or the
adding incremental autonomous functions as driving “electrification of the automotive powertrain” in the form of
technology and infrastructure improve over time. If xEVs (e.g., battery-powered electric vehicles, hybrid electric
autonomous driving takes off in a big way, with supportive vehicles, plug-in hybrid electric vehicles) could be the way
regulations, up to 15 per cent of all new vehicles sold forward. As per a NITI Aayog report, India could save 64 per
globally in 2030 could be fully autonomous. In India, cent of energy demand for road transport and 37 per cent of
however, the government is currently cautious of self- or carbon emissions by 2030 by pursuing a shared, electric
autonomous-driving cars due to concerns that these may and connected mobility future.
hurt employment opportunities. A change in the The automotive industry is already feeling the effects of
government’s position in the future may shift the electrification or e-mobility, both globally and in India.
relevance of this global trend for India.
While global revenue pools from conventional sources such
as one-time vehicle sales and aftermarket sales may continue
to grow at their current pace (low single-digit growth
depending on geography), the real growth ahead lies in
services, which, for passenger vehicles, are expected to grow
by an average of up to 40 per cent per annum globally.

In India, the transformation story of the automotive industry The transition to EVs could be very quick in India. As seen in
is likely to be most heavily driven by electrification & shared developed economies like the US and Germany, around 30 to
mobility, followed by connectivity and autonomous driving. 45 per cent of vehicle buyers already consider EV as an option
The impact of electrification on India’s automotive industry while choosing a car. By 2030, EVs could hold a substantial
With increasing urbanization come environmental challenges share—up to 50 per cent in breakthrough scenarios—of
due to high levels of vehicle emissions. To combat this, passenger vehicle sales in major global geographies .
governments across the world have announced regulations This trend could impact the automotive industry in different
on emissions and efficiency that are expected to become ways. It could cause overlaps in the value chain, affect the
stringent with time. In the case of India, crude oil imports cost structure and render a few components obsolete.
account for a significant portion of the current account deficit For example, electrification will gradually drive down
demand for core value components like engines and
transmission. This might push OEMs and suppliers to explore
options beyond their traditional means of value addition.
Uncharted areas like e-motors and battery services or
packaging will emerge as more relevant and attractive. This
could create an overlap between OEMs and suppliers, making
it important for them to identify a collaborative model.
Automotive companies could benefit from seeing
electrification as an opportunity to venture into newer areas
of value addition.

13 October 2017

Insight

E-mobility is here to stay, and will play out in different ways
across the world and India. The one certainty is that it will
impact automotive component manufacturers, as it gains
traction in India.

Drivers of EV adoption

While global EV sales presently form less than 1 per cent of
new car purchases, this may soon change, with a mix of push
and pull factors creating a self-sustainable cycle of EV growth
over the next few years.

Earlier in 2017, former Power Minister Piyush Goyal next decade, especially through the use of alternate
announced the aspiration to not sell a single petrol or diesel powertrains. In addition, India has a huge push on reducing
car in the country by 2030. With such a thrust, both the push the current account deficit by cutting down on oil imports
and pull factors of EV adoption could shape the e-mobility that contribute significantly to the deficit. They also create
landscape in India. Globally, governments are working with dependence on other countries. While greater EV penetration
the private sector to build EV infrastructure for sustainable will create dependence on new commodities and component
growth. These efforts may boost EV sales and demand and imports, EVs could help manage current account deficit and
facilitate investment in research and development, possibly reduce India’s dependence on oil-rich countries.
reducing the cost of critical components like batteries due to The market leader in EV adoption, Norway has implemented
growing scale. These indirect gains could generate customer a mix of initiatives to promote e-mobility:
“pull” to further enhance sales. Lower tax: EVs are subject to reduced circulation or road tax,
Regulations and incentives and are exempt from VAT and other charges like registration
Many countries have tried to promote e-mobility through fees. Moreover, tax on company EV cars is 50 per cent lower
multiple initiatives, generating a push through stringent than for traditional cars. Annual motor vehicle tax/road tax
regulations and lucrative consumer tax incentives for using is lower too.
EVs. These combine to create a supportive ecosystem that • Free parking: Municipality-owned parking lots offer free
fosters EV adoption. However, monetary incentives alone
cannot drive EV penetration. For example, West Virginia in parking for EVs.
the US offers the most monetary incentives for EVs, but has • Free or discounted road tolls and ferry costs: EV owners
seen low EV adoption. California, on the other hand, offers
fewer monetary incentives, but has the highest penetration, can use most toll roads and ferry connections for free.
thanks to the government’s investment in providing robust They may have to pay a fee in the future, but rates could
EV infrastructure, parking benefits and workplace charging still be discounted.
facilities. • Special transport lanes: EVs enjoy access to dedicated,
Stringent government regulations on emissions could provide fast-moving lanes for public transport.
a big push towards EV penetration. Worldwide, the industry • Free battery-charging points: An increasing number of
is gearing up to meet lower CO2 emission targets over the publicly-funded charging stations allow EV users to
charge their cars for free.
Technology
Enhancements to EV technology could help improve battery
prices, charging time and driving range, all changes that will
encourage the faster adoption of EVs. As a large component
of the overall EV costs, high battery prices impact
manufacturing and sales. Between 2011 and 2016, global

October 2017 14

Insight

battery pack prices dropped sharply from approx USD 800 Infrastructure
per kWh to USD 227 per kWh. This also led to higher battery- Three key factors—cell energy density, charging speed and
operated EV (BEV) and PHEV sales, especially in Europe and swappable battery infrastructure—determine the availability
China. The US Department of Energy expects battery prices to and quality of the fast-charging infrastructure needed. Each
continue falling, and to be around USD 140 per kWh by 2022. of these factors is evolving by the day. The availability of
Battery prices in India currently follow global price trends; charging infrastructure will be a crucial factor in reducing
several drivers could reduce global costs further, by as much downtime for EV customers. Recognizing this concern, China
as 50 per cent between 2016 and 2021: is focusing heavily on EV infrastructure—it will be building
• Growing demand: Global output demand is expected to around 12,000 centralized charging or battery swap stations
and nearly 5 million scattered charging poles by 2020 to
be more than 4 TWH in 2025. Growing scale could push meet the charging demand of 5 million EVs—effectively aiming
down battery costs. The current average capacity for one charging point per car.
utilization of manufacturers and upstream suppliers is Most markets worldwide have been unable to grow
less than 50 per cent. As battery manufacturers start infrastructure to keep up with their EV aspirations. To fill
exploring high volume sourcing of critical components, this gap, different business models are evolving worldwide
they could achieve economies of scale sooner rather across the automotive value chain.
than later, resulting in lower battery costs. Car companies in some countries are themselves investing
• Technological improvements: Advancements in cathode in setting up fast-charging stations and providing free
material and anode technology could improve energy charging options for customers. Besides OEMs, oil and gas
density, prolonging battery life. Improved battery companies, too, have started to offer charging infrastructure
efficiency may also encourage EV adoption, eventually to keep customers coming to their petrol stations. Owners of
reducing costs. facilities accessible from public roads—restaurants, parking
• Market dynamics: Several factors will come into play as garages and shopping malls—are doing the same to generate
industry competition intensifies—cost-competitiveness additional revenue.
between players, the search for cheaper raw material, Customer demand
new entrants with niche expertise like non-lithium battery The automotive industry in India caters to many varied
technology, and indigenization of technology. All of these segments of end customers across two wheelers, three
could reduce manufacturing costs, lowering battery wheelers, passenger cars, off-road and commercial vehicle
prices in turn. segments. Moreover, there are differences based on end
• Picking up on the promising future of EVs, the private use as a private or public vehicle. Participants at industry
sector is also exploring opportunities in developing roundtables organized by the McKinsey Centre for Future
battery technology. In 2017, three multi-national Mobility indicate that vehicle segments like buses, three
companies have announced a JV to manufacture lithium- wheelers, scooters and small commercial vehicles will
ion batteries for EVs in India with an initial investment see faster EV penetration. These will be followed by
of INR 1,200 crore. passenger cars (taxis will likely see faster adoption than
Improved charging time will also make EVs more attractive. privately owned vehicles), while medium and heavy
An Indian automobile manufacturer has already cut down commercial vehicles will be the slowest to move to electric
the charging time of its EVs by 75 per cent—in three years, the powertrains.
charging time fell from six to nine hours earlier to barely 75 These roundtables also indicated that high upfront
to 90 minutes. However, this is still high for commercial end acquisition cost and limited availability of chargers were
use applications. The automotive industry has already seen the two biggest deterrents to greater EV adoption. The
technology evolve from AC slow chargers to DC fast and ultra- economics of TCO, including resale value, play a huge role
fast chargers today. as well. Our analysis shows that while e-scooters are more
Current EV models, particularly BEVs, lack the driving range economical than traditional ICE scooters at purchase,
of gasoline cars, and need to be plugged in to charge more when it is time to replace the battery in the fifth year, they
frequently. Range expectation also depends heavily on vehicle no longer seem so economical. EVs in the passenger car
end use, which is mostly correlated with the vehicle segment. segment have a significant premium over directly
In the case of passenger cars, the average driving range is comparable ICE vehicles, and break even on TCO in about
expected to go up from a current estimate of 300 km to about six to seven years.
500 km within 10 years.

15 October 2017

Insight

For passenger cars in particular, taking various factors into regulations and well defined strategic targets on crude
account, three horizons of EV purchasers emerge: oil substitution could offer much needed long-term
clarity to the automotive industry, enabling companies
• The first horizon has “high-end buyers”, who expect luxury to plan pipelines in advance. The government could also
and new technology, “risk-averse green technology set up committees to provide guidance, as and when
adopters” and “second-vehicle budget buyers”. These industry stakeholders need any support to achieve their
purchasers may be early EV adopters. targets.

• In the second horizon, as the TCO of EVs improves, “in- As it drives EV penetration through policy and long term
town mobility seekers” and “mass premium seekers”, who direction, the government could also define its level of
are moving up the segment may join the EV group. participation in the means employed to meet the policies

• In the third horizon, young families seeking practical and targets. Globally, most governments define
transport solutions with modern technology, features
and style may buy EVs. They could be persuaded by the regulations and targets that are technology agnostic,
and the industry chooses a portfolio of technologies to
improved TCO and technology of EVs, which by then could ensure compliance.
be at par with ICE cars, if not better.
• Incentives and subsidies: Currently, the TCO economics
At a vehicle-segment level for passenger four-wheelers, an of EVs do not work for either the customer or the charging
analysis of customer buying preferences revealed that infrastructure providers. The government might need to
customers for Segment B (hatchbacks and entry-level sedans) drive adoption, as seen in the case of Norway, through a
valued a broader set of factors beyond mere cost, unlike variety of avenues like upfront or recurring incentives,
Segment A (entry-level mini hatchbacks). Segment B customers tax breaks, funding for infrastructure and innovation,
may, therefore, be closer to considering EVs while making the
next purchase. support for technology localization and skill
development. The Indian government launched the FAME
India scheme in April 2015 to support the development
The way forward for e-Mobility in India of the hybrid and EV market and manufacturing
ecosystem through subsidies. Of the total Phase 1
Beyond end customers, three key stakeholders could play an allocation in FAME, only around 25% has been used by
integral role in the EV transition in India—government, August 2017. FAME also underwent changes midway—
infrastructure (power, oil and gas) and automotive industry the NITI Aayog took it over from the Department of Heavy
players (OEMs, auto component manufacturers and battery- Industries and mild hybrids were removed from the
makers). As an integral part of this ecosystem, auto scheme’s coverage list.
component manufacturers can influence its evolution, which As public policy influences the automotive sector, all
in turn, could shape the road ahead for them. key stakeholders within the government could work
The government

The government could play a vital role in driving EV towards a unified, transparent and predictable decision-
penetration. Given that electrification could help meet
emission targets and reduce dependence on crude oil imports, making system. A comprehensive set of EV guidelines
could help the government to meet its aspirations and
EVs have become a part of mission documents for many milestones for emissions and efficiency. In addition, an
governments globally. Any country determined to support EV
adoption should focus on developing a supportive ecosystem, exhaustive list of parameters for product inclusion or
exclusion from the FAME scheme could help automotive
much like Norway has done. The Indian government in companies in deciding their product pipelines and
particular could focus on three areas:
improve the utilization rate of funds offered under the
FAME scheme. A clear mandate and goal for each
• Environmental targets and strategic intent: The Indian department within key ministries could help to make the
government’s Tcruerarteyn)tiCs Oto2 emission target (based on the EV policy more predictable and improve its coordination
Paris Climate maintain 113 g/km by 2021; with schemes like Make in India.
the average fuel efficiency target, in line with the
Corporate Average Fuel Consumption (CAFC) standard, • Long-term direction: Setting long-term EV aspirations
is 22 km/litre by 2022. The government also has a long- could help the government ensure sustainable
term strategic focus on reducing crude oil imports and
the implied dependence on certain trade partners. penetration and define a roadmap for the industry while
giving the industry enough time to prepare and act. For
example, India’s current EV-adoption commitment to the
A consistent and stable government policy on emission

October 2017 16

Insight

Clean Energy Ministerial (CEM) aims at 30% new sales As an example, in China, incumbents and new attackers
of electric passenger cars, light commercial vans, buses are expanding their play across the EV supply chain—
and trucks (including BEVs, HEVs, PHEVs, and fuel-cell from developing batteries to offering services like
vehicles or FCEVs) by 2030. To achieve this long-term charging. Interestingly, the established players and EV
goal, the government could also set short-term milestones specialists are trying to develop a presence across most
to track progress and take corrective action, if required. parts of the value chain, while emerging players are
The government could consider working with industry selective about their role—venturing into areas like
associations to define a technology-agnostic roadmap design and engineering, marketing and sales, distribution
to chart the route ahead for automotive stakeholders in and charging services.
the industry.
The government could also encourage collaboration
between public and private players to ensure long-term
buy-in from all automotive stakeholders. Some
collaboration are already underway—as seen in the case
of the ARAI, ISRO, and BHEL working together on a project
to explore the applications of lithium-ion battery
technology for surface transport vehicles.

Automotive industry players

As e-mobility penetrates worldwide, the cost structure of
vehicles is likely to change. The market for ICE components
like engine and transmission could shrink gradually while
key components and systems related to EV motors and battery,
charging technology, power electronics and EV software could
see significant growth. With evolving technology across key • Build new competencies: As EVs take off in India, most
components, companies have enough room to expand their automotive players may need greater access to new
play. At the same time, new players are also entering the EV
space—a possible cause for concern among traditional technical talent not only in software and power
electronics but also across commercial and supply chain
manufacturers, unless they prepare for this disruption. functions. In addition, there could be a need to build
Automotive players in India could expand their play in these
times of disruption through the following focus areas: new technology assets like testing facilities, rapid
prototyping, and product/UI design capabilities.
Automotive players in India need to assess such needs
• Change the mix in the ecosystem: The entry of EVs in the and find ways to build EV competencies in their existing
automotive landscape could change the balance of the
industry. OEMs and suppliers may need to start talent pool or acquire from outside.

competing for new sources of value addition to maintain • Improve performance: This could include reducing
their profit pools. Many unconventional partnerships battery cost and charging time, and increasing EV driving
are emerging, such as the foray of global tier-1 auto
suppliers into the EV battery business via joint ventures range. Globally, battery prices are dropping due to
technology and scale improvements—this could affect
with cell makers. Many EV start-ups have also battery prices in India as well. Additionally, automotive
mushroomed in the recent past, inspired to replicate the
success of a few players. players in India could explore ways to make charging as
convenient as refuelling. Battery swapping could be a
solution, especially for public transport vehicles like
OEMs and component players in India need to figure out buses and three-wheelers, where product
opportunities to protect and expand their market share. standardization is easier (subject to charging time, ease
There are early signs of resilience across segments—a of swapping, scheduling and routing of vehicles).
leading two-wheeler manufacturer has invested in a
start-up to manufacture affordable electric two- • Build scale: Battery and EV component manufacturers in
wheelers. A hardware start-up has developed a premium
scooter that uses an in-house lithium-ion battery and India need to figure out strategies to develop scale and

can charge to 80 per cent in under an hour. Similar to make local manufacturing feasible. Leading battery

innovations are needed across the EV ecosystem. manufacturers have a different point of view on scale.

According to one estimate, approximately 3 GWh of cell

17 October 2017

Insight

production facility is needed to gain economies of scale component suppliers some time to transition to a
different product mix. However, as the supply–demand
in battery cell production. Another global battery balance shifts, auto component OEMs need to brace for

manufacturer puts the figure at a minimum of 10 GWh. significantly lean operations in ICE vehicle components.

Going with the conservative estimate of 10 GWh,

approximately 200,000 to 500,000 four-wheelers (10- • Re-invent the business, including collaborating with
20 kWh) and 1.5 million to 2 million two-wheelers (3 OEMs/other manufacturers across the global industry:

kWh) sold in a year need to be electric to create the Auto component manufacturers could benefit by

required scale. This seems achievable even excluding collaborating among themselves and with OEMs to chart

the replacement battery demand. out their EV path, and accordingly define individual

The road ahead for auto component manufacturers strategies. It might be timely to get started on this, as the
prudent players have already started forming
There is no denying that e-mobility is here and now, and that partnerships. As automotive players in India seek the
its growth could impact auto component manufacturers in
India in a big way. It is imperative for auto component best business model, it is important to remember that
models that have worked in the past and in other
manufacturers to start preparing for the ensuing disruption. geographies may not necessarily be the best solution
They could consider a three-step roadmap to smoothly
transition into the EV way: for markets in India.

• Build the right assets and skills to serve the needs of the
new age industry: Auto component manufacturers could
• Acknowledge and move fast: While 3-wheelers and buses need access to new assets (e.g., new prototyping and
are expected to be electrified in the first wave, the second
wave will see scooters, taxis and small & light testing facilities) and skills (across diverse functions
like engineering, sourcing, marketing, investments/M&A)
commercial vehicles going the EV way. This will eventually in order to thrive in the new ecosystem. It is imperative
be followed by private cars and other vehicle segments.
As a result, there could be a gradual transition away that they think about it and chart out detailed plans to
build or acquire such assets and skills
from ICE vehicles across various segments giving auto

October 2017 18

Surveys & Studies

New-Vehicle Purchase Behaviour in India Influenced by Digital
Proliferation, J D Power Finds

Mahindra Ranks Highest among Mass Market Brands

The strengthening digital environment in India is impacting by 31 points (on a 1,000-point scale) from 2016. Key
consumer behavior throughout the new-vehicle purchase factors contributing to this improvement include a higher
journey, according to J D Power 2017 India Sales Satisfaction implementation rate on process standards; an increase
Index (Mass Market) Study released on October 12. in the number of amenities made available at dealer
facilities; and a drop in pressures and problems
Proliferation of online information is altering the landscape experienced by customers during the shopping
of the shopping process. The study finds that 49% of new- experience.
vehicle buyers in India researched vehicles online, an
increase of 15 percentage points from last year. The primary • Upgraded dealer facilities are worth it: Satisfaction in
information searches relate to vehicle pricing and product the dealer facilities factor has improved y-o-y, with 65%
specifications, resulting in an increasing number of
customers visiting showrooms with a clearer idea of pricing of customers—a 5-percentage-point increase from last
year—saying their dealer offered all the amenities
and the variants of choice available. measured, including, Wi-Fi access, comfortable seating

“The digital medium is enabling customers to collect a space and product brochures, among others.

significant amount of information in advance of their vehicle • Salespersons are exerting less pressure on customers:
purchase,” said Kaustav Roy, Director at J D Power Singapore. The industry has improved in terms of the number of
“However, they still need relevant advice to be provided at
the showrooms in order to formulate it into a purchase problems and the level of pressure experienced by
customers, with the proportion of those who experienced
decision, as a large proportion of customers are still either a problem or pressure during the buying process
undecided before their visit. Ultimately, brands that
effectively help their customers bridge the online and offline dropping by 4% this year (37% vs. 33%, respectively).

purchase journey are likely to benefit from positive word of
mouth and an enhanced brand image.”

The study finds that nearly half of customers who used the
internet to research their new vehicle seriously considered
other models before making a final decision—19% higher
than those who relied only on word of mouth and showroom
visits for their information needs (30%).

Study findings also show that the majority of customers using
online tools in advance are younger, more educated and more
affluent. More than half (58%) of customers who browsed
the internet in advance are younger than 35 years of age,
with the median age of this group two years younger than
those who did not use the internet. Additionally, these
customers are more educated, as 80% are university
graduates, compared with 66% of those who did not use the
internet. Customers who used the internet to research their
purchase decision also have a mean income 20% higher than
those who did not, as well as a preference for purchasing the
higher variants of vehicles—even those shopping for smaller
cars tend to buy at the higher end of the segment.

Following are key findings of the study:

• The overall sales satisfaction index for the industry
improves significantly: Overall satisfaction increases

19 October 2017

Surveys & Studies

Study Rankings

Mahindra ranks highest in sales satisfaction, with a score of
866. Toyota rank second with 856, while Ford ranks third
with 846.
The 2017 India Sales Satisfaction Index (Mass Market)
Study—is based on responses from 7,831 new-vehicle owners
who purchased their vehicle from from September 2016
through April 2017.
Now in its 18th year, the study examines six factors that
contribute to overall customer satisfaction with their new-
vehicle purchase experience in the mass market segment. In
order of impact on overall sales satisfaction, those factors
are sales initiation (17%); dealer facility (17%); deal &
paperwork (17%); delivery timing (17%); salesperson (16%);
and delivery process (16%)

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October 2017 20

Wall Street Warms to Detroit's EV Vision

GM electric goal jolts stock; Ford rethinks its spending

Detroit's vision for how it can compete against Silicon Valley "General Motors believes the future is all-electric. A world
is starting to come into focus — and Wall Street finally may free of automotive emissions," product chief Mark Reuss said.
be taking notice. "These aren't just words in a war of press releases. We are
General Motors recently revealed plans to launch 20 new far along in our plan to lead the way to that future world."
electric or fuel cell vehicles by 2023 as part of CEO Mary At least the first two of the 20 new vehicles will be based on
Barra's push toward an autonomous, zero-emission future. the current Chevrolet Bolt EV, while future ones will feature
Ford CEO Jim Hackett, meanwhile, spelled out drastic cost- an "all-new battery system" and architecture, GM said. The
cutting measures to improve the automaker's ability to first two vehicles are expected to launch in the next 18 months.
compete now and in an uncertain future for the industry. GM declined to provide specifics about the next-generation
The moves were meant to reassure skeptical investors who propulsion system or what vehicles it will electrify. However,
have kept both companies' stock prices in neutral, instead it previewed three clay models of vehicles designed for the
favoring the disruptive business models and new-age propulsion system: a Buick crossover, a Cadillac wagon and
technology of Tesla and Google. a pod-looking vehicle with "Bolt EV" badging. Their underlying
They might have worked. architecture can accommodate two different heights of cells
GM's shares hit a new high every day in the recent past, as for the battery pack.
bullish analysts upgraded its stock, and there is growing Reuss promised the vehicles would be profitable, but he
speculation that GM could spin off its mobility business into would not elaborate on a time frame for that or say when the
a separate company. Ford received a small bump before its automaker might offer zero-emission vehicles exclusively.
stock price leveled off, and several analysts issued reports Ford also intends to operate a "sustainably profitable"
saying the Blue Oval has the right building blocks in place battery-electric vehicle business, said Jim Farley, the
for success, though it may take some time. company's president of global markets.

By the numbers While Ford offered even fewer details than GM, Hackett said
• $14 billion: Amount Ford plans to reduce material and the automaker would slash spending on internal combustion
engines by nearly one-third in the next five years. The $500
engineering costs through 2022 million in savings will be reallocated to electric-vehicle
• $7 billion: Product development funding Ford is development.
Ford is the US's No. 2 seller of electrified vehicles, according
reallocating from cars to light trucks to the automaker, but lags in sales and development of
• 20: Number of electric or fuel cell vehicles GM will battery-electric vehicles. It plans an EV crossover with a 300-
mile range by 2020 and said that it would add an unspecified
bring to market by 2023 number of battery-electric vehicles "post 2020." It has
• 100%: How much of its US lineup Ford plans to make dedicated an internal team, dubbed Team Edison, to study
and develop battery technology.
connected by end of 2019 Connectivity
• 6 million-plus: Number of GM vehicles in North America

now equipped with 4G LTE

"At this point in the cycle, it is extremely difficult to Hackett announced plans to build modem connectivity into
sustainably push earnings expectations to new highs," Ford's full US lineup within two years.
Morgan Stanley analyst Adam Jonas said. "We are not About 55 percent of Ford's lineup is connected today. The
surprised to see auto firms spend greater portions of their automaker still is exploring how it will commoditize that
presentations focused on a thoughtful pivot to Auto 2.0." connectivity and what services it could offer.

Zero-emission future "I don't feel that where we are competitively is where we
That pivot — for both Ford and GM — includes moving away should be," Hackett said, adding he felt that could be resolved
from the traditional internal combustion engine to zero- rather quickly.
emission propulsion systems. GM's vehicles have been connected through OnStar since the

21 October 2017

subsidiary was founded in 1996. It began adding 4G LTE through more common parts and design technology that
Internet to vehicles in 2014. More than 6 million GM vehicles requires building fewer prototypes.
are now equipped with 4G LTE in North America. Ford said it's reallocating $7 billion of capital from cars to
Connectivity is a key part of the development and deployment light trucks. This year, it decided to move production of the
of autonomous vehicles. GM and next-generation Focus from North America to China to save
Ford have been testing self-driving vehicles on public roads, money. It also has been chasing GM and other rivals in hot
though the two have taken different paths. segments such as midsize pickups and compact crossovers.
GM is on what it calls its third generation of the self-driving The automaker said that shift in spending on light-vehicle
Chevrolet Bolts it's developing through Cruise Automation, development would result in fewer car nameplates but did
which it bought in 2016. The company has roughly tripled its not provide specifics.
California test fleet of self-driving cars since July and aims Those moves are meant to bolster profit margins, an area
to become the first automaker to deploy them for ride-sharing Hackett has admitted Ford lags GM and wants to fix.
and ride-hailing purposes through a partnership with Lyft. Ford's second-quarter profit margin of 5.9 percent was down
Ford, which is testing self-driving Fusion sedans, also formed from 7.7 percent a year ago and well below the 10 percent
a partnership with Lyft in September. It's planning to launch margin that General Motors reported for the same period.
a Level 4 self-driving vehicle for commercial use in 2021. The two companies are scheduled to release third-quarter
Ford has said it wants high utilization rates to make it as results in October.
profitable as possible. Hackett said Ford still has a long-term goal of an 8 percent
"The best model to do that is to have a diverse group of operating margin on the core automotive business as it looks
businesses and services to utilize the vehicle all day long," to boost overall profitability.
Farley said. Some analysts, though, still want Ford to provide many more
To prepare itself for such a future, Ford is embarking on a details and answer more questions before buying into the
regimen to improve its fitness, which is a favourite term of company's plans under Hackett.
Hackett. "While the building blocks may be in place, it will take quite
The company plans to reduce the rate of growth in automotive some time for benefits to be clear and likely for investors to
costs by half through 2022. It's vowing to cut $10 billion in give credit," Barclays analyst Brian Johnson wrote in a note
incremental material costs and $4 billion in engineering to investors. "Thus, for the time being, investor focus on Ford
expenses over the next five years. It hopes to achieve that will be around quarterly earnings and '18 guidance — where
we don't see much positive surprise."

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October 2017 22



Office Bearers for the Year 2017-18

John K Paul Re-Elected as President of F A D A

At the Council Meeting held immediately after the 53rd AGM was the first automobile dealer from Kerala to have been
on 5th October 2017 at New Delhi, John K Paul was elected last year as President of F A D A since its inception in
unanimously re-elected as the President of Federation of 1964.
Automobile Dealers Associations (F A D A) for the year At the same meeting, Ashish Kale and Vinkesh Gulati were re-
2017-18. elected as Vice President and Hony Secretary, respectively.
Manish Raj Singhina was elected Hony Treasurer for the year
2017-18.

Ashish Kale, Vice President

Ashish Kale, 44, is the
Managing Director of
Provincial Automobile, one of
the oldest dealerships in the
country, based out of Nagpur.

Managing one of the larger Provincial Automobile has
groups engaged in retail been in the Auto Retail
automobile trade in India, John Business since 1930 and is one
K Paul is the Managing Director of the oldest Channel Partners
of Popular Vehicles and of Mahindra and Mahindra Ltd
Services Ltd, Prabal Motors Pvt for their Auto and Tractor
Ltd and Director of various Divisions, having been
other Group Companies associated with the Group
John K Paul is the Managing since 1954
Trustee of Kuttukaran The Group also has franchise
Foundation running the for Bharat Benz range of Trucks and Buses for the Vidarbha
Kuttukaran Institute for Human and Marathwada regions. The Group operates dealership
Resources Development. of Nissan Motors India Ltd for Vidarbha region, as well. In
He is an Engineering Graduate addition, the Group is engaged in multi-locational Used Cars
from the Regional Engineering Business as franchisee of Mahindra First Choice Wheels in
College, Calicut. He was the the region and as Dealers for Mahindra Construction
President of the Kerala Chamber of Commerce & Industry for Equipments for Vidarbha, Marathwada and Mumbai
the year 2005-06. He is also former President, TiE-Kerala as regions.
well as Former Member of Board of Trustees, TiE Global. He Ashish Kale is also MD of Provincial Insurance Broking, which
was the President of both the Kerala Hockey Association and is an IRDA Certified General Insurance Brokerage firm, having
the Ernakulam District Hockey Association in the past. offices in Nagpur, Bhopal, Pune and Mumbai.
John K Paul is, currently, also the President of Kerala He is President of Vidarbha Automobile Dealers Association
Automobile Dealers Association. He is also a member of as well.
Governing Council of Automotive Skills Development Council Ashish Kale has been a Managing Committee Member of
(ASDC), jointly promoted by SIAM, ACMA and F A D A. Central Provinces Club Nagpur in the past and is an active
John K Paul has been actively associated with F A D A for the Member of Rotary Club of Nagpur, V idarbha Cricket
last 7-8 years and was Hony Secretary during 2012-13 & Association, Gondwana Club and Vidarbha Economic
2013-14 and Vice President during 2014-15 & 2015-16. He Development Council.
Ashish Kale has been actively associated with F A D A for the
Past 7 years and has been a Member of FADA Council for the
last 5 years.

October 2017 24

Office Bearers for the Year 2017-18

Vinkesh Gulati, Hony Secretary He is also a member of Governing Council of Automotive
Skills Development Council (ASDC).
Vinkesh Gulati is a Law
Graduate and has done Manish Raj Singhania, Hony Treasurer
Masters in Commerce and
Masters in Business Manish Raj Singhania is the
Management. He is Managing Managing Partner of Ralas
Partner of United Automobiles, Motors based in Raipur, which
one of the largest selling Bajaj is one of the largest
2W dealerships in India and dealerships, engaged in sales,
also deals in Mahindra service and spares of the entire
Automotive. He has been range of vehicles
regularly recognized by manufactured by M&M and
Mahindra and is the member Mahindra Trucks and Buses
of M&M Dealer Council. Ltd. Possessing B Com and MBA
degrees, Manish Singhania is
He is Senior Vice President of also engaged in agriculture
United Group of Institutions land and real estate business.
having educational He has been the State Chairman
institutions in Allahabad and Greater Noida, imparting – Chhattisgarh and Council
Engineering, Management, & Computer Science degrees. Member of F A D A since 2012
and has been associated with its various committees.
Vinkesh is Director in United Bharat, Hindi Daily Newspaper Manish Singhania is also actively associated with a
having circulation in Eastern Uttar Pradesh. number of social and industry/trade bodies in various
capacities, such as: President – Raipur Automobile
He is Chapter Chairman of Indian Industry Association. He Dealers Association (RADA); State Secretary (CG) – Eastern
was President of Allahabad Automobile Dealership India Chamber of Commerce & Industries; President – CG
Association during 2010-12. Kshetriya Sahkari Gruh Nirman Samiti; State General
Secretary (CG) – Akhil Bhartiya Vaishya Mahasamelan;
He has been actively associated with F A D A for the last 9 and Member – State Road Safety Council, Mahindra
years. Finance Dealer Council, and Mahindra & Mahindra
Dealer Council
Vinkesh Gulati was Hony Treasurer of F A D A from 11th
January 2016 to 22nd September 2016 and has been continuing
as Hony Secretary since 23rd September 2016.

Engagement of GST/Service Tax Consultant

A GST/service tax consultant – Ms Puloma Dalal, FCA based in Mumbai, has been engaged by FADA on retainership
to help members deal with the complexities of GST/service tax law and procedures. She will, on reference made by
F A D A, guide and give legal opinion on various issues relating to GST/service tax as applicable to automobile
dealers.
FADA 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/service tax issues raised by FADA 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/service tax as relevant to automobile dealers,
may send their queries to F A D A office at 804-805, Surya Kiran, 19, K G Marg, New Delhi (E-mail Id: [email protected]).
The service is offerred to F A D A Members free of charge.

25 October 2017









FADA Newsline

Dealers have to Reinvent Themselves to Stay Relevant
in Changing Times

Automotive scenario is changing at alarmingly fast pace. that the Indian entrepreneurship will be even more different
Automobile dealers have to change and innovate, adopt in 2020, as it evolves. Laws, taxes, consumers and the entire
technology, imbibe service orientation and be constantly on ecosystem are changing, leaving the Indian entrepreneurs,
their toes to face disruptions, as otherwise they will be including automobile dealers, with many questions. What is
overtaken by the events. This was the message that came out the quantum of change expected? What do we need to do to
loud and clear from the deliberations of F A D A’s 53rd Annual keep pace with the changing times and capitalise on the
Session on the theme “Vyapar – Are Indian Businesses Ready evolution instead of just survive? To perish is not an option,
for Changing Times, held on 5th October 2017 at New Delhi. and thriving will need new learning, unlearning and

Setting the tone of proceedings, F A D A President - John K relearning.” As such, F A D A could not have had a better
Paul said that the Indian businesses and auto retail business, theme for the Annual Session, he added.
in particular, were witnessing major disruptions and Major General G D Bakshi (Retd), speaking on the topic ‘Living
vicissitudes of late. Old management techniques and tools Like a Leader’ and relating anecdotes from his battlefield
are fast losing their relevance. “As we look ahead, we realise experience, emphasised on the importance of team building

October 2017 30

FADA Newsline

and sustaining. A true leader must be able to build and sustain uncertainty in Government’s policies and growing
team, synchronise efforts to achieve the goals of an complexities of doing business in India. He said that the
organisation, take decisions and own up, and produce results automobile dealers, in particular, have to operate with
on the ground, he said. their hands tied down.
In the Panel Discussion I – “Doing Business in India – An Sanjeev Bikhchandani, Founder and Managing Director,
Entrepreneur’s Journey So Far ”, Dr Ashwani Mahajan, Naukri.com, pointed out that GST had done immense harm to
National Convenor, Swadeshi Jagran Manch, highlighted the SMEs. He expressed the view that the policies should
growing inequalities in India. He said that GDP in India was ultimately benefit the common people.
hardly a barometer for the well-being of people at large, with The panel members felt that though GST is a good idea and a
90% of the people having remained untouched by the GDP revolutionary reform, equating big businesses with small
growth over the years. He stressed on inclusive growth and businesses in its implementation is a mistake, which the
empowering farmers and common people. Government must rectify at the earliest.

Dr Mahesh Gupta, Chairman and Managing Director, Kent The panellists, however, agreed that the future is bright,
Systems, painting a grim situation of air and water pollution notwithstanding numerous challenges facing entrepreneurs
in times to come, emphasised on growth with sustainability. today. The panellists also agreed with the view that auto
Nikunj Sanghi, Past President, F A D A representing the retail and service industry plays in important role in revenue
voice of dealers at the panel discussion, alluded to the
and employment generation, which could be used to influence

31 October 2017

FADA Newsline

the Government in formulating policies conducive to growth. from auto retail business. Illustrating the uncertainty
Gaur Gopal Prabhu, a Spiritual Leader and Life Coach from besetting the auto retail business, he said that automobile
ISKON, dwelt on managing change. He said that we should dealers had to suffer huge losses due to abrupt decision of
accept the unchangeable, which is beyond our control, using the Supreme Court to ban the sale of BSIII vehicles from 1st
emotional and spiritual support. At the same time, we must April 2017. He added that switchover to electric vehicles,
be ready to change the changeable and manage the changeover with far less complex mechanism and number of parts, would
to our advantage. result in paradigm shift, leaving automobile service and
Initiating the discussion in Panel II: ‘Reimagining Automotive workshops virtually out of business.
Dealership Business for Next Generation’, Tamal Arun Anand, Director, Centre for Information and Development
Bandyopadhyay, Auther and Consulting Editor, Mint, Communication, expressed the view that policy initiatives of
highlighted (i)Digital influence, (ii) Uncertainty, (iii) Policy the Government were good and aimed at removing bottlenecks.
flip-flop, (iv) Virtual world and (v) Technological changes, as However, the problem lay in their executions.
the major challenges for auto retail business. Rajan Pental, Group Preesident and Head, Retail Assets, Yes

Vinkesh Gulati, Hony Secretary, F A D A, reflecting the Bank exhorted the automobile dealer community to adop
perspective of auto dealers at the panel discussion, pointed digital distribution model, embrace technology and bring in
out that abysmally low margins, uncertainty, policy flip-flop out-of-box thinking to tide over the challenges.
and complexities were weaning the next generation away Prahlad Kakkar, Ad Guru and Founder, Genesis Film

October 2017 32

FADA Newsline

Production, referring to the major changes sweeping the childhood in a small village in Tamilnadu to the National Stock
auto landscape, said that buying a car and for that matter, Exchange, Dr A Velumani, Founder & MD, Thyrocare
buying a house is considered white elephant by today’s tech- Technologies, said that the disruptions are important for
savvy discerning customer, particularly when online car learning and success. He touched on the following mantras
hiring companies like Ola and Uber have become all- for success: Be focussed, Be frugal, Use technology, Romance
pervasive and provide the ease and comfort of travel never with risk, Work on stamina, Become an example for others and
witnessed before. He opined that it is the customer Maintain perfect discipline. He said that entrepreneurs have
experience, which will be the differentiating factor. to choose between living and leading, if they want to succeed.
Panellists were of the view that the automobile dealers Ashish Kale, Vice President, F A D A, in his closing remarks
need to reinvent themselves, assimilate and adopt new, out- thanked all the eminent speakers for their inspiring words.
of-the-box ideas and identify right channel in the Also thanking the attendees for their participation, he said

Government for redressal of their concerns, to stay afloat that the deliberations provided a lot of food for thought for
in this buyer’s market. the members of automobile dealer fraternity. It was really an
Narrating his exemplary journey from an impoverished
enriching experience, he added



Upgrades & Variants

Hyundai Introduces Global SUV TUCSON with Intellimatic ‘4WD’

Hyundai Motor India Ltd (HMIL) introduced the 4-Wheel Drive The On demand 4-Wheel Drive (4WD) functioning system
(4WD) system in TUCSON, enhancing the portfolio of Dynamic ensures better Fuel Efficiency as intelligent switching ON/
Global SUV. The Intellimatic 4WD TUCSON offers a perfect OFF for 4WD system, the performance is optimized and
combination of a high performance off roader SUV, along there is low wear & tear of mechanical parts. TUCSON 4WD
with comfort and stylish road presence. system also offers 4WD Lock mode which helps to activate
the 4WD function manually based on user demand,
Commenting on the introduction of 4WD TUCSON, Y K Koo, resulting in a torque split of 50:50 between front and rear
MD & CEO, HMIL, said, “Introduction of 4WD is to bring to the wheels.
customer the next level of cutting edge technology in Dynamic Advanced Traction Cornering Control (ATCC) is an integral
Styling, Athletic Performance, Advanced Safety and Smart feature of TUCSON’s 4WD. It helps to transfer torque to the
Comfort as product innovation towards competitive wheels that have the most grip resulting in improved
advantage in fast growing SUV market while also enhancing cornering performance.
the overall price value equation through value engineering With over 4.5 million customers worldwide, TUCSON is one
and passing the price benefit to customer.” of the best-selling SUV’s across the world and a benchmark
in the segment in India. TUCSON’s strong success is apparent
The TUCSON is engineered to deliver Excellence with Dynamic from the overwhelming response it has received from experts
Styling, Athletic Performance, Smart Comfort, along with and also from customers winning 7 big auto awards in India
Advanced Safety. With the introduction of 4WD TUCSON; we since its launch in November 2016.
have focused on the localisation thus offering competitive
pricing for our valued customers. Superior customer TUCSON: New Prices (Ex-Showroom Delhi)
experience through innovation is the hallmark of Hyundai
Brand DNA. The much awaited 4WD system is an upgradation Fuel Type Variant Price (Rs.)
to TUCSON’s cutting edge technology and will surely raise the Petrol 2WD MT 17,99,900
excitement in the growing SUV market in India.” 2WD AT GL 20,99,000
Diesel 2WD MT 19,95,900
Key features : 4WD System 2WD AT GL 22,49,000
4WD AT GLS 25,19,000
The 4WD System comes with - ‘On Demand 4WD Functioning’
which automatically implements Rear Wheel Traction Further, with Hyundai’s strong focus on Safety, the TUCSON AT
Control by assessing road conditions & maintain utmost GL trims in both petrol and diesel have been reinforced with
traction on rough, lose or slippery surfaces, improving safety features like Electronic Stability Control (ESC), Vehicle
stability while cornering. When driving in this mode the Stability Management (VSM), Hill Assist Control (HAC), Down
system determines intelligently that there is need for 4WD Hill Brake Control (DBC) & Brake Assist enhancing the safety
based on the terrain and the engine driving power and driving performance.
automatically get distributed to all 4 wheels without the
driver’s intervention.

35 October 2017

Upgrades & Variants

Nissan Motor India Launches
redi-GO GOLD 1.0L

Nissan Motor India announced the launch of the Limited Datsun redi-GO GOLD 1.0L, comes with a first-in-segment
edition Datsun redi-GO GOLD 1.0L, on 26th September 2017, Ambient Lighting app for mobile phones with which a
packed with a host of exciting features and stylish customer can choose the mood lighting of the passenger cabin
enhancements. to suit his or her taste. The limited edition model is available
Priced from Rs. 3,69,737 onwards, Datsun redi-GO GOLD 1.0L on the T (O) trim level, with smart features such as Bluetooth
is available from 26th September at all Nissan and Datsun audio system, and a reverse parking sensor, among others.
dealerships pan-India, company release said. Datsun redi-GO GOLD limited edition is powered by the
Jerome Saigot, Vice President, Marketing & Datsun Business Intelligent Spark Automated Technology (iSAT) 1.0L three-
Unit, Nissan Motor India said, “Datsun will make the festive cylinder fuel efficient engine, paired with a five-speed manual
season even more special for our customers by bringing more transmission, to enhance the driving experience. It combines
power, style and convenience in the redi-GO GOLD 1.0L limited the roominess, agility and efficiency of an urban hatchback
edition. Datsun redi-GO GOLD offers an accessible price, with best-in-class ground clearance (185mm) and high
peppy driving performance, and a refreshing exterior which seating position. It also features other best-in-class features
together reinforces Datsun’s commitment to offer stylish, high- such as excellent front visibility, ample shoulder and rear
value-for-money cars to our customers.” knee room, in addition to brisk acceleration thanks to more
Datsun redi-GO GOLD 1.0L’s prominent gold inspired decals power coming from the new engine.
on the exterior together with gold-themed seats in the interior,
infuse an extra dose of style to the car.
It is available in three body colours: Grey, Silver and White.

Volkswagen Introduces New Passat Starting at Rs. 29.99 Lakh

Volkswagen, Europe’s leading car manufacturer, announced luxury and safety in the category with Park Assist for hands-
on October 10 the launch of the luxury sedan Volkswagen free parking and 9 airbags.”
Passat at a starting price of Rs 29.99 lakh. Knapp added, “We are extremely pleased to launch the
The newly launched Passat will host several premium luxury technologically advanced New Passat in India offering our
features including 9 Airbags, Hill Start Assist, Auto Hold, customers a carline that is equipped with superior safety
Reverse camera with 360° area view, Park assist, App connect, features and driving dynamics that the brand Volkswagen is
‘NAPPA’ leather seats, Dynamic chassis control, 3 zone Auto known to offer across the industry. The Passat is renowned
AC, Electric adjustable front seat, Full LED Headlamps with world over for its sheer performance, iconic style & rich
DRLs and LED tail-lamps and easy open boot, among others. heritage. With the launch of the Passat we will now have a
Steffen Knapp, Director, Volkswagen Passenger Cars, portfolio with remarkable carlines across leading vehicle
Volkswagen Group Sales India Pvt Ltd, said, “Generating peak segments in the country.”
power of 130kW (177 PS) and a torque of 350 Nm ranging The Passat is the first sedan to be based on the MQB platform
from 1500–3500 rpm, the New Passat will undoubtedly be a in India and is up to 70kgs lighter as compared to the
trendsetter amongst car enthusiasts in India, redefining predecessor yet offers improved rigidity. It also comes with
premium features such as Park Assist which assists the driver
by automatically carrying out the optimum steering
movements in order to reverse-park on the ideal line. All the
driver has to do is operate the accelerator and the brake
while the steering movements are undertaken by Park Assist,
ensuring that the driver retains control of the car at all times.
New Passat is equipped with the powerful and efficient 2.0L
TDI engine mated to a 6 speed automatic DSG transmission
that offers superior fuel efficiency of 17.42 kmpl

October 2017 36

News Basket

Hero Motocorp Sets New Global Benchmark with Record
2 Million Unit Sales in Q2

Riding on robust sales of its range of motorcycles and trust in the Hero Brands. “We have also already crossed four
scooters, Hero MotoCorp - the world’s largest two-wheeler million units in despatch sales in a little over six months in
manufacturer - set a new global record, clocking 2 million the current fiscal (starting from April till the first week of
unit sales in the just-concluded second quarter (July- October). We will look to building on this going forward. Our
September) of this financial year (FY 2017-18). This is the sales performance this year is a testimony to our intent and
first time globally, that any two-wheeler company has crossed determination on further consolidating our very strong and
the 2 million sales mark in any quarter. consistent market leadership in the country. Our brand
Hero MotoCorp sold 20,22,805 units of two-wheelers in the specific regional strategy, innovative consumer-engagement
second quarter with consecutive months of robust sales, programmes, and an overall integrated 360 degree ‘Go-To-
growing by 11% over the large volume of the corresponding Market’ approach has been immensely successful in driving
quarter in the previous fiscal. In September this year, Hero this growth. In the current festive period, while posting very
MotoCorp became the only two-wheeler company to sell over strong double-digit growth in both Scooters and Motorcycles
7 lakhs two-wheelers in a month. Driven by popular demand - we have already set an all-time record by selling well over
for its iconic brands – including the Splendor, Glamour, one million two-wheelers in domestic retail sales, which has
Passion and HF Deluxe motorcycles as well as the Duet, come nearly three weeks before Diwali.”
Maestro Edge and Pleasure scooters - Hero MotoCorp
surpassed four million sales mark in a little over six months Hero MotoCorp, which recently surpassed 75 million units
of the current fiscal. in cumulative sales since its inception, has also been
Ashok Bhasin, Head of Sales, Marketing and Customer Care, leveraging its association with the ongoing FIFA U-17 World
Hero MotoCorp, said “Clocking 2 million sales in a quarter is Cup India 2017, of which it is a ‘National Supporter’. “Our
highly gratifying and its a moment of great pride for us. This overall strategy for the festive season has been integrated
landmark achievement in sales has been possible due to an with the customer activation initiatives for the FIFA U-17 World
excellent team effort of everyone at Hero and all our Cup. Under this strategy, we have rolled out innovative
associates. Most importantly, we have accomplished this consumer engagement programmes like the Trophy Tour and
feat - powered by the affection of our ever growing family of have reached out to our targeted consumer groups through
consumers who have always reposed their overwhelming the print, television, digital and social media platforms,”
Bhasin added.

Volvo Launches First Locally-Assembled 'XC90' from Bengaluru Plant

Volvo Cars, the Swedish luxury car maker, rolled out its first
assembled car from its plant in Bengaluru.

The launch of luxurious XC90 on October 10 was in line with
the announcement by Volvo Cars earlier this summer that it
would start assembly operations in India in 2017 to grow
further in the country. The assembly operations are focused
on models based on Volvo’s scalable product architecture
(SPA) modular vehicle architecture.

"It’s a moment of great pride for all of us at Volvo Cars," said
Charles Frump, the newly appointed Managing Director for
Volvo Auto India, while speaking on the occasion. "With glo-
bal standards in quality, we are a formidable luxury car com-
pany in India and on-track to gain a bigger share of the seg-
ment," he added. Volvo Cars decision to assemble its models
locally reflects the ‘Make in India’ initiative.

37 October 2017



News Basket

Bookings for New Honda CBR650F Open

Honda Motorcycle & Scooter India Pvt Ltd (HMSI) opened the It is lighter and regulates how much compression damping
bookings for its new Honda CBR650F in India on October 10. can be reinforced for delivering superior performance levels,
With enhanced riding dynamics, aggressive styling and a equivalent to cartridge type suspension units.
wilder induction roar, the new CBR650F airms to take sports Rear Shock: The single-tube, monoshock suspension unit with
touring to the next level. 7-stage spring preload adjustment and aluminium swingarm
New CBR650F is a middleweight Super Sport motorcycle with promises stability and strength.
a sleek, aerodynamic fairing and specially designed air ducts. Enhanced Braking: Stopping at high speeds is no problem; the
Underneath is a 649cc, DOHC inline, four-cylinder engine CBR 650F feels planted and in control at all times. The 2017
and a new 6-speed short ratio gearbox. With new additional CBR650F is equipped with new dual-piston Nissin front
value for the customers, CBR650F exhibits a new LED calipers and sintered metal pads on 320 mm dual hydraulic
headlight, revised Nissin brake calipers, Showa Dual Bending front discs. The rear gets a 240 mm hydraulic disc with a
Valve type fork and bronzed engine & head covers. single-piston caliper and resin mold pads.

Sharing how the excitement now gets even bigger, Yadvinder Redesigned Intake Valve: CBR 650F comes with
Singh Guleria, Senior Vice President - Sales and Marketing, a redesigned intake valve. The new 4 into 1
HMSI, said, “The new CBR650F, delivers a strong dose of CBR exhaust employs a dual-pass internal
series sporting intent and style. With a great combination of structure (rather than triple-pass) in the
sporty style & powerful performance of inline 4 cylinder muffler, reducing back pressure. This helps
engine, CBR650F has got a long list of enthusiastic riders. deliver a wilder exhaust note when you wind
The new CBR650F offers additional value at no increase in on the throttle. Drive it out of a corner and
price from its previous generation. We are confident, the accelerate through the six-speed gearbox and
enthusiast will feel the rush & get delighted with new ride & you get hard acceleration with the short gear
excitement.” ratios – more noticeable in the bike’s mid-
range.
Key Features Clear-Lensed LED Headlight: The sporty clear-
lensed LED headlight in the new CBR650F
649cc powerful engine: CBR 650F packs a punch with its ensures that you can see well ahead on the
649cc, DOHC inline, four-cylinder engine and develops darkest roads. The rear LED tail light is housed
63.7kW @ 11,000rpm. in the sleek tail section and emerges as a bright
Front Fork: CBR 650F now comes with a new 41mm Showa & noticeable spotlight.
Dual Bending Valve type fork that provides excellent control.
Steel Diamond Frame: CBR650F is built around a steel
diamond frame, which has been strengthened towards the
head and made flexible at the spars to provide excellent
rigidity and balance. This has been specifically tuned to feel
the rush with agile real-world handling.
Unchanged Price – Additional Value: Customers can contact
or visit Honda’s exclusive Wing World outlets located across
22 cities in India for bookings. With no change in price from
the previous generation, new CBR650F will be available at
Rs. 7.30 lakh (Ex-Showroom, New Delhi) in 2 attractive colours
- Millennium Red & Matte Gunpowder Black Metallic.
CBR 650F Legacy in India: Launched in India at the Honda Rev
Fest in 2015, the CBR650F is the first of Honda’s premium
‘Make-in-India’ motorcycles. Celebrating the success of
CBR650F, Honda conducted the MotoGP Lucky Customer
contest. The 5 lucky owners are now set to Feel the Rush of
witnessing the MotoGP live in Malaysia this October.

39 October 2017

News Basket

New Dzire Scores the Fastest 1-Lakh Sales Mark in Indian
Automobile History

Maruti Suzuki’s new Dzire achieved the fastest 1-lakh sales the young, aspirational and indulgence seeking Indian
mark, a distinctive feat in the Indian automobile industry. customer. Built afresh on the HEARTECT platform, the all-New
The third generation Dzire, launched in May 2017, has Dzire continues to fulfil the growing aspirations of young
surpassed the 1-lakh sales milestone in just five and half and prosperous India. Committed to redefine the market,
months. brand Dzire has not only expanded our share in the entry
sedan segment but also expanded the industry size."
Positioned as an authentic sedan offering plush and roomy According to internal research, the top three reasons that
interiors, loaded with new features and equipped with have delighted Dzire customers in this avatar include the
advanced safety features, the new Dzire became an instant authentic sedan style and looks; the reliable and efficient
hit. Maruti Suzuki brand name; and exciting new features in the
Expressing gratitude to customers for making Dzire the most car like the SmartPlay infotainment system with Android Auto,
successful entry sedan, R S Kalsi, Sr ED (Mktg & Sales), MSIL Apple CarPlay and Mirror-link technology and the Auto Gear
said: "Indeed, the Dzire has brought an unprecedented Shift. These have made the new Dzire an irresistible package.
disruption in the automobile market. The new Dzire takes the Interestingly, nearly half of the new Dzire customers have
brand to a whole new level – an authentic sedan designed for chosen the sedan as their first car purchase. This shows a
paradigm shift of the Indian customers who is now opting
for a sedan as their first car.
Maruti Suzuki customers have also appreciated the Auto Gear
Shift (AGS) technology. Nearly 17% of Dzire customers have
opted for AGS variant during April-September 2017. The AGS
technology is now available on six options, starting V trim
up to Z and Z+ in Petrol and Diesel fuel variants.
The diesel variant of Dzire delivers best in industry fuel
economy in passenger cars at 28.4 kmpl. Petrol fuel efficiency
is 22.0 kmpl, making it the best in segment.
Dzire has won the prestigious Good Design Awards 2017,
hosted by the Japan Institute of Design Promotion in Japan.

Tata Motors Opens New CV Dealership in Ahmedabad

Tata Motors inaugurated its 3S state-of-the-art commercial R T Wasan, Head, Sales and Mktg, CVBU, TML, said, “We are
vehicle facility in Ahmedabad, through its newly appointed happy to associate with Gallops Autolink Pvt Ltd to expand
dealer, Gallops Autolink Pvt Ltd, on October 11. our services in the city. With a very encouraging demand for
Located at Sarkhej Bavla Road, the new 3S dealeship facility’s our commercial vehicles here, the comprehensive facility we
after-sales service arrangement has a capacity to cater to 36 have inaugurated today is a result of our focused customer
vehicles a day. The facility is equipped with 5 MHCV bays, 3 orientation to help create long-term value for the Tata Motors
accident repair bays, 2 washing ramps, 4 dedicated bays for brand, giving us a competitive edge in the Gujarat market.”
quick service of SCV, 4 2-post hoists and 1 inspection pit, Tanuj Pugalia, Managing Partner, Gallops Autolink Pvt Ltd
staffed by professionally trained technicians. The facility is said, “We are extremely delighted and privileged to partner
also equipped with amenities like Advanced Full Range Wheel with a prestigious brand like Tata Motors, which has
Alignment unit, an Automatic Lube Dispensing unit, is Wi-Fi revolutionized the commercial vehicles market here in India.
enabled, an air-conditioned customer lounge, driver At our new state-of-the-art dealership, we’ve inaugurated here
restrooms with bunkers and washrooms are provisioned. It today, customers can experience a host of primary and value-
is the commercial vehicle dealership to offer 24*7 services added services for Tata Motors entire range of commercial
in the region. vehicles, through trained personnel.”

October 2017 40

News Basket

Isuzu Motors Inaugurates New Dealership Facility in Nagpur

Isuzu Motors India Pvt Ltd inaugurated the new dealership portfolio of sales, service and spares (3S) and is
facility – GIRNAR ISUZU in Nagpur on September 26. On the conveniently located in the city. The showroom displays the
occasion of dealership inauguration, the company also V-Cross and mu-X in their true adventure and lifestyle
showcased the ISUZU mu-X premium full-size 7-seater SUV settings. The dealership employees have been trained under
and the entire range of ISUZU vehicles. the supervision of ISUZU personnel and will provide a
Speaking on the occasion, Hitoshi Kono, Dy MD, Isuzu Motors quality of sales and service experience to the visitors and
India, said, “We are pleased to inaugurate our new 3S customers.
dealership in Nagpur today. Girnar Cars is one of our valued ISUZU D-Max V-Cross is India’s First Adventure Utility
and experienced dealer partners in India, and together we Vehicle, and caters to those SUV buyers, who seek adventure
are confident of providing a high level of customer and want to stand out among their peers. The V-Cross comes
satisfaction and creating a strong ISUZU brand in Nagpur.” with a highly capable 4WD, loads of modern SUV features
and a large practical luggage deck. Isuzu D-Max V-Cross
Pravin Chandak, MD, Girnar Cars Pvt Ltd, said, “We are very has been awarded as the ‘Lifestyle Vehicle of the Year’ at the
happy to associate with Isuzu Motors and represent the ISUZU BBC Magazine TopGear Awards & CNBC-TV18 Overdrive
brand in this region. ISUZU vehicles are known for their Awards 2017. The V-Cross is available in the new bold and
durability, reliability and performance around the world. As aggressive ruby red colour along with a range of other
a dealer partner, we will continue our focus on high customer exciting colors.
satisfaction by maintaining high standards of sales and ISUZU mu-X is a premium, 7-seater, full size SUV, designed to
service set by ISUZU.” offer the best of both worlds – All Muscle. All Heart.
Spread over an area of 9,000 sq ft, the state-of-the-art ISUZU D-MAX S-CAB, a 5-seater pickup, offers a unique
dealership facility - GIRNAR ISUZU - offers the complete combination of Space, Performance and Strength in Smart
proportions. It caters to the modern businessmen and
professionals, who seek high level of sophistication, space
and utility in a commercial pick-up.
ISUZU D-MAX Regular Cab, a single cabin pickup, is a tough,
powerful and reliable workhorse that is globally known for
its performance and life-long durability. The Regular Cab is
available in both flat deck and cab-chassis variants.
ISUZU vehicles are attractively priced with the ISUZU mu-X
(4X2 variant) at Rs. 23,53,022, V-Cross at Rs. 13,14,195, D-
MAX S-CAB (AC) at Rs. 8,02,864 and D-MAX Regular Cab (4JA
engine with flat deck) at Rs. 6,82,233 (Ex-Showroom,
Nagpur).

Leasing of Vehicles Purchased, Leased Prior to July 1, 2017 to
Attract 65% GST

As per the decision of GST Council in its 22nd meeting in Delhi Sale of vehicles by a registered person, who had procured
on 6th October 2017, the capital leasing of vehicles purchased the vehicle prior to 1st July, 2017 and has not availed any
and leased prior to 1st July 2017 would attract GST at a rate Input Tax Credits of Central Excise duty, VAT or any other
equal to 65 per cent of the applicable GST rate (including taxes paid on such motor vehicles, would also be subject
Compensation Cess). to 65% of applicable GST rate (including Compensation
According to a Finance Ministry statement, such vehicles Cess).
when sold shall attract GST @ 65 per cent of the applicable These rates would apply for a period of three years with
GST rate (including Compensation Cess). effect from 1st July, 2017

41 October 2017

Perspective

The Auto Industry’s Real Challenge

- Strategy&

While automakers pour millions into winning the survive. Indeed, there’s a strong possibility that the structure
autonomous vehicle race, they run the risk of ignoring the of the industry could change, with automakers dis-integrating
more imminent threats that could sink them before the more of the vehicle’s component manufacturing or
technology becomes pervasive. specializing in particular vehicle categories.
The past five years have been good to the auto industry. Clearly, in the auto industry, there is a major disconnect
Following a cyclical downturn and a series of bankruptcies between expectations and reality, especially with regard to
and harsh restructurings in the wake of the 2008–09 financial the next five to seven years. AVs will likely take considerably
crisis, US vehicle sales have been strong, especially for highly longer to become pervasive than is anticipated, and by that
profitable trucks and SUVs. Globally, automobiles have grown time, the industry will probably look quite different.
more attractive than ever, with all kinds of exciting new Some automakers are already investing hundreds of millions
technologies - impressive powertrain systems, mobile of dollars in the dream of the fully autonomous vehicle. Some
connectivity, advanced driver-assistance systems, are also spending hundreds of millions to develop and sell
maintenance monitoring, and the like. add-on mobile services and applications related to the
In the eyes of many in the industry, the future looks equally Internet of Things, but the search, thus far, for those killer
bright. Oil and gas prices appear likely to remain reasonably apps and service businesses has come up short.
low for some time, encouraging big-margin SUV sales. The Predictions that AVs will populate our roads within the next
technology inside autos will continue to grow more five or 10 years are highly optimistic. Present-day AVs, as
sophisticated and affordable. advanced as they are, are hardly road-ready. Further
Automakers feel confident investing large sums of money in advances in technology and affordability are required. AVs
developing new features for their cars, particularly advanced still struggle to interact with human-driven vehicles on the
safety and navigation options. Many suspect that they can road, and they face huge liability, insurance, and even moral
make fully autonomous vehicles (AVs), machines that can concerns that have yet to be resolved. And how will vehicles
drive themselves anywhere, under any traffic and weather produced by different companies with incompatible
conditions, without a human ever having to take the wheel, a navigation and communications technology interact?
reality within a relatively short time, as little as 5 or 10 Even once these issues are resolved, it will take another couple
years. That, in turn, would open huge new markets, it is hoped, of decades to transform our current vehicle population of
as buyers - large fleets as well as individuals - flock to cars into a robotic fleet. There are, after all, more than 250
driverless vehicles and associated services. million vehicles currently on the road in the US alone, with
There is much truth in the vision of fully autonomous vehicles. an average useful life of more than 11 years. And the related
Certainly, there will come a time when commuters can relax, vision of rental robocars, owned by the automakers
eat breakfast, and write emails on the way to work as their themselves, chartered at will by people seeking short-term
robotic taxis transport them on algorithmically chosen routes transportation, is equally unlikely.
in perfect safety. But as the fatal crash of a Tesla in semi- Focusing so much attention and so many resources on the
autonomous mode sadly made clear, it will probably take captivating prospects of the self-driving world may make for
years, for this vision to become a common reality. good reading, marketing, and investor interest. But it is a
In the meantime, the industry will have to navigate through a dangerous distraction for the auto industry.
number of difficult challenges, and figure out how to take Facing Reality
advantage of a few surprising opportunities. But few industry Perhaps the most pressing hurdle for the industry is the need
players are adequately prepared for the hurdles they must to meet increasingly restrictive emissions and fuel-
clear before AVs are able to produce real revenue. consumption requirements in the Western world. It’s easy
Before prolific AVs become a reality, industry players must enough for automakers to build a single car model that meets
make huge investments in meeting tightened mpg and these requirements. The problem in the US is that an
emissions requirements, developing new powertrains, automaker’s entire model lineup, including SUVs and light
continuing to expand in markets around the world, and trucks, has to maintain an average level of higher mpg and
developing new vehicles to feed changing transportation lower emissions. Making matters more difficult, the average
needs. It is not clear that all the current competitors will

October 2017 42

Perspective

is taken from autos sold, not produced. automakers are At the same time, automakers must scale up geographically,
expected to have to improve fuel efficiency by at least 20 because virtually all the industry’s growth is, and will be, in
percent and as much as 60 per cent by 2025, depending on emerging markets. That means satisfying regional differences,
the company and regulations. including the need for fundamentally cheaper automobiles
This presents a particularly thorny problem for vehicle for emerging economies, a different product design and
makers in the US, where, thanks to low fuel prices and marketing for these countries, and local manufacturing. These
consumer preferences, they make virtually all their money demands compound the requirements for more investment.
selling hugely popular trucks and SUVs, which, of course, So the costs and complexities of renewing and expanding
bring down those mpg averages. Most customers simply don’t product lineups can be expected to grow.
want smaller, more efficient cars, and very few companies All these demands add to the already enormous and
have been able to make money consistently in this part of the overbearing capital requirements of the industry in general.
US market. Adding expensive technology to improve fuel As the technological demands accumulate, it becomes less
efficiency is equally unpalatable: Already, new-vehicle prices feasible to recover the costs of developing a new vehicle and
are beyond the reach of the average US citizen. It is not at all all the powertrain and regional variations it requires. As
clear how most automakers will be able to profitably automakers create ever more vehicle models and variants in
reconcile what government regulators will force them to sell attempts to achieve more volume on which to spread their
and what customers want to buy. investments, they further increase the total capital needed.
In response to these pressures, vehicle makers have to invest These pressures will bring into stark relief the industry’s
heavily in technology to squeeze out more fuel economy and notoriously weak capital efficiency. Its historical return on
performance. Investments in lighter-weight technologies and invested capital has generally been below the cost of that
powertrains are swelling as never before. The costs of capital, despite the restructuring that followed the 2008–09
proliferating and advancing engine offerings are staggering, financial crisis, and significantly lower than that of virtually
as most automakers are supporting a large array of expensive every other major industry globally. On top of that, the
engine technologies — gasoline, diesel, electric hybrid, plug- industry’s margins are so closely tied to the number of vehicles
in electric, battery electric, and hydrogen fuel cell. Without it sells that it makes the industry’s profitability highly cyclical.
knowing which path will ultimately win in the context of Taken together, this bodes ill for an industry facing the massive
different federal and state regulatory landscapes, investments required to overcome the emerging challenges.
manufacturers are faced with a murky choice of which An economic downturn in this time frame, which is highly
technologies to bet on, how much to bet, and whether and plausible, would only pile on more pressure. Only players
how to partner with others to spread the costs and risk. with sufficient scale and shrewd technology and investment
Another challenge is related to the digitization of driver strategies will prevail to confront the next set of obstacles
and passenger experiences. Automakers recognize that posed by the fully autonomous auto world.
consumers are attracted to the rapidly progressing The Way Forward
connectivity and intelligence in their vehicles — safety As serious, and even overwhelming, as the obstacles faced
features such as blind-spot warnings and automatic pre- by the auto industry today appear to be, companies that
collision braking, and convenience and infotainment position themselves properly will prosper. To do so, however,
features such as automated parking assistance and they must take the first step of carefully separating what
smartphone mirroring on the dashboard. But designing needs to be accomplished within the next five to seven years
and producing these smart cars and trucks is no easy task, from the investments needed for a longer-term future of self-
and it poses real risks. The cost of incorporating and driving cars.
managing all the new technology and data is skyrocketing. Robotic vehicles and non-core service businesses cannot
Further, automakers, given their traditionally hardware- offer a near-term solution for all the industry’s challenges.
focused organizations and cultures, simply don’t have the Companies along the automotive value chain must
technology or the software skills to do it themselves. That’s realistically decide how much of their precious management
why they have been investing in and partnering with attention and financial capital they will deploy on the longer-
technology companies to help design and build AVs. Yet term speculative opportunities and how much on the more
that also presents problems, as automakers’ culture, immediate challenges. They must successfully traverse the
traditionally based on stringent safety requirements and minefield just ahead in order to be able to participate in the
long design cycles, meshes poorly with tech companies’ big battles of the fully autonomous world.
rapid development pace and experimental culture.

43 October 2017

Perspective

The second step is for companies to clearly decide what their Regardless of what form they take, partnerships, alliances,
strength is — for example, building large trucks and SUVs, and joint ventures are likely to become much more common.
powertrains, or some other technology integration — so that As these types of arrangements expand, the old lines of
they put their resources into the scale and capabilities needed distinction between automakers and suppliers, auto industry
to thrive in their chosen area. They should do this while players and technology companies, and those that were
keeping in mind that not every automaker will survive in its previously competitors could permanently change. Some
current form, nor can they all hope to gain the scale and branded auto manufacturers may evolve from full-line
breadth of the largest players. manufacturers to focused players or even branded suppliers
Because of this, it is wise to assume that the auto industry of a particular type of powertrain or interior, most of their
will undergo a substantial restructuring between now and products sold or offered in onetime competitors’ vehicles.
2025. This restructuring will force most automakers to Joint ventures with companies outside the auto industry —
redefine themselves, not by their past product lines or where such as technology companies with digital expertise — will
they do business, but by what they are particularly good at, also increase. Alliances like these, of course, have occurred
what their most distinctive capabilities are, where they have in the past, with decidedly mixed results. A distinctive
the appropriate scale to compete, and thus where they fit capability for many of the winners in the industry will certainly
into the industry’s overall value chain. be learning how to adapt their organization and culture to
For automakers, this shift will likely entail breaking up incorporate advanced digital technology.
industry verticals and dis-integrating large segments of the A restructuring of the industry is inevitably on the horizon,
industry in response to the overwhelming impending capital so rather than being swallowed up whole or picked apart by
requirements. So suppliers may achieve greater scale by larger companies interested only in their most obvious
taking on more of what auto manufacturers outsource for strengths, these companies should already be focusing on
multiple carmaker customers, or new suppliers may leverage those strengths and paring away anything that distracts from
scale from outside the auto industry. their chosen way to play. They have to judiciously select what
One potential course for an automaker trying to focus its technologies and investments they should and can afford to
limited capital on its core offerings is to source some vehicle make, and deploy their limited resources accordingly. They
segments from a joint venture, a competitor, or even a should be pursuing creative and aggressive new strategies
consortium of auto companies. An automaker with of vertical dis-integration and partnerships that can make
insufficient profitable small cars to meet regulatory emission up for insufficient scale.
and fuel economy mandates might find it makes the most Overinvesting in the pursuit of fully autonomous solutions
strategic sense to establish a joint venture with another and noncore businesses runs the great risk of focusing
company to provide them, or to just buy them from an companies’ precious attention and resources away from the
independent small-car specialist. tall tasks that have to be mastered well before the AV dream
Outsourcing some or even all powertrains, which are an has a chance of becoming reality.
increasingly capital-intensive and risky part of the business, No matter what future we can imagine for the auto industry,
is another way to conserve scarce resources. This, in turn, it will probably always be plagued with cyclicality, high
would create opportunities for a merchant powertrain capital costs, changing consumer demand, and regulation.
supplier to achieve greater scale, resiliency, and viability. That’s just the nature of a business in which technology
Perhaps the small-car joint ventures and specialists will matters more and more, government requirements get tighter
source all their powertrains from the same supplier or two. and tighter, and ever more companies are chasing new
Relying more heavily on suppliers for other expensive, high- markets around the world. But companies that understand
technology subsystems — infotainment, holistic vehicle this, and can focus over the next five to seven years on
interiors, or advanced driver-assistance packages — is profitably designing, manufacturing, and marketing the kinds
another avenue. For instance, a consumer electronics of vehicles or vehicle systems they excel at, while establishing
company, leveraging technology, operations, brand, and partnerships for the rest, will be in the best position to survive
customer pull from its much larger scale, might provide an and thrive. Those that put too much energy, money, and other
entire infotainment and customer-interface system for an resources into a more distant, more unpredictable future
automobile more effectively than the existing supply chain will struggle to meet their much more pressing challenges. It
of an automaker. will be a matter of survival of the fittest, and every auto
company still has the opportunity to optimally position itself
for the changes ahead

October 2017 44

Consumer Case Studies

National Consumer Disputes Redressal Commission, New Delhi

Ajit Bharihoke, Presiding Member and Anup K Thakur, Member

Ram Singh – Petitioner
Versus

Kunal TVS Auto Centre and Ors – Respondents

Revision Petition No. 1808 of 2017 Decided on 13.07.2017

(Against the Order dated 16.02.2017 in Appeal No. 677/2015 of the State Commission Uttar Pradesh)

CPA, 1986 – Section 15, 17, 19 and 21 – Automobile - Manufacturing Defect - Complsaint dismissed by State Commission in
appeal – Scooty was purchased by Petitioner on 14.08.2008 with a warranty of one year and Complainant visited Opposite
Party with alleged problem after expiry of warranty period – Petitioner could not show any job card, which may indicate that
prior to 23.10.2010, Petitioner had taken the Scooty to workshop of Opposite Party with subject problem – In absence of
material evidence, OPs cannot be held liable for problems alleged to have been faced by Complainant – Petitioner has failed to
point out any jurisdictional error or material irregularity in impugned order – Revision Petition Dismissed. (Paras 6, 7 and 8)

Important Point

In absence of material evidence, OPs cannot be held liable for problems alleged to have been faced by Complainant.

Order

1. Ajit Bharihoke, Presiding Member - This revision is against either to replace the scooty in question with a new one or
the order of the Haryana State Consumer Disputes
Redressal Commission, Panchkula (in short, “the State to refund its price with interest @ 9% p.a. from the date of
its purchase till payment, within a period of one month.
Commission”) dated 16.2.2017 in first appeal No. 677/ The Complainant is also allowed compensation to the tune
2015, whereby the State Commission reversed the order
of the District Forum and dismissed the complaint. of Rs.20,000 for mental agony and harassment besides
litigation expenses which are quantified at Rs.5,500
against Opposite PartiesNo. 1 & 3.”
2. The Petitioner filed the consumer complaint alleging that
he purchased a scooty bearing registration No. HR-36M- 5. Being aggrieved of the order of the District Forum, the
1408 from Respondent No. 1 on 14.8.2008. The scooty Opposite Parties approached the State Commission in
was supposed to run on four chargeable batteries. It is
the case of the Petitioner that the scooty started giving appeal. Haryana State Commission, on reconsideration
of the record, allowed the appeal, set aside the order of
trouble from very beginning i.e. 2nd service done on the District Forum and dismissed the complaint.
22.10.2008. On inspection, it was found that the batteries
were supplying insufficient current. As a result, the 6. Perusal of the order of the State Commission would reveal
movement of scooty was jerky. It is alleged by the that after discussing evidence, the State Commission has
Petitioner that he took the scooty for rectification of the allowed the appeal and dismissed the complaint because
defect to the service station of the Opposite Party on of following reasons:

eleven occasions but in vain. Opposite Party No. 1 even (i) The scooty was purchased on 14.8.2008 and the
Complainant visited the OP with the problem in scooty
replaced the battery and some components of scooty on 23.10.2010 i.e. after more than two years. Till then,
but to no effect.
the vehicle had already covered 5600 kms and no job
3. The Opposite Parties resisted the complaint by filing card, whatsoever, showing any repair, was produced
written statement, denying the allegations. by the Complainant.

4. The District Forum, on consideration of pleadings and (ii) The first complaint before the District Forum was filed
the evidence allowed the complaint and directed the on 24.4.2012 in which the only claim was refund of
Opposite Parties as under: - Rs. 7,450 by way of cost of one set of batteries alone,

“In view of the discussion and for the foregoing reasons, whereas, in the present complaint, the relief sought is
the complaint is allowed, directing the OP Nos. 1 and 3 total replacement of the scooty, alleging OEM defect.

45 October 2017

Consumer Case Studies

(iii) The warranty period of one year had already expired, sustainable, because the State Commission has failed
when the Complainant approached the OP. Not only to appreciate the facts in correct perspective. During the
this, the Complainant had himself alleged that he had course of arguments, we had asked the Petitioner to show
purchased batteries of other companies and had also any document, which may tend to show that the findings
got the scooty serviced and various repairs made from given by the State Commission are factually incorrect,
other workshops. Thus, when the Complainant had but the Petitioner has not been able to show any such
got the scooty repaired from unauthorized and evidence, which may indicate that the finding of the State
untrained mechanic, who did not possess the Commission is faulted. State Commission has categorically
necessary expertise of handling electric scooty, the OPs held that the scooty was purchased by the Petitioner on
could not be held liable for the problem alleged to 14.8.2008 with a warranty of one year and that the
have been faced by the Complainant. Complainant visited the Opposite Party with the alleged
problem after expiry of the warranty period on
(iv) Finally, the Complainant, being an Advocate, was fully 23.10.2010. We asked the Petitioner to show us any job
aware that u/s 13(c) of the CPA, 1986, he was card, which may indicate that prior to 23.10.2010, the
supposed to have the expert opinion getting the Petitioner had taken the scooty to the workshop of the
scooty inspected with the help of the District Forum. Opposite Party with the subject problem, but the Petitioner
He failed to do so and has not produced any such has failed to show us the documents and he states that
expert opinion or evidence on the record. Therefore, in instead of job card, only a token and a slip used to be
the absence of such material evidence, the OPs cannot given, which explanation is not acceptable. Thus, under
be held liable for the problems alleged to have been the circumstances, we are of the view that Petitioner has
faced by the Complainant, especially when the failed to point out any jurisdictional error or material
aforesaid submissions of the Appellant have not been irregularity in the impugned order, which may prompt
factually refuted on the record.” us to interfere in exercise of revisional jurisdiction.

7. The Petitioner, who is a lawyer, has contended that the 8. In view of the discussion above, revision petition is
impugned order of the State Commission is not dismissed

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]

October 2017 46

Competition Law Updates

KFTC fines Mercedes-Benz deepen the extent of the commitment package offered
and eight dealers for by it to tackle the allegations of resale price-
price fixing maintenance.

Korea’s Fair Trade Hyundai had promised to compensate the dealers and
Commission (KFTC) has punish the staff that had been involved in the conduct in
fined Mercedes-Benz and addition to setting up an antitrust compliance program.
eight other dealers and The KFTC however felt that Hyundai had failed to provide
ordered them to pay 1.78 sufficient details about its proposed payouts and has given
billion won (€1.32 million) the car manufacturer time till 27 October to submit new
for fixing the price of commitments to resolve the resale price maintenance
maintenance services. investigations.
Supreme Court stays COMPAT order that imposed
G R Bhatia, Partner & Head, According to KFTC, penalty on 3 car companies
Competition Law Practice Group, Mercedes-Benz Korea and The COMPAT, by its order dated 09.12.2016, concurred
Luthra & Luthra Law Office eight other dealers met with the findings of the CCI and directed Ford, Toyota
and set profit targets for and Nissan, to remove all restrictions imposed through
repair and maintenance services, inter-alia, circulated a agreements on auto parts suppliers so as to open up
plan for rate increases and pressurized dealers to raise market for spare parts, remove all restrictions on supply
their hourly maintenance repair charges in 2009. of spare parts by original equipment suppliers to
authorized dealers, etc.
Mercedes-Benz claims to have no motive to force dealers On appeal, Hon’ble Supreme Court has stayed the
to fix prices as the suggestion to increase hourly charges operation of the COMPAT’s order and the matter will be
was non-compulsory and did not amount to a collusion, taken up for arguments on the next date of hearing.
and they intend to appeal against this decision of the Chairman Rod Sims expresses concerns on ACCC’s New
KFTC. Car Retailing Industry Market Study
Speaking at the Australian Automotive Dealer Association
Department of Justice penalizes auto-shipper with fine conference on 18 September, Sims discussed the
and probation for price-fixing submissions received in response to the draft report on
Market Study and directed the ACCC to further
The Department of Justice, United States, has ordered investigate the imbalance in the commercial relationship
Norwegian shipping company- Höegh Auto liners, to pay between manufacturers and dealers that impose
a fine of $ 21 million to the US government for taking significant cost on dealers and ultimately affect
part in a world-wide price-fixing scheme. consumers.
Sims reiterated that while consumers generally make the
Along with the fine, the Department of Justice has also first contact with a dealer when seeking car refund,
announced that it would subject Höegh to three years of replacement or repair, the dealers are entitled to seek
corporate probation that will ensure that the company reimbursement for those remedies from the car
complies with US anti-trust laws in the future. manufacturer.
However, information provided to the ACCC, through the
Though Höegh has dodged multiple antitrust submissions, highlighted that manufacturers’ dealership
investigations of a cartel without facing any punishment, agreements and policies are so stringent that they
it is the fifth company to admit its US role in the discouraged dealers from raising claims with the
international ocean freight shipping cartel that lasted manufacturers
from early last decade until September 2012.

Korea gives Hyundai second chance for commitments

KFTC has alleged that car parts manufacturer Hyundai
Mobis pushed 23 car dealers to use set sale prices for its
products between January 2010 and May 2013. The KFTC,
on 30 August, ordered Hyundai Mobis to add details and

47 October 2017

NADA Musings

After September Sales Surge in US, What’s Next?

Like a bolt from the blue, the US auto selling pace in September Crossovers led September gains. The segment surged 18
turned hotter than any month in the last 12 years. percent to 452,029 vehicles, led by three fresh models that
Confounding forecasters’ modest expectations, sales totaled each sold at least 12,000 more units than last September: the
1.53 million, jumping 6.3% from a year earlier. That ended Toyota RAV4, Chevrolet Equinox and Nissan Rogue.
eight straight months of declines from 2016’s record pace.
The seasonally adjusted annualized selling rate was 18.6 “Automakers keep filling in all the crossover niches to meet
million, the best since July 2005 and the sixth-highest SAAR demand,” said Mark Wakefield, head of the Americas auto
on record. The Bloomberg consensus forecast of analysts practice at consultancy AlixPartners, noting the expanding
had been 17.4 million. number of crossovers such as the new Volkswagen Atlas.
So what happened in September? Automakers and analysts
cite a combination of post-Hurricane Harvey replacement But Hurricane Harvey seemed to spur most of the September
demand, makeup deals from storm-delayed August purchases, surge.
higher fleet volume, a five-weekend sales month, attractive
new products and more effective incentives aimed at clearing “Above all, it was Harvey,” said Wakefield. He noted vehicle
out aging 2017 models. damage was especially heavy because of flooding and
And the more important question: Will it continue? officials advising some residents to stay in place instead of
Analyst Alec Gutierrez of Kelley Blue Book said hurricane evacuating.
replacement sales will provide a modest boost for two or
three months. But he says the lift isn’t enough to change his Leading the way
full-year forecast of 17.1 million, which would be down from
last year’s 17.6 million sales. 5 models accounted for more than two-thirds of September’s
Still, auto company economists say US market fundamentals sales growth.
support growth in the months ahead. Ford Chief Economist
Emily Kolinski Morris predicted fourth-quarter growth “in Model : Unit increase, Sep’17 from Sep’16
the 2 per cent-plus range” for the general economy. General Ford F series : 14,493
Motors Chief Economist Mustafa Mohatarem called the Toyota RAV4 : 12,957
economy “the main force” driving auto volume. “With the US Nissan Rogue : 12,510
economy strengthening, retail sales should remain strong Chevy Equinox : 12,251
for the foreseeable future,” he said. Chevy Silverado : 9,856

SAAR’s greatest hits “So the storm destroyed a lot of cars,” he said. “It destroyed
September’s seasonally adjusted annualized selling rate was the cars people care about because if you leave, you’ll take
among the highest in recent history. the best vehicle you have, not the beater.”
Indeed, September was so strong that two automakers cured
their sales year so far. Toyota Motor Sales and American Traditionally, local sales drop in the first 30 days after a
Honda were down through eight months, but strong major hurricane as dealers restock and victims await
Septembers flipped them into positive territory. insurance payouts to replace totaled vehicles. But not in
And some see September as the first round of a fourth-quarter sprawling, auto-dependent Houston, a prime market for
skirmish among automakers as victims of Hurricanes Harvey highly profitable pickups. Automakers, lenders and dealers
and Irma replace storm-damaged vehicles. scrapped the hurricane playbook after Harvey pounded
Trucks carry the load Houston in late August. They rushed vehicle resupply, cut red
September was also the truckiest month yet. Pickups, SUVs, tape and offered special incentives to flood victims.
crossovers and vans captured 64.7% of the volume, driving
sharp gains for GM, Toyota, Ford, Nissan North America and Both GM and Ford reported September sales bumps in Texas.
Honda and surpassing the highs of 64.5% set in June & August. Ford is offering employee pricing to flood victims. In
48 months earlier, the mix was virtually even: 50.1% trucks. September, that added 5,000 new-vehicle sales in Houston,
sales chief Mark LaNeve said.

In Texas, “Our employee pricing has been incredibly popular
with customers,” he said, “particularly in Houston, where
there was much more widespread vehicle total losses.”

As data guru Mitchell Phillips of Urban Science has described,
replacement sales almost always peak 60 to 90 days after a
hurricane, which would put most of the Harvey and Irma
sales lift in the fourth quarter.

October 2017 48

NADA Musings

Don’t dawdle Edmunds said 2018 models accounted for just 16 per cent of
But automakers shouldn’t dawdle, Autotrader executive September sales.
analyst Michelle Krebs warned. “It’ll be a short-lived party,” Krebs said new and more targeted incentives may have
she said. “We saw a lot of replacement demand in September. increased their effectiveness in September. “We’re seeing
We’ll see more in October and only a little bit in November.” fewer 0 per cent financing and more cash,” she said. “We’re
By December, hurricane replacement will be over, she said, also seeing some lease-pull-ahead deals.”
adding, “The only way we get any lift in December will be if September incentives remained high, however. Autodata
incentives go crazy, like they did last year.” estimated industrywide incentives averaged $3,899 per
In September, automakers generally tailored incentives to vehicle, up 5.4% from a year earlier. ALG put the average
clear out 2017 models and make room for 2018 models. incentive at $3,742. Edmunds had the average spiff at $3,506.

‘Stair-Step Incentives Kills Trust in Dealers, Brands’

It’s probably been a topic mentioned during sales staff customers the same price on the exact same equipped vehicle,
meetings and around the coffee pot at franchised dealerships just because they came into the dealership on different days
— stair-step programs sometimes leveraged by automakers of the month, destroys consumer confidence.”
to incentivize stores to get new metal rolled over the curb. The ongoing proliferation of market strategies such as
Current National Automobile Dealers Association chairman indiscriminate price coupons and unfair stair-step incentive
Mark Scarpelli took on the subject recently within a test drive programs are leading to severe, unintended, negative
of the three domestic OEMs. Scarpelli urged all automakers consequences for consumers, dealers and manufacturers
to consider how stair-step incentive programs are damaging alike, Scarpelli said.
their brands and alerted manufacturers about the unintended “That lack of consistency, lack of transparency, and lack of
consequences of such programs that erode consumer trust explanation is leading directly to a lack of trust - lack of trust
and lead to a lack of loyalty to — and desire for — their in both the individual dealer, and, in fact, lack of trust in
brands over time. every dealer, who also carries that make. And when you have
“Any dealer who’s had to deal with these programs can tell a lack of trust in every brand dealer, guess what? You have a
you that they are not only trust killers, but they’re brand lack of trust in that brand itself. And that lack of trust in the
killers, too,” Scarpelli said. “Not being able to offer two brand leads directly to a lack of loyalty,” Scarpelli added.

Toyota and Mazda Seek $1 Billion Incentive Package for US Plant

Toyota Motor Corp and Mazda Motor Corp are pressing for in Ann Arbor, Michigan. “The competing states may be
an incentive package of at least $1 billion from US states willing to put more on the table than they would have
trying to land their $1.6 billion joint car factory. previously.”
Toyota and Mazda plan to brief their boards on a short list of The shared factory Toyota and Mazda plan to open in 2021 is
states contending for the plant in the coming weeks and the only new auto assembly plant to be announced under
announce a final selection by the end of year, said the people, President Donald Trump, who’s pressured Toyota and other
who asked not to be identified because the talks are private. carmakers to make more of their vehicles in the US.
The tax breaks and other support Toyota and Mazda are said Mazda, which imports all of the models it sells in the US,
to be asking for could rival the package Nevada approved for plans to produce crossovers alongside Toyota Corolla
Tesla Inc’s Reno battery factory in 2014 that was valued at as compact cars at the new joint plant.
much as $1.25 billion. The Japanese carmakers have More than a dozen states have either confirmed their interest
positioned themselves to drive a hard bargain with states by or have been connected to proposals for the factory, including
pledging to create as many as 4,000 jobs. Michigan, Ohio, Indiana, Texas, Alabama, North Carolina and
“There haven’t been any big prizes like this in a while, and South Carolina. Governors that already have large Toyota
there isn’t expected to be any more for some time as overall plants such as Mississippi’s Phil Bryant have said they would
auto production plateaus,” said Kristin Dziczek, director compete and benefit from existing infrastructure and
of industry research at the Center for Automotive Research relationships with the company

49 October 2017