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June 2018 issue of F A D A Journal

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Published by FADA Journal, 2018-06-28 08:16:23

F A D A Journal - June 2018

June 2018 issue of F A D A Journal

President’s Message

Auto Sales Enters Fast Lane

At F A D A, it’s exciting times ahead!

John K Paul, President constant learning amongst the fraternity. When disruptions
become inevitable, ignorance can prove to be fatal. Through
Dear Dealer Colleagues, this academy, we would not only provide a platform for
The Indian economy posted a growth rate of 7.7% during acquiring knowledge but also encourage to think creatively
the Q4 of FY17-18, enabling the country to retain its position and adapt to change.
as the fastest growing major economy. India shot past With the implementation of E-Way bill, F A D A has been
China's 6.8% growth for the same period. A faster pace of receiving quite a handful of queries as confusion prevails
growth in manufacturing at 9.1%, compared with 6.1% a within the industry. We have, hence, requested our
year ago, helped lift overall economic growth in this quarter. empaneled experts to provide clarity on the issues which
Further, the Hon’ble Minister of Heavy Industries, Mr Anant are being faced by the Auto Retail Industry. Please be rest
Geete said that Indian Automobile Industry is likely to assured that we will also take up the issues with the right
contribute 12% to the country's GDP over the coming Government Officials as and when it is required. On the
decade, from 7.1% at present. This will be a moment of Used Car front, even though the GST rates have come down
great pride for all of us as we will contribute a larger share after F A D A took up the matter very seriously with the
towards building the Indian Economy! Ministry, it further needs to be brought down to make the
Coming to the sales number for the month of May 2018, the organised used car business, a sustainable business model.
industry continued to witness strong demand with most of We are working on the same and am hopeful that we will
the verticals registering strong double-digit sales. The Indian get a break through once again.
Passenger Vehicle market has broken the 3,00,000 units/ F A D A’s aim is to make the Federation every Auto Dealer’s
month barrier after eight months, with dispatches close to one stop destination for any concern related to the
the peak volumes seen in last festive month of September Automobile Retail Industry. To facilitate this in an organized
2017. Commercial Vehicle and Two-Wheeler makers too way, the Federation has started organizing ‘Vyapar
joined the party with strong set of numbers. Conference’ in every F A D A State Chapter. By doing this,
At F A D A, it’s exciting times ahead for all of us as we recently we aim to update the dealers with upcoming changes in the
signed an MoU with YES Bank to begin F A D A Academy. business dynamics and insulate them with uncertainty and
F A D A Academy aims to evolve into a mechanism for therefore keep them prepared for the future disruptions in
this ever-changing environment.
The events season at F A D A has begun as we have just
concluded with Vyapar Patna. The dealers their witnessed
top-quality speakers and content which was specifically
designed with a focus on rural growth. The next pit-stop for
Vyapar is Lucknow which is also clubbed with our next council
meeting on 18th July and Kolkata on 24th August. I will urge
members to attend these events and reap maximum benefits
out of the same.
Times are changing and so is your Federation. Together, we
will not only make F A D A strong but will also work towards
preparing each & every member face the future, head-on!
With best wishes.
Yours sincerely

John K Paul

fada.in | June 2018 F A D A Journal 5

Industry Track

Auto Sales Remain Positive Aided by Economic Upturn

Auto sales during the month of May 2018 clocked double- units had a growth of 7%, maintaining strong momentum
digit growth, propelled with economic growth as real GDP with Power Brands - CRETA, ELITE i20, Grand i10 and The Next
growth spurted to an eight-quarter high of 7.7% in Q4. This Gen VERNA showcasing our strong performance month on
growth was due to both consumption and investment showing month and year on year with a strong promise of growth.”
improvement. Honda Cars India (HCIL) recorded 40.66% increase in its
The total number of vehicles sold in the domestic market domestic sales for the month of May 2018 with a tally of
during May 2018 aggregated 2,282,618 units representing a 15,864 units as against 11,278 units sold in May 2017. This
growth of 12.13% over the same month last year despite petrol growth was led by All New Honda Amaze clocking monthly
and diesel prices increasing daily. This significant uptick in sales of 9,789 units, which is highest ever monthly sales
domestic sales numbers was contributed by all segments of numbers for a single Honda model.
industry. Commercial vehicles and three-wheelers led the The company notched up export sales of 516 units compared
charge with robust growth of 43.06% and 51.97%, respectively. with 498 units in the corresponding period last year, which
Passenger vehicles witnessed positive growth of 19.65% y-o- translated into a growth of 3.6%.
y in domestic market, albeit on the back of discounts offered Rajesh Goel, Senior Vice President and Director, Sales and
on the old models and variants. Preference in passenger cars Marketing, Honda Cars India said, “We are delighted with
was also noticed in the purchase of petrol variants as price the customer response to the All New Amaze which has helped
differential narrowed between petrol and diesel. Two- our overall sales grow by 41% in May 2018. The customers
Wheelers also grew by healthy 9.19% during the month. have appreciated the car for its one class above offering of
The country’s largest carmaker, Maruti Suzuki India (MSIL) unmatched bold design, sophisticated & spacious interiors,
having 50% market share, reported a 24.9% jump in sales to advanced engine technology and outstanding driving
170,340 units (including exports) during the month of May dynamics.”
2018, the company’s domestic sales growing by 24%. The Ford India’s combined domestic wholesales and exports in
major contribution to the company’s growth numbers came May 2018 recorded 26,188 vehicles from 23,413 vehicles in
from Swift, Celerio, Ignis, Baleno, Dzire, Tour S in the Compact the same month last year, a growth of 11.9%.
segment which vaulted by 50.8% to 77,263 units during the The company’s domestic wholesales stood at 9,069 vehicles
month. The domestic sales volume in Mini segment in May 2018, up from 6,742 vehicles in the same month last
comprising of Alto and Wagon R slided by 3.1% to 37,864 year. Exports during the month grew to 17,119 vehicles from
units in May. Also, sales of Mid-Size segment comprising of 16,671 vehicles in May 2017.
Ciaz slipped further by 14.8% to 4,024 units from 4,724 units Commenting on Ford's sales, Anurag Mehrotra, President and
a year ago. MD, Ford India said, "Our continued focus on executing our
Maruti’s exports remained bullish and surged 43.2% to 8,843 strategic pillars of strong brand, right products, competitive
units in May 2018. cost and effective scale have ensured our growth which
Hyundai Motor India Ltd (HMIL) – India’s second largest car continues to be better than the industry. At macroeconomic
manufacturer and the largest passenger car exporter, clocked level, the outlook is positive thanks to a good monsoon
a domestic sale growth of 7.1% y-o-y. The cumulative sales forecast. However, the industry needs to exercise caution
increased by 11.4%, while the exports growth was an given the rising commodity and fuel prices that are expected
impressive 33.3% as compared to May last year. to result in higher inflation."
HMIL’s total sales for May 2018 stood at 56,016 units as Toyota Kirloskar Motor (TKM) sold a total of 13,113 units in
against 50,264 units in May, 2018. Of this, the domestic sales the domestic market during the month of May 2018 growing
accounted for 45,008 units (42,007 units) and the overseas by 20.1%. The company exported 855 units of the Etios series
sales grew to 11,008 units from 8,257 units in May 2017. The in May 2018 thus clocking a total sale of 13,968 units. TKM
tremendous response for the New 2018 CRETA and the New sold a total of 10,914 units in the domestic market and
2018 ELITE i20 showcases the customers increasing exported 1442 units of the Etios series in May 2017.
preference for high value in style and first in segment features. Passenger Vehicle Business Unit of Tata Motors reported a
Commenting on the sales Rakesh Srivastava, Director - Sales total sale of 19,202 units in domestic market during May
and Marketing, HMIL said, “Hyundai with a volume of 45,008

6 F A D A Journal June 2018 | fada.in

Industry Track

2018, an impressive 53.6% increase compared to 12,499 units 19,283 units, rising by 41.8% over the corresponding sales
sold a year ago. The Tata cars recorded a growth of 17.6% at figure for May last year.
11,516 units driven by continuous strong demand for Tiago Ashok Leyland sold 12,077 CVs in the domestic market during
and Tigor, while the UVs continued to record an exceptional the month against 7,833 vehicles sold in the same month
performance of 463% growth at 5,973 units, due to the strong last year, a growth of 54.2%. The company also exported 1,
demand for the Nexon and Hexa. Tata Vans also reported a 582 vehicles during the month clocking 27.4% uptick YOY.
modest growth of 4.2% clocking sale of 1,713 units. VE Commercial Vehicles sales at 5,371 units in the domestic
Tata Motors’ exports at 126 vehicles in May 2018 were up market notched a decent growth of 34.7% against 3, 987 units
41.6% from 89 vehicles exported in May 2018. sold in May 2017.
Mahindra & Mahindra (M&M) clocked a marginal growth of Two-wheeler sales remained on fast track during the month.
1.6% y-o-y in its domestic sales of passenger vehicles (which Hero Motocorp once again came up with a healthy growth of
includes Cars, UVs and Vans) during the month of May 2018 13%, clocking domestic sales of 692,601 two-wheelers during
at 20,621 units (20,290 units). The company exported 1,242 May 2018 compared to corresponding sales figure of 613,019
PVs during the month growing by whopping 303.2% YOY. two-wheelers a year ago.
Both, Renault India and Nissan India were in negative terrain Honda Motorcycle & Scooter India (HMSI) continued to move
in the Indian market, selling 6,732 units and 3,569 units up the sales curve with its steady performance. HMSI’s
respectively during the month. However, in the international domestic sales numbers at 519,087 units in May 2018 surged
market the companies performed well achieving growth of by 1.7% y-o-y. The company also turned in creditworthy
46.3% and 18.3% respectively. performance on export front, its exports at 32,529 units
Commercial Vehicles a barometer of economic activity growing by 22% and resulting in a 2.7% rise in its cumulative
continued to head north on back of infrastructure projects in sales during the month.
full swing across the country. TVS Motor Company posted a 8.2% growth in May 2018,
Mahindra & Mahindra in the commercial vehicle segment, witnessing total two wheeler sales of 298,135 units vis-a-vis
sold 18,748 vehicles in May 2018, registering a 15.3% growth. 275,426 units in the same month last year. Domestic sales of
In the Medium and Heavy Commercial Vehicles segment, TVS reading 246,231 units in May 2018 climbed up 2.4%
M&M sold 1,321 vehicles and in Light Commercial vehicle from 240,527 units a year back.
segment, the company sold 17, 427 vehicles during the month TVS Scooters continued to grow, recording 8.9% growth in
in domestic market. Exports of CVs for May 2018 stood at sales at 90,737 units (83,338 units). Domestic motorcycle
1,707 vehicles, with a high growth of 100.6%. sales were in the negative terrain and stood at 82,427 units
Commenting on the monthly performance, Rajan Wadhera, in May 2018 as against 86,936 units recorded in May 2017.
President, Automotive Sector, M&M Ltd, said, “May has Company sold 73,067 Mopeds in the domestic market
relatively been a subdued month compared to April. At accruing 4% growth YoY. Exports of 51,904 two-wheelers were
Mahindra we have by and large maintained our growth robust at 48.7% against export of 34,899 units in the
momentum during the month of May 2018, especially in corresponding month of the previous year.
commercial vehicles. On the back of a buoyant economy, our India’s second largest two-wheeler manufacturer – Bajaj Auto
MHCV division continues to outperform. Exports have also continued to be on growth trajectory selling 192,543 two-
been strong with a high growth. With the forecast of an wheelers in the domestic market during the month gaining by
upcoming normal monsoon we are confident of good growth 23% y-o-y. The company’s exports also grew by 24.4% to
in the coming months.” 23.6% in its cumulative sales of two-wheelers in May 2018.
Tata Motors’ total sales (including exports) of commercial in Royal Enfield and Suzuki Motorcycle also saw robust growth
May 2018 added up to 38,666 vehicles, a growth of 50% over of 23.6% and 36.6%, respectively, in their domestic sales of
25,773 vehicles sold in May 2017. Domestic sales volume of two-wheelers during the month.
Tata commercial for May 2018 stood at 35,093 units, a 59.8% With economy and especially industrial production picking
growth over 21,962 units sold in May last year. up, outlook for the coming months looks promising. Equally
Tata Motors sold 15,810 M&H commercial vehicles in May encouraging is the forecast of an upcoming normal monsoon.
2018 in the domestic market - up 89.1% over the previous All this augurs well for sustained momentum in automobile
corresponding sales tally of 8,361 M&H CVs. LCV sales were market in the coming months

fada.in | June 2018 F A D A Journal 7

India Economics

Core Inflation Rises. Is it a Cause
of Worry?

GDP growth rises to 7.7% in Q4FY18 vs 7% QoQ
and 6.1% YoY

CPI inflation for May came in at 4.9% YoY, up 30bps from rise in adjusted core inflation is partially due to the low
April. The pick-up was seen in both food and core CPI (ex- base, especially in categories such as personal care,
commodities and housing). The rise in food inflation is education, transportation ex-fuel and communication. At the
attributable to the base effect. However, adjusted core CPI same time, it appears that even the uptick in input prices is
(i.e. ex-commodities and housing), which has been on the showing up in output prices, although in a muted way given
rise for the last 3–4 months, touched a nearly two-year high weak pricing power. Therefore, the underlying dynamic may
of 5.3%. Policy-makers too have expressed concern about not be inflationary at this stage.
the rising core inflation. One part of the rise in adjusted core Inflation likely to rise for another month and moderate
inflation is led by a low base (seen in personal care, thereafter
education, transportation ex-fuel and communication). It may The headline and core inflation may inch up over the coming
also be the result of higher input prices (seen in personal 1–2 months and may moderate thereafter. The rise in core
care and transportation) and not necessarily a demand-push inflation is not the result of demand push factors, but that of
effect. a low base and higher input prices. Accordingly, H2FY19
CPI inflation rises moderation in core inflation is on the cards. However,
CPI inflation for May came in at 4.9% YoY, ~30bps higher than stickiness in core inflation beyond a couple of months would
April. It was driven by both food and core inflation. Food start acting as a cause for concern.
inflation is largely due to a low base and thus not concerning. GDP growth rises
In fact, barring vegetables, prices of various food India’s real GDP growth picked up to 7.7% in Q4FY18 vs. 7%
categories—cereal, oilseeds, meat and milk—remain benign in Q3FY18 and 6.1% in Q4FY17. The Q3FY18 GDP growth,
while pulses continue to face deflation. However, adjusted however, was revised downward to 7% from 7.2% earlier. A
core inflation (ex-commodities and housing) has been on the sharp jump in fixed investment (GFCF) growth to 14.4% and
rise for a few months. 16.8% jump in Government Expenditure are the two main
Core CPI gathers steam, but may not be demand-led contributors to higher GDP growth in Q4FY18. Household
The key highlight of the data is the persistent rise in adjusted consumption growth also rose to 6.7% in Q4FY18 from 5.9%
core inflation to 5.3%, implying a nearly 100bps jump over in Q3FY18. Construction activities grew 11.5% in Q4 FY18,
the last five months. Monetary authorities have highlighted following 6.6% jump in Q3FY18.
this as their main worry in the last two policy reviews; indeed
it was instrumental in the rate hike decision by the MPC. The

8 F A D A Journal June 2018 | fada.in

India Economics

Share (%) Annual (% YoY) Quarterly (%YoY)
FY18
14.8 FY17 FY18 Mar-17 Dec-17 Mar-18
31.0
Agriculture (i) 54.2 6.3 3.0 7.1 3.1 4.5
Industry (ii) 100.0
Services (iii) 55.8 6.8 4.8 5.0 7.1 8.8
GVA (i+ii+iii) 10.8
Private consumption (i) 33.4 7.5 8.3 6.3 7.7 7.7
Government consumption (ii) 100.0
Gross Capital Formation (iii) 100.0 7.1 6.4 6.0 6.6 7.6
Real GDP
Nominal GDP 7.3 6.6 4.2 5.9 6.7

12.2 10.9 22.5 6.8 16.8

4.1 8.6 1.1 10.1 14.9

7.1 6.7 6.1 7.0 7.7

10.8 9.8 10.7 11.0 10.9

Growth outlook & RBI Policy may continue to strengthen on account of good
A combination of three factors – favourable base effect, monsoons.
tailwind of higher government spend and formalization Among other factors, higher than expected GDP growth coupled
of the economy post GST – have mainly contributed to with return of pricing power among corporates may lead the
the rebound in GDP growth in Q4FY18. Rural economy RBI to increase the repo rate by ~50bps in 1HFY19

Chart of the Month

Electric Car Stock Ramping Up at a Fast Pace

For a long time, electric cars were an inconvenient niche e-vehicles on the streets around the globe, but the current
product for oddball ecologists. But with ever extending growth rates are immense. With big manufacturers jumping
range, the emergence of plug-in hybrids and an increasingly on the electrified bandwagon and e-car champion Tesla
dense network of charging points, e-vehicles are slowly guiding the whole development, its seems to be only a matter
competing with combustion-based vehicles. of time until combustion engines are outdated niche
As this chart shows, there are currently only three million products for coal rolling oddballs.

Global electric vehicle stock by year end and engine type (in 1,000)

Source: International Energy Agency (IEA) and F A D A Research

fada.in | June 2018 F A D A Journal 9

Survey & Studies

Nearly Half of India Dealers Use Digital Media to Reach Out to
Prospective Buyers, J D Power Finds

Toyota, Royal Enfield and Ashok Leyland Rank Highest in the Passenger, Two-Wheeler and Commercial
Vehicle Segments, Respectively

Across the passenger, two-wheeler and commercial vehicle vehicle dealerships regarding the possible shift to online
segments, nearly half of dealers are using digital media to sales is divided, with only four in 10 dealerships forecasting
reach out to prospective buyers, according to the J D Power such a scenario in the future.
2018 India Dealer Satisfaction with Automotive Manufacturers “Passenger-vehicle dealers today are not only interacting
Index (DSWAMI) Study, released on May 31, 2018. digitally with their customers and offering test drives at home,
J D Power’s 2017 India Sales Satisfaction Index Study showed but also working alongside manufacturers to bring the digital
that during the past five years, vehicle owners who are 30 showroom into their customers’ homes. The need for
years or younger have been using traditional outlets far less customers to visit a showroom to merely see the vehicle or to
often as their information source
—notably with declines in
television (45% in 2012 vs. 24% in
2017) and newspapers/magazines
(53% in 2012 vs. 20% in 2017)—
while shopping online for a vehicle
has increased by 28 percentage
points (28% in 2012 vs. 56% in
2017) during the same period.
“We are increasingly finding that
shoppers, particularly in the
younger age bracket, are using the
internet as their chosen channel to
search for product specifications,
pricing and promotional offers,
reviews and evaluations,” said
Shantanu Nandi Majumdar,
Regional Director, Automotive
Practice at J D Power Singapore.
“This consumer preference
demonstrates how crucial it is for
dealers—with the support of their
OEMs—to develop their digital
strategy to enhance interaction
with potential buyers.”
The study finds that nearly 60% of
passenger-vehicle dealerships
expect that more new-car buyers
will purchase their vehicles online
instead of from traditional dealer
showrooms. This proportion has
increased by 14 percentage points
since 2016 (43% in 2016 vs. 57%
in 2018). Interestingly, the opinion
of two-wheeler and commercial

10 F A D A Journal June 2018 | fada.in

Survey & Studies

make enquiries may not be necessary in the future as digital ranks second with a score of 937, followed by Maruti Suzuki
solutions, such as augmented reality or dynamic virtual test with a score of 933.
drives, will enhance convenience and transparency in the Royal Enfield, with a score 861, ranks highest in dealer
buying process,” added Majumdar. satisfaction among manufacturers of two-wheelers, followed
The following are additional key findings of the study: by TVS at 841. Honda ranks third with 810.
• Expectations for another profitable financial year: Among In the commercial vehicle segment, Ashok Leyland ranks
highest in dealer satisfaction with a score of 815. Tata ranks
the passenger-vehicle dealers surveyed, 63% expect a second with 812, followed by Eicher with 776.
profitable financial year, which is the highest since 2013. Now in its eighth year, the India DSWAMI Study measures
More than half of two-wheeler and commercial vehicle dealer satisfaction with vehicle manufacturers or importers
dealers also expect a profitable year, which is higher in India and identifies dealer attitudes regarding the
than in 2017, when two-wheeler and commercial vehicle automotive retail business. Overall dealer satisfaction is
dealers were first surveyed in the study. Approximately, determined by examining nine factors (in order of
six in 10 dealers across the three segments expect their importance): sales team; marketing and sales activities;
profits to be better in 2018 than in 2017. support from the manufacturer; product; vehicle ordering
• Retaining manpower proving to be a challenge: Dealers, and delivery; training; warranty claims; after-sales team; and
across the three vehicle segments, continue to have parts.
challenges in retaining manpower, with nearly one-fourth The 2018 study is based on responses from 2,472 dealer
of their employees in sales, after-sales service as well principals or dealership general managers located in more
as technicians leaving the dealership every year. than 200 cities throughout India. The study was conducted in
association with the Federation of Automobile Dealers
Study Rankings Associations (F A D A) and was fielded from January through
March 2018
In the passenger-vehicle segment, Toyota (939) ranks highest
in dealer satisfaction for the eighth consecutive year,
performing particularly well across all factors. Hyundai

fada.in | June 2018 F A D A Journal 11

F A D A News

F A D A Inks MoU with YES Bank to Launch Dealer Upskilling Academy

Federation of Automobile Dealers Associations (F A D A) signed graduates but may have a knowledge gap in terms of KPI.
a Memorandum of Understanding (MoU) with the Yes Bank, This unique knowledge-based partnership aims to address
to launch ‘F A D A Academy’.

- To up skill 500+ dealer principals and 3000+ teams.
- Training sessions for dealer principals, CEO’s, Service

Leaders, Finance Leaders and Sales leaders.
- Classroom, online and blended learning sessions in

multiple formats.

F A D A Academy will prepare current and future dealer
leadership to build front-end and back-end processes,
improve customer and technical operations and enhance
financial results of each department in the dealership.

skill gaps to make Auto Retailers in India
globally competitive by making the industry
technically sound, thereby helping
institutionalize the sector. In the first year,
the academy aims to up skill 500+ dealer
principals and 3000+ teams on various
technical and management programs.
In order to make it more comprehensive,
various formats like workshops,
certification courses, and management
development programs would be included
in the courses to be imparted through
classroom, online and blended learning
sessions through F A D A Academy.

The Academy will also work towards providing world class Speaking about the partnership, John K
training and development programs for Dealer Principals, Paul, President, F A D A said “F A D A
CEO’s, Service Leaders, Finance Leaders and Sales Leaders. Academy aims to evolve into a mechanism
The course coverage will be across a spectrum of topics such for constant learning amongst the fraternity. When
as finance, strategy, customer experience, digital and disruptions become inevitable, ignorance can prove to be
innovation, process management techniques etc., which fatal. Through this academy we would not only provide a
would benefit the auto retailers and their teams to manage platform for acquiring knowledge but also encourage to
their business more efficiently. think creatively and adapt to change.”
The auto retail industry has conventionally been a family Commenting on the development, Rajan Pental, Group
managed business, with families running these businesses President and Group Head - Branch and Retail Banking, YES
for almost three to four decades, in case of some of the large Bank, said, “We are pleased to power the F A D A Academy
dealerships. In such businesses, the first generation’s towards up-skilling, re-skilling and preparing the current and
inclination towards adapting to new technologies is low as future dealer leaders to build front-end and back-end
opposed to the second and third generation who are B-school processes, improve customer engagement and operations,
thereby helping improve profitability. The curriculum has
been designed to cater to up-skill and upgrade the auto
dealers segment.”

12 F A D A Journal June 2018 | fada.in





The Global Electric Vehicle Market as McKinsey & Co.
Amped Up and On the Rise

China remains firmly in the lead on Electric Vehicle What is the Electric Vehicle Index?
Index. But other pockets of growing public- and private- McKinsey’s proprietary Electric Vehicle Index assesses the
sector commitment to these vehicles have emerged. e-mobility performance of 15 key countries around the
world. Since the creation of the EVI, several years ago, it
Last year, for the first time, global sales of new electric vehicles has served as a critical tool to help organizations exposed
(EVs), passed a million units (Exhibit 1), according to to the automotive, mobility, and energy sectors understand
McKinsey’s Electric Vehicle Index. Under the current growth how electric-vehicle (EV) dynamics have evolved at a
trajectory, EV producers could almost quadruple that granular level and where they are trending for the future.
achievement by 2020, moving 4.5 million units, around 5 The index explores two important dimensions in the
percent of the overall global light-vehicle market. advance of electric mobility: markets and demand, on the
one hand, and industries and supply, on the other. On the
Exhibit 1 market side, it analyzes the share of electric vehicles in
the overall market. It also looks at incentives, such as
subsidies, the existing infrastructure, and the range of EVs
available. The industry side determines how successfully
the automotive sector in each country has supported
electric mobility. It involves analyzing a range of factors
such as the current and future share of electric vehicles in
the global production of vehicles and incorporates key
components, such as e-motors and batteries.
Every country is assessed on the key performance
indicators and accumulates a score from zero to five. These
are transferred into an overall weighted score, which is
the basis for the final EVI matrix and country ranking.

Pure electric vehicles (BEVs) currently make up 66 percent of
the global EV market. BEV sales are growing faster than those
of plug-in hybrid vehicles (PHEV). However, specific markets
have very different powertrain preferences, which are
influenced by regulatory actions, customer choice, and the
availability of specific models.

fada.in | June 2018 F A D A Journal 15

Perspective

Pure electric vehicles (BEVs) currently make up 66 percent of However, given today’s EV-battery economics, leadership in
the global EV market. BEV sales are growing faster than those EVI scores comes at a price: China and Norway have some of
of plug-in hybrid vehicles (PHEV). However, specific markets the world’s highest levels of spending on consumer and
have very different powertrain preferences, which are supply-side subsidies, at the taxpayers’ expense.
influenced by regulatory actions, customer choice, and the
availability of specific models.

China solidifies its leadership position in EV sales Exhibit 2

The Chinese market expanded by 72 percent over the previous
year in 2017, solidifying China’s leadership position in EV
sales. The country now has a larger EV market—primarily
BEVs—than Europe and the United States combined. With a
sales share of around 94 percent, domestic OEMs currently
dominate the Chinese EV market.

Generous subsidies and tight regulation continue to drive A comparison of EVI performance over time reveals that China
much of the growth. Electric vehicles are exempt from license- has rapidly overtaken the United States and Germany in
plate lotteries and auctions in some Chinese cities, and this combined EVI scores. China and Germany occupying roughly
still plays an instrumental role in promoting EVs. After a the same position in 2014, for example. Yet by 2018, China
successful pilot program in selected cities, the Chinese had far outpaced Germany in both market and industry EVI
government decided last year to introduce green license scores. In the market EVI scoring, China improved through
plates for new energy vehicles (NEVs) across the country. At higher EV sales, significant monetary and non-monetary
the end of 2017, the plates were rolled out to all provincial incentives, a greater variety of models, and the investment
capitals and other selected major cities, with the remaining intensity of the charging infrastructure. China also excelled
cities to follow in the first half of 2018. Car owners with on industry scoring, significantly increasing its EV production
these license plates will be eligible for preferential treatment. and component shares. Major restrictions on local content—
Furthermore, China’s national and local subsidies for electric especially approved battery suppliers—keep a large portion
vehicles are among the world’s highest, reducing consumer of China’s EV profit pool locally based.
concerns about the comparatively high up-front cost.
However, in an attempt to reduce spending on subsidies while Germany and Norway led growth in the European
still encouraging EV sales, the government recently Union
communicated a change in the incentive policy. On the one
hand, it raised the minimum range to qualify for any incentive Europe’s EV market grew by nearly 40 percent from 2016 to
to 150 kilometers (up from 100) and the energy-density 2017, albeit from a small sales base. A variety of factors
requirement to 105 watt-hours per kilogram (up from 90). On contributed, such as the ongoing headwinds for diesel
the other hand, the subsidies for long-range BEVs (400 technology and increasing customer interest in EVs. Much of
kilometers or more) rose by 14 percent, to 50,000 renminbi the regional momentum emerged in Germany, where the EV
($7,900). Monetary support for plug-in hybrid vehicles fell market more than doubled. That country is now Europe’s
by around 8 percent, to 22,000 renminbi ($3,500). second-largest EV market, outperformed only by Norway.
In absolute terms, China’s EV-sales performance is quite Excluding the Netherlands, where an incentive shift from
remarkable. Yet the adoption rate represents only 2 percent PHEVs to BEVs led to a significant drop in overall EV sales,
on a national level—a limited number of large cities (such
as Beijing, Hangzhou, Shanghai, Shenzhen, and Tianjin)
account for a majority of EV sales. Nonetheless, China’s
positive market performance helped put the country in a
strong, well-balanced position in McKinsey’s latest overall
EVI rankings (Exhibit 2): it was outperformed only by Norway
in the EVI market score and reinforced its leading position—
ahead of Japan, Germany, and the United States—in the
industry EVI analysis (the “supply” side of the equation).

16 F A D A Journal June 2018 | fada.in

Perspective

European markets underlined the regional growth trajectory. regulations, or the time frame for their adoption, will probably
Norway’s EV sales-penetration rate reached 32 percent in be relaxed. However, California and 12 states that follow its
2017, and by December every second passenger car sold there lead are determined to maintain stronger air-pollution
was an EV. Norway stands largely alone in its mass-market standards than the federal government does.
embrace of electric vehicles, so it provides a real-world India is new to the EVI this year. Both Electric Vehicle market
picture of future EV sales proportions that developed markets acceptance and Electric Vehicle industry dynamics are at
could experience over the next five to ten years. Exhibit 3 an early stage: the EV-adoption rate is less than 1 percent
shows the four stages of a disruptive trend. Having reached a and domestic OEMs are just starting to launch EV models.
critical mass of EVs, Norway is clearly ahead of other Although the government rolled out a new tax policy to
countries—the EV disruption is inevitable. Most other encourage EV adoption, a clear strategic road map is still
countries are still in the first stage, except for China and missing. Demand comes mainly from commercial owners
Sweden, which have already advanced to the second: and the public sector, and the country has almost no
disruption is somewhat more clear, with EVs emerging as a charging infrastructure. Since India’s carbon-dioxide levels
validated model.
from electricity generation are among the world’s
Exhibit 3 highest, it also needs more renewable-energy
sources for its Electric Vehicles to achieve true
The rollout of more attractive, better-performing EVs in key “well-to-wheel” zero-emission status.
high-demand segments is another major driver for sales New models (and regulations) to stoke markets
uptake, both in Europe and the United States. Nevertheless, Global automakers will reportedly launch
at 27 percent, US growth lagged behind that of China and the approximately 340 BEV and PHEV models in the
European Union, since fuel prices remain low, reducing the next three years, significantly reducing supply
operating-cost advantage of EVs. Likewise, the US as a barrier to further market uptake. The OEMs’
Environmental Protection Agency recently announced that it increased attention mainly reflects tougher
would revise existing vehicle-emission standards (set by the emissions targets, especially in China and
previous administration), which require cars and light trucks Europe, and announcements that several
to average more than 50 miles a gallon by 2025. It is still countries, as well as cities around the world,
unclear what the new standards will look like, but the will set end dates for the sale of diesel- and
gasoline-powered vehicles. Norway, for
example, wants BEVs to account for 100 percent
of its new-car sales by 2025. California, France,
and the United Kingdom have proclaimed that
they will end sales of ICEs by 2040.
China too seems to be developing a long-term
plan to abandon vehicles powered by fossil fuels:
a new EV policy, which will become effective by
2019, requires automakers to comply with a
mandatory EV credit target. As a result, several
international automakers announced new joint
ventures with domestic Chinese brands to develop and
produce numerous EVs together.
Electric vehicles have made meaningful progress in several
regions and countries as they passed the milestone of
one million sales, in 2017. With demand rising and
manufacturers ramping up production capacities, the
market will continue to grow. Looking forward, the
confluence of government action, greater attention by
OEMs, rising customer acceptance, and ingenious suppliers
could accelerate the segment’s profitability until the early
to mid-2020s

fada.in | June 2018 F A D A Journal 17

Insurance Marketing

The Secret Sauce to Double Your Insurance Revenue

TLDR: Cross-selling Insurance to Regular Service Customers can increase Dealership Insurance Revenue by 25% - 40%

MISP has caused a lot of pain in the dealer community - insurance to regular service customers either doesn’t happen
Insurance pay-outs have crashed, and dealer bottom-lines or happens ad-hoc with no system or process in place. This
have been reduced to rubble. In this environment, it is critical means that a vast potential to increase insurance revenue is
for dealerships to increase insurance volumes to counter systematically missed every month!
the effects of a reduced margin. Our recommendation to dealerships is to put a process in
So, if you don’t already have an insurance marketing place with dedicated telecallers and data management to
department that is firing on all cylinders, backed by properly market insurance to regular service customers who do not
aligned telecaller and manager incentives, stop reading here have an insurance relationship with you. We call this process
and go fix that immediately. “Insurance Cross-selling”.
If you’re still with us, you’re probably looking ways to extract Let’s look at some numbers. Exhibit B shows India-wide
more juice out of your insurance business. We have one magic averages for OEM-program premiums and own-renewal
word for you – “Cross-selling”. retentions (both 1st renewal and subsequent renewals are
Most dealerships have a large base of regular service blended).
customers who renew their
insurance outside of the dealership. Exhibit B: Retention & Premiums
These customers have a recurring
service relationship with the
dealership but do not have an
insurance relationship. In fact, for
the best run dealerships in India,
only about 30% of regular service
customers have an insurance
relationship with the same
dealership. Exhibit A shows the
India-wide benchmark for the best
dealerships across brands.

However, the way insurance
marketing works at most
dealerships in India, cross-selling

Exhibit A: Most regular service customers at a dealership aren’t Because the pool of regular service customers is larger than
covered by dealer-sold insurance the pool of customers who renewed their insurance with you
last year, the number of leads for Insurance Cross-selling
every month is usually larger than the number of leads for
OEM-program retention. This means that Insurance Cross-
selling increases the opportunity for dealerships multiple
times. (See Exhibit C for our benchmarks for increased
opportunity across OEMs). However, the conversion rate for
Insurance Cross-selling leads is always lower than OEM own
retention rate. (See Exhibit D for benchmarks). This is because
regular service customers have existing insurance
relationships elsewhere which are harder to break than
continuing your own insurance relationship. Combining both
of these factors, the overall impact of Insurance Cross-selling
is to increase a dealer’s insurance renewal volume by 25% –
40%. (See Exhibit E).

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Insurance Marketing

Exhibit C: Number of cross-selling leads are more than the Exhibit E: Hence, Renewal volume increases
At this point you must be wondering, what is up with the
Maruti numbers. The impact of cross-selling in the Maruti
Insurance ecosystem is significant, but smaller than other
OEMs because the Insurance cross-selling process works
differently with Maruti dealers. The most effective Insurance
cross-selling leads for Maruti dealers are for customers who
have a recurring service relationship with a dealer but who
have their insurance relationship within the Maruti Insurance
system but with a co-dealer. Hence, the lead numbers here
for Maruti’s Insurance cross-selling process are a subset of
the leads that are being counted at other OEMs.

Conclusion

Exhibit D: 6% to 17% of all cross-selling leads convert In the MISP-era, dealers need to squeeze out every efficiency
that is possible within their customer database to market
insurance aggressively and preserve their bottom-line. Hence,
setting up a data-backed process to sell Insurance to regular
service customers is a worthy investment.

The article was contributed by Aditya Sureka, Nikhil Sharma and Kshitij Saxena from Autoninja. Autoninja is India’s
largest Auto CRM. It is used by Dealers for Service Marketing, Insurance Marketing and Sales Automation.

fada.in | June 2018 F A D A Journal 19



New Unveils

Mercedes-Benz Launches AMG S 63 Coupé in India

Mercedes-Benz India bolsters its position in the dream car • AMG DYNAMIC SELECT driving modes: Comfort, Sport,
segment with the launch of Mercedes-AMG S 63 Coupé with Sport+ and Individual
an all-India Ex-Showroom price of Rs. 2.55 crore.
The two-door Coupé is powered by 4.0-litre V8 biturbo engine • Controllable AMG Performance exhaust system: The S
with twin-scroll turbochargers, producing 450 kW of power 63 Coupé is fitted as standard with the controllable AMG
and 900 Nm of torque, which accelerates the vehicle from Performance exhaust system to ensure an even more
stand still to 100 in mere 3.5 seconds. The new 4.0-litre engine emotionally appealing sound experience. The infinitely
installed in the vehicle is churns out 20 kW more power from adjustable flaps modulate the exhaust note authentically
its predecessor, which hosted a 5.5-litre engine. The and directly. The flaps open or close dependent on the
Mercedes-AMG S 63 Coupé is launched by Michael Jopp, VP selected AMG DYNAMIC SELECT driving mode, but can
Sales and Marketing, Mercedes-Benz India. also be controlled individually with a separate button
in the AMG DRIVE UNIT on the centre console
Michael Jopp said, “With the launch of Mercedes-AMG S 63
Coupé, we are further strengthening our lead in the • AMG DYNAMIC SELECT drive programs
Performance and Dream Car line-up in India. With the vision
of evolving continuously, it is our perpetual effort to bring in Radar based Driving Assistance Features
new technology and elements of luxury in our existing
vehicles. The new AMG S 63 Coupé hosts breakthrough Over and above the multifold safety features that come as
technology and enhanced appearance, which sets a standard, S 63 Coupé comes with optional safety technology:
benchmark in the segment, and makes it even more desirable. a new radar-based driving assistance system, which reduce
The launch of new S 63 Coupé is a strategic decision after the the risk of accidents.
introduction of new S-Class, which received a great response Active Distance Assist DISTRONIC: Controls the distance to
from its customers, and we are confident that the vehicle will vehicles in front up to a speed of 210 km/h and if necessary
entice our Mercedes-AMG enthusiasts and enhance our loyal brakes the vehicle with up to 50 per cent of the maximum
fan base.” braking power.
Active Steering Assist: At speeds up to 210 km/h, Active
Key product highlights Steering Assist helps the driver keep the vehicle in the centre
of its lane on straight stretches of road or slight bends.
• AMG Cylinder Management' cylinder deactivation system Active Braking Assist: The emergency braking function can
• AMG SPEEDSHIFT MCT 9G transmission help to avoid or lessen the consequences of accidents with
• AMG speed-sensitive steering vehicles in front and pedestrians.
• AMG RIDE CONTROL+ suspension with variable damper Blind Spot Assist: It can warn the driver of vehicles in the
blind spot during a lane change
control

fada.in | June 2018 F A D A Journal 21

Upgrades

Mahindra Refreshes New TUV 300 Plus

Mahindra & Mahindra (M&M) announced on June 10, the Plus on Comfort & Premiumness: Equipped with Cushion
introduction of the TUV300 PLUS, with a competitive price Suspension Technology, the new SUV PLUS delivers a superior
tag of Rs. 9.47 lakh (Ex-Showroom, Mumbai). ride experience on all type of roads. The interiors are designed
Powered by the proven 2.2 litre mHAWKD120 engine, which by legendary Italian design house, Pininfarina, and the faux
delivers 88 kW (120 BHP), comes with a 6-speed manual leather seats give the TUV300 PLUS a premium feel. It also
transmission for enhanced driving pleasure. It also makes a comes with steering mounted audio & phone controls, a rear
stylish & powerful statement with its bold design and true- defogger alongwith wash & wipe, a driver seat height adjuster,
blue SUV stance. The interiors, designed by legendary Italian armrests for the front row, a convenient storage tray and
design house, Pininfarina, and faux leather seats give the lead-me-to-vehicle & follow-me-home headlamps.
SUV a premium feel. It also offers high-tech features such as Plus on Technology: TUV300 PLUS offers a host of hi-tech
the 17.8 cm touchscreen infotainment with GPS navigation, features, such as the 17.8 cm touchscreen Infotainment System
ECO mode & micro hybrid technology, to name a few. with GPS navigation and 4 speakers + 2 tweeters, Bluesense
Veejay Nakra, Chief of Sales & Mktg - Automotive, M&M, said, App, ECO mode, Micro Hybrid Technology, Brake Energy
“TUV300 has enjoyed a successful run since its launch in Regeneration Technology, Intellipark Reverse Assist, AC ECO
September 2015, with close to 80,000 vehicles on road. We mode and Driver Information System.
are now pleased to introduce the TUV300 PLUS for customers Plus on Safety: TUV300 PLUS comes with a toughened high-
who are looking for a true-blue SUV with more space & more strength steel body alongwith chassis derived from the
power. The TUV300 PLUS will appeal to buyers looking for an Scorpio. It also comes with dual-airbags and ABS with
SUV that compliments their aspirations and lifestyles.” Electronic Brake-force Distribution. Additionally, the hazard
lights also switch on incase of panic braking.
TUV300 PLUS Attractive Finance Options: TUV300 PLUS will be available
with customizable finance options with low down payment
Plus on Power: Equipped with the proven and reliable & attractive EMIs as low as Rs. 11,999
mHAWKD120 engine, that delivers superior drivability both Attractive Service Plans: TUV300 PLUS will come with
in city traffic as well as on highways with 88 kW (120 BHP) customised AMC options starting from Rs. 0.31/km and
power, 280 Nm torque and a 6-speed manual transmission. extended shield warranty (up to 5 years).
Plus on Space: Spacious & comfortable SUV that offers Customers will have the option to choose from five attractive
luxurious space to seat 9 people with the flexibility. colours, namely Majestic Silver, Glacier white, Bold Black,
Plus on SUV quotient: TUV300 PLUS makes a powerful and Dynamo Red and Molten Orange, and three variants - P4, P6
stylish statement with its imposing stance, big footprint and and P8.
its real SUV character defined by the aggressive front grille,
large alloy wheels (215/70 R16) and rear wheel drive.

22 F A D A Journal June 2018 | fada.in

BMW X3 Launched in Petrol Variant

BMW launched the petrol variant of new BMW X3 in India on BMW ConnectedDrive systems like 12.3-inch multifunction
21 June 2018 for Rs. 56,90,000, all-India Ex-Showroom, Price. instrument display, BMW iDrive, including touch controller,
Vikram Pawah, President, BMW Group India said, “BMW X BMW Navigation Professional (with 10.25-inch touch screen),
range is a pioneer in the SAV segment. high-end surround sound system from Harman, Apple Car
New BMW X3 has been reinterpreted with a striking design Play, BMW Apps and Connectivity through Bluetooth and USB.
language, featuring a compelling frontwith a boldly enhanced The innovative petrol engine from the BMW EfficientDynamics
distinctivedouble kidney grille. Fully Adaptive LED headlights family offers considerably more spirited power delivery as
andLED fog lampsfeaturing the new hexagonal design ensure well as spontaneous responsiveness even at low engine
a prominent stance on any road.At the rear, LED expressive speeds. Thanks to the unrivalled BMW TwinPower Turbo
taillights combined with a low-slung roof spoilerand exhaust technology, it blends maximum power with exemplary
tail pipes on both sidesin chromemake for a powerful efficiency. The two-litre four-cylinder petrol engine of the all-
conclusion.Automatic tailgate operation allows convenient new BMW X3 xDrive30i produces an output of 185kW / 252hp
opening and closing of the tailgate. and a maximum torque of 350 Nm at 1,450 – 4,800 rpm. The
The chrome radiator grille bars, two-tone underbody car accelerates from 0-100 km / hr in just 6.3 seconds.
protectionin frozen gray matt with chrome trim, air-breather The eight-speed automatic Steptronic sport transmission
in chrome and 19-inch alloy wheels shine an even brighter performs smooth, almost imperceptible gear shifts. At any
spotlight on the elegance of the exterior design. time, in any gear, the transmission collaborates perfectly
The interior impresses with an accomplished balance of with the engine, enabling it to develop its full power and
dynamic driver-orientation and luxurious comfort. The efficiency.
exquisitely embossed X logo in the elegant chrome located BMW EfficientDynamics doubles the Sheer Driving Pleasure
on the doors and the centre console is a true eye-catcher. with features such as Auto Start-Stop, ECO PRO mode, Brake-
New BMW X3 comes with game-changing technologies such Energy Regeneration, Electronic Power Steering, and 50:50
as the BMW Display Key that allows drivers to keep in contact Weight Distribution. Driving Experience Control switch is used
with their car round the clock. Welcome Light Carpet welcomes to choose between different driving modes(ECOPRO,
passengers in glamorous style. Rear-view camera with Park COMFORT,SPORT and SPORT+).
Assist assists in parking or maneuvering into parallel or BMW X3 features cutting-edge safety technologies. It provides
lateral space. The smartphone holder integrated into the six airbags, Attentiveness Assistance, Dynamic Stability
centre console allows inductive, Wireless Charging for mobile Control (DSC) including Cornering Brake Control (CBC),
phones and the BMW Display key. electric parking brake with auto hold, side-impact protection,
The new BMW X3 is equipped with an extensive range of crash sensor, ISOFIX child seat mounting and integrated
emergency spare wheel under the load floor

fada.in | June 2018 F A D A Journal 23



Consumer Case Studies

National Consumer Disputes Redressal Commission, New Delhi

Dr B C Gupta, Presiding Member and Dr S M Kanitkar, Member

Honda Siel Cars India Ltd - Petitioner

Versus

Savita Jerath & Anr - Respondents

Revision Petition No. 4614 of 2012 Decided on 16.05.2018

(Against the Order dated 03/09/2012 in Appeal No. 150/2012 of the State Commission Chandigarh)

Order

1. Dr B C Gupta, Presiding Member - This Revision Chandigarh and had to be towed away. The matter

Petition has been filed under section 21(b) of the was brought to the notice of both the Opposite Parties

Consumer Protection Act, 1986 challenging the and they were requested to replace the complete
legality and correctness of the order dated
engine of the vehicle, as there was manufacturing
03.09.2012, passed by the UT Chandigarh State
defect in the same. It was stated that due to said
Consumer Disputes Redressal Commission defect in the body of the engine, the coolant had
(hereinafter referred to as ‘the State Commission’) in
leaked into the engine head, got mixed up with the
First Appeal No. 150/2012, “M/s Honda Siel Cars
engine oil and entered the cylinders of the engine,
India Ltd versus Savita Jerath & Anr” and First Appeal thereby causing damage to the whole engine. On the
No. 137/2012, “M/s Harmony Honda Vs Savita Jerath
advice of the manufacturer, the dealer decided to
& Anr”, vide which, both the appeals were ordered to
replace the ‘Head Assembly’ of the engine of the
be dismissed and the order dated 07.03.2012, passed vehicle. However, the Complainant took the stand
by the District Forum-I, UT Chandigarh, allowing the
that the Head Assembly was one of the components
consumer complaint No. 282/2010, filed by the
of the engine and when one of the components was
Complainant Savita Jerath against the two
Appellants/Revision Petitioners mentioned above, found to have a manufacturing defect, the whole
engine needed to be replaced. However, despite
was upheld.
sending letters to various functionaries of the OPs,

2. Briefly stated, the facts of the case are that Savita they refused to proceed in accordance with the
Jerath, the Complainant, purchased a Honda City car demand of the Complainant and ultimately delivered
for a sum of Rs. 7,23,500 on 29.02.2008 from the the vehicle to her on 10.11.2009, after replacing the
dealer, M/s Harmony Honda, Joshi Automobiles Pvt head compressor cylinder, which was termed as Head
Ltd, Chandigarh, manufactured by the Petitioner M/s Assembly. The Complainant, however, maintained
Honda Siel Cars (India) Ltd, Greater Noida (UP). The that there was dip in speed after the repairs carried
extended warranty cover for the car is stated to be out by the OPs. The Complainant has further stated
valid upto 29.02.2012. It has been stated in the that although joint inspection of the vehicle was
consumer complaint that there was a manufacturing carried out on 26.02.2010 and a joint drive done, the
defect in the application of gears in the said vehicle, defects in the vehicle could not be rectified. It is
which was noticed right from the beginning. The said also alleged that after replacement of the Head
defect could not be rectified during regular servicing Assembly, the BHP test was not carried out to
of the vehicle, done by the Opposite Party (OP)/ determine, whether the vehicle was in perfect running
dealer. The matter was brought to the notice of the condition. The Complainant then filed the consumer
other OP, i.e., the manufacturer M/s Honda Siel Cars complaint in question, seeking directions to the OPs
Ltd through letter dated 06.03.2009, duly to replace the complete vehicle, because of the
acknowledged by the said party. It is alleged that defects in many parts of the vehicle.

the said vehicle suddenly stopped on 03.10.2009 in 3. The complaint was resisted by the OPs by filing their
the middle of the road at a traffic intersection in
written reply before the District Forum. The OP-1

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Consumer Case Studies

dealer stated that there were no defects in the that it was an established legal proposition that a

vehicle at the time of its sale. As and when, any manufacturer or a dealer was required to replace
defect was pointed out, the same was promptly the defective part of the vehicle only. The learned

attended to by them. There was no problem in the counsel has drawn attention to the vehicle inspection

application of the gears and the same was report dated 10.09.2010, made by their technical
communicated to the Complainant after conducting personnel, according to which, all technical

the test drive jointly. The OP-1 maintained that there parameters of the vehicle were found to be in order.

was no need to replace the engine, as the vehicle The learned counsel further stated that the vehicle
was running perfect. It was also stated that the was being run by the Complainant or her

engine of the vehicle consists of various parts and representative in perfect condition and hence, there

in case a problem is found in a particular part, the was no chance of any manufacturing defect in the
relevant part in engine is to be replaced, rather than same. The learned counsel has drawn attention to

replacing the whole engine. There was no defect in an affidavit filed by Jasminder Singh, Service Advisor

the gear operation and dip in speed after the repairs of their dealer, Joshi Automobiles Pvt Ltd, in which it
carried out by them. It was also stated that during has been categorically stated that the OPs were ready

joint test drive on 26.02.2010, no defect was found to get the vehicle inspected from any independent

in the vehicle. The written reply was also filed by agency or engineering institute to ascertain the
the OP-2 on similar lines. allegations regarding the noise in the engine or dip

4. The District Forum, after considering the averments in the speed of the vehicle. Referring to the opinion
of the Parties passed their order on 07.03.2012, by expressed by L D Garg from the Department of
which they allowed the consumer complaint and Mechanical Engineering, Punjab Engineering College,
directed the OPs jointly and severally to replace the Chandigarh, the learned counsel stated that the said
entire engine of the car, without charging any amount person had not inspected the vehicle before giving
from the Complainant. The OPs were also directed his report. Moreover, L D Garg was not an Automobile
to pay a sum of Rs. 50,000 as compensation and Rs. Engineer and hence, his report did not carry any
15,000 as cost of litigation. Being aggrieved against weight. Similarly, the technical opinion of Ravi
the order of the District Forum, both the OPs Nandan Malhotra placed on record by the
challenged the same by way of separate appeals Complainant, was of no value, because Malhotra was
before the State Commission. The said appeals having also a Mechanical Engineer only. Moreover, he had
been dismissed vide impugned order, both the OPs not conducted any test on the vehicle and the report
are before this Commission by way of the present was also prepared without their knowledge. The
Revision Petitions. learned counsel further stated that the vehicle might
have travelled 1,50,000 kms by this time and hence,

5. During proceedings before this Commission, the the presumption is that it was in a perfect running
Petitioners in RP No. 4615/2012, M/s Harmony Honda condition. The representative of the Complainant
appeared on some of the hearings, but none came replied that the vehicle had run about 80,000
present for them since hearings done on 17.03.2016 kms. The learned counsel for the Petitioner further
and afterwards. In the interest of justice, a notice stated that the onus to prove that there was
was sent to them for appearance on the next date of manufacturing defect in the vehicle, was upon the
hearing, but despite due service of the notice, none Complainant only.

was present on any of the hearings subsequently. RP 7. In support of his arguments, the learned counsel for
No. 4615/2012, therefore, deserves to be dismissed the Petitioner, inter-alia, relied upon the following

on grounds of non-prosecution, as well. judgments made by the Hon’ble Supreme Court of

6. During arguments before us, the learned counsel for India and this Commission:-

the Petitioner in RP No. 4614/2012, M/s Honda Siel Sl. No. Case Title Citation Maruti Udyog Ltd Vs Sushil
Cars India Ltd submitted that the OPs had already Kumar Gabgotra & Anr
replaced the Head Assembly of the engine free of cost,

and hence, there was no need to replace the entire 2006 (IV) SCC 644 - Classic Automobiles Vs Lila Nand

engine of the vehicle. The learned counsel argued Mishra & Anr

26 F A D A Journal June 2018 | fada.in

Consumer Case Studies

I (2010) CPJ 235 (NC) - Swaraj Mazda Ltd Vs P K period, has not been denied on record by the Opposite
Chakkappore & Anr Parties. The Opposite Parties have taken the plea that
on receipt of complaint about the defects in the
II (2005) CPJ 72 (NC) - Sushila Automobiles Pvt Ltd Vs vehicle, they conducted repairs by replacing all
Dr Birendra Narayan Prasad RP No. 1652/2006 concerned parts which could lead to any future
decided on 07.05.2010 trouble. They also stated that the vehicle was
absolutely road-worthy, after the repairs were
8. The authorised representative for the Respondent/ carried out in the same and there was no
Complainant stated that the vehicle in question manufacturing defect etc. However, since the
suffered from manufacturing defect from the very Complainant was not satisfied with the repairs made
beginning and hence, the direction given by the and continued to highlight the defects in the vehicle,
Consumer Fora below for replacement of the entire a joint inspection was carried out on 26.02.2010 in
engine of the vehicle, was in accordance with law. which, the representative of the OPs recorded the
The vehicle had been purchased by them from M/s remarks that no abnormality was found. However,
Harmony Honda, Chandigarh on 29.02.2008 and it the Complainant recorded her dissatisfaction note
was within the warranty period, when it stopped saying that, “ the operation of second gear continues
suddenly on 03.10.2009 at the traffic light point to be extra hard and troublesome. The engine BHP
located at the intersection of Section 15 and 16, be checked to eliminate the problem of dip in speed
Chandigarh. He immediately contacted the Opposite especially because the head assembly has been
Party and asked them to take required action in the replaced because of a manufacturing defect in the
matter. The authorised representative explained that engine.”
being an experienced engineer himself, he could say
with certainty that once water had entered the head 11. It is made out from above that the Petitioners failed
assembly, it had entered the cylinders also and to convince the Complainant that the defects in the
caused damage to the whole engine. It was necessary, vehicle had been fully removed. Moreover, they did
therefore, to replace the entire engine. The authorised not take any steps to get the BHP test etc. done, so as
representative stated that they had placed on record to remove all doubts about the vehicle not working
expert technical opinions from two persons, who to its full efficiency. It has been stated in the reports
were both mechanical engineers and had stated produced by the Complainant that the original
categorically that if the coolant gets mixed up in the efficiency of the engine cannot be restored if the “Head
engine oil, a serious damage is done to the engine. Assembly” alone is replaced. It has further been
The experts had also opined that the replacement of stated that once the coolant gets mixed up with the
head assembly alone, cannot restore the original engine oil, a serious damage is done to the engine
efficiency of the engine. The authorised and under those circumstances, it is necessary that
representative stated that the Opposite Parties had the whole engine should be replaced. These reports
failed to carry out the requisite tests like the BHP have been given by experts who are qualified
test etc. and hence, they could not take the stand that mechanical engineers, expected to have an in-depth
the vehicle was in perfect running condition. The knowledge about the working of the automobiles.
authorised representative admitted that the vehicle One of the experts, L D Garg is a retired officer from
was being used by them, but it was not running to its the Mechanical Engineering department of a reputed
full efficiency. Institute, known as the Punjab Engineering College
(PEC), and now the PEC Institute of Technology. In
9. We have examined the entire material on record and the absence of any other technical/expert report to
given a thoughtful consideration to the arguments the contrary, it would be unfair to say that these
advanced before us. reports should not be relied upon, while taking a
decision in this matter.
10. The main issue for consideration in the matter is
whether the vehicle in question suffered from any 12. One of the main thrusts of the argument taken by the
manufacturing defect or not. The version given by learned counsel for the Petitioner/manufacturer says
the Complainant that the vehicle suddenly stopped that the onus to prove that there was manufacturing
on the road on 03.10.2009 during the warranty

fada.in | June 2018 F A D A Journal 27

Consumer Case Studies

defect in the vehicle was upon the Complainant. In down in various judgments/orders of the Hon’ble
this regard, we would like to place reliance on a view Supreme Court and this Commission, it was
taken by this Commission in RP No. 381 of 2012 incumbent upon them to replace only the defective
decided on 17.10.2014/05.11.2014, “Ankur Seeds part of the engine. However, the consumer fora below
Private Ltd & Anr Vs Moti Lal & Anr”, in which it has had directed them to replace the entire engine of
been stated as follows:- the vehicle, which was neither fair nor just.
However, we would like to emphasise here that it
“It is cardinal principle of law that ordinarily the was the duty of the Opposite Parties to ensure that
burden of proving the fact rests on the party who the vehicle was free from any fault, imperfection or
asserts the affirmative issues and not on the party shortcoming in the same after the necessary repairs
who denies it. Nevertheless, there is distinction were carried out and for that purpose, they should
between the phrase burden of proof and onus of have placed sufficient evidence on record in the
proof. Exp lain ing the said distinction , in A. shape of technical/expert reports that the vehicle
Raghavamma & Anr Vs A. Chenchamma & Anr AIR did not suffer from any defect. We, therefore, do
1964 SC 136, a three-Judge Bench of the Hon’ble not find any justification to make any modification
Supreme Court held that: there is essential distinction in the findings recorded by the Consumer Fora
between burden of proof and onus of proof: burden below.
of proof lies on the person who has to prove a fact
and it never shifts, but the onus of proof shifts. Such 15. Fu rther, it is a settl ed lega l propositio n th at
a shifting of onus is a continuous process in the interference in the exercise of the revisional
evaluation of evidence.” jurisdiction can be made only, if there is material
defect or jurisdictional error in the orders passed
It has further been stated in the said order as by the Consumer Fora below. Such a view has been
follows:- taken by the Hon’ble Supreme Court in their judgment
in “Rubi Chandra Dutta vs United India Insurance
“In my view therefore, to give effect to the Objective Co. Ltd. [(2011) 11 SCC 269]”. In the present case,
of the Act, its provisions have to be construed by considering the concurrent findings given by the
resorting to the Doctrine of ‘Purposive Construction’. District Forum and the State Commission, there does
Considered from that perspective, in my opinion, if a not seem to be any justification in making any
Complainant is able to create a high degree of modification in the orders passed by them in the
probability of deficiency on the part of the Opposite exercise of Revisional Jurisdiction.
Party, the onus would shift on to the Opposite Party
(the defendant) to discharge the onus to prove his 16. It is further observed that in RP No. 4615 of 2012
denial.” filed by the dealer M/s Harmony Honda, the Petitioner
made appearance on first few days of hearing and
13. It is made out from the above that once the then stopped appearing. It is very clear, therefore,
Complainant has placed reports from two technical that they are no longer interested in pursuing the
experts on record, the onus had shifted to the OP to Revision Petition any more, meaning thereby that they
prove that the defects in the vehicle had been fully have accepted the verdict given by the consumer fora
removed, after they carried out the repairs in the below. RP No. 4615 of 2012 deserves to be dismissed
same. The contention of the Complainants that once on ground of non-prosecution as well.
coolant gets mixed up with the engine oil, serious
damage is done to the engine, has not been 17. Based on the discussion above, we do not find any
controverted by the Petitioner by producing any justifiable reason for making any change in the
tangible evidence or technical report in their favour, orders passed by the consumer fora below, which
neither they have furnished any substantive proof are based on sound and logical reasoning. The
that the engine of the vehicle is working to its full present Revision Petitions are, therefore, ordered
efficiency. to be dismissed and the orders passed by the
consumer fora below are upheld. There shall be no
14. The learned counsel for the Petitioner/manufacturer order as to costs
has vehemently argued that as per settled law laid

28 F A D A Journal June 2018 | fada.in



The Zero Hour

Devki Nanda, 31, an LSE pass out is the MD of Cargo Motors having 3S dealership of Tata Motors, Jaguar
Land Rover and HMSI. A 3rd Gen Entrepreneur, Devki was an Investment Banker before jumping into
her family business started in 1959 by late Mr Yash Pal Nanda and carried forward by his son, Mr Jayant
Nanda. Today, Devki manages 90 sales and service outlets, spread across Delhi, Gujarat, Punjab and
Rajasthan. The company recently won 2 awards at F A D A Awards 2018 under the categories, Employee
Engagement Initiatives and CV Dealer of the Year.

In an exclusive interview with Saharsh Damani, Editor – F A D A Journal, this is what she had to say:

Tell us about your association with Tata Motors and where do is anxiety concerning medium and heavy CVs, in terms of
you see this grow from here on? distance to cover and cost of ownership. We see a surge in
Cargo’s relationship with Tata Motors dates back to 1959. commercial viability with increased production in other
Our association spans 60 successful years, which is exactly segments and expansion of charging infrastructure
how long Cargo Motors has been operational. With god’s Another factor, as stated by EY, is transition to BSVI. It
grace, it has been a strong business partnership that has would add to the push towards EV in CV and other segments
been extremely fruitful. as ICE price would increase by 20%, thereby reducing the
Tata Motors is a valuable patron, as they have always price gap between EV and ICE. Their analysis also states,
motivated us to perform better and excel in our industry. We currently with respect to two wheelers, the total cost of
work as one team with a common goal, which is to provide ownership of electric two-wheelers is lower than that of
the best in class service to our customers. This collaborative ICE counterparts in terms of fleet usage. Similarly, for
approach has been the foundation of our success. Over the passenger car fleets, the TCO is currently comparable to
years we have established ourselves as one of the strong ICE but post BSVI implementation, the cost dynamics would
contenders in this industry. This would have not been possible shift in favour of EVs, enabling an ease of transition for
without mutual trust and understanding. the private user as well.
As everyone knows, EV is coming and coming fast. Is the CV
Vertical specifically ready for it? What are the other changes
which you think will come in the industry in next 5-10 years?
Yes, EVs are coming and CV market is ready for the change.
Quite a few OEMs have already announced the launch of
their respective electric CV fleets. Since we deal with Tata, I
would like to mention that they have already supplied hybrid
electric buses to MMRDA and emerged as the lowest bidder
to supply 190 electric buses to six cities. Also, at the Auto
Expo this year, Tata Motors displayed a fleet of EV buses.
Furthermore, a recent news article stated that an electric
version of Tata Ace is coming soon.

Transition to BSVI will push towards EV in commercial
vehicle and other segments as ICE price would increase by
20%, thereby reducing the price gap between EV and ICE.

As retail partners we agree with the OEM strategy of
launching electric buses first. This segment is more market
ready because of shorter trip lengths, designated routes and
ease of charging at bus depots. The next phase would involve
vehicles used for last mile connectivity and passenger carriers
such as Ace, Magic and Iris. The third phase would be medium
and heavy commercial vehicles. In the present scenario, there

30 F A D A Journal June 2018 | fada.in

The Zero Hour

Other than EV, the change I personally foresee is that the Considering the
Indian CV market will have to cater to the changing needs of fact that I belong to
our customers. They will naturally demand products with the next
better power, emission, safety norms, driver comfort, generation, I will
advanced telematics and higher fuel efficiency. have to disagree.
What are your views on today’s OEM-Dealer Principal We are not shying
relationship and how can it be improved w.r.t making this away, many of my
relationship stronger and transparent? counterparts are
Our relationship with the OEM has been very productive and second or third
promises to grow with time. In the current scenario, dealership generation and are
and OEM have become partners in growth as both stakeholders actively involved
share the same goal – enhanced customer satisfaction. with their
In the past dealerships would wait for the OEM to advise on dealerships.
the way forward, but currently with escalating competition
in the market and urgency from customer, dealers need to be I started my career
more proactive in their approach and further the cause of as an investment
constructive OEM-Dealer relationships. banker but always
We understand that in a partnership the initiatives pertaining thought of
to positive business growth have to be mutually pursued. contributing to my
With this is in mind we, as a dealership, have taken a step family business. I
forward by focussing on a couple of key areas of operations am humbled by the
to enhance performance. On the other side, Tata Motors have legacy left behind
also been taking a very proactive approach towards their by my grandfather,
channel partners who happen to be the voice of their customers. and I take great
What are the main issues according to you faced by the auto pride in it. I am
retail business at a broad level? motivated to hold
on to that legacy, just as my father does. I am passionate
Cost to retail and inventory, manpower quality and shifting about creating a work environment where our employees and
customer loyalties are the three main challenges in the colleagues thrive. Together we wish to see our company grow
auto retail business currently. and rank among the top five dealerships in the country.

Cost to retail and inventory, manpower quality and shifting I am passionate about creating a work environment where
customer loyalties are the three main challenges in the auto
retail business currently. The real estate boom has led to our employees and colleagues thrive. Together we wish
sharp rise in property prices and rents alike. Automobile to see our company grow and rank among the top five
dealers require a lot of space and that comes at a sizable
cost. The life cycle of the products has reduced drastically dealerships in the country.
and frequent upgrades in models have made lean inventory
management impossible. The borrowing rates are relatively What are your views on making the Dealerships Digitally
very high, compared to those of developed economies. Besides, ready? How is today’s customer different from yesterday?
this is a people centric business and with the rise of BPOs The proliferation of Internet has changed the basics of
and other non-traditional career options, finding quality man communication. Today’s customer is more evolved, very well
power has also become a challenge. And lastly, customer informed, equally demanding & knows the developments
loyalty has diminished to a great extent with the availability taking place in the automobile space with latest trends. They
of so many options. are even aware about present and future launches. In a
Why is the next generation shying away from entering the nutshell, the modern customer does all the research well
Auto Retail Business and therefore what is that one thing ahead of walking into a dealership. Hence, it has become
which attracted you to enter the Business? imperative for dealerships to be digitally sensitive, as most
purchase decisions are based on digital information and
marketing.
According to a research report released by Bain & Company
almost 70% of automobile sales in India will be digitally

fada.in | June 2018 F A D A Journal 31

The Zero Hour

influenced by 2020. We are an active participant in various understand the customer and provide apt solutions within
forums and seminars related to digitalization, and their stipulated time frames. This program has proven effective in
unanimous recommendation has been the immediate terms of augmenting sales and enhancing customer retention.
necessity for dealerships to digitalize their operations as it How do you envisage Dealerships of the future?
is need of the hour. Although we must not forget that leveraging The future of dealerships lies in value offerings. Retail is no
digital tools is also a beneficial step. It would help us improve more just about selling. We need to be equipped enough to
real time transparency, enhance sales activity support, and answer the question ‘What value am I adding to the customer’.
bring access to digital analytics and simulation. Importantly, Providing appropriate solutions and offering customized
there are two levels where digital intervention should be experiences would be the real mark of creating impact and
pursued: value.
• CRM tools: Proactive key account plans, customer There are some key factors that would govern the future growth
of dealerships, such as:
relationship mapping, lead management and digital • Digitalization: CRM tools, internal digital tools, customer
interface for instant customer feedback
• Internal digital tools: Detailed customer data and reports engagement tools (online sales), experience centres
which could be tailored to analyze customer purchase • Customer Centricity: customer knowledge,
history and predict future purchases, and timeline of
the same understanding their business needs and offering apt
What changes are you making in your dealerships to cope up product aligned to their requirements, key account
with this new customer buying behaviour? management even at the dealer principal level
As they say, change is the only constant. We have been • Problem Solving: ability to offer customized products,
persistently adapting to evolving customer expectations and fleet management services for customers using advanced
adopting updated systems and processes. There has been a telematics, selling bundled solutions
very conscious investment on employee engagement and • Value Added Services (VAS): AMC, Extended warranty,
digital initiatives such as: insurance & finance services
• Employee engagement: annual off-sites, holidays,
training and development, financial support for critical Dealerships of the future would create experience zones,
illness, loans for advanced studies and children’s be it for presale, sale or post sale, offering customers
weddings personalised solutions at the touch of a button.
• Digital initiative: consumer application, updated website,
dealer application to track online leads and smart tablets Further, dealerships of the future would create experience
Our sales and service personnel use smart tablets for demos. zones, be it for pre sale, sale or post sale, offering customers
They are like moving offices, always ready to make personalised solutions at the touch of a button. It is a
presentations to our customers wherever they may be. The challenging but exciting time ahead for us in the industry.
other permanent ongoing investment is on human resource. What is that one best practice which according to you should
We strongly believe our employees are our internal customers be adopted by everyone in the Auto Retail Trade?
and their happiness is directly proportional to the
satisfaction level of our external customers. We have a very Well-trained and motivated employees combined with
robust training system; our people are constantly mentored the latest technological trends would be the game changers.
and evaluated. The benchmarks keep rising, and we keep them
abreast to the changes in the industry. The best practices I recommend will have to be valuing human
resource and investing in tech-advancement. The focus
Our sales and service personnel use smart tablets for should be on constant talent /skill management and long-
demos. They are like moving offices, always ready to make term retention. This has to come by way of structured processes,
presentations to our customers wherever they may be. right from well-defined recruitment procedures to adequate
training and innovative rewards and recognition programs.
Apart from training, customer interaction meets are often Well-trained and motivated employees combined with the
organized at our dealerships. The idea is to connect with and latest technological trends would be the game changers

32 F A D A Journal June 2018 | fada.in

Know Our Member

Param Automobiles Pvt Ltd, Gandhinagar, Gujarat

Param Automobiles Pvt Ltd – a Life Member of F A D A was customers. The major customer base of the dealership is
established in the year 2010 and is a part of Karnavati Group rural and therefore, care is taken to provide vehicles the
of Companies. same day to its clientele with the help of the Mahindra
Karnavati Automobile Group having 6 automobile dealership Financial Services Limited (MMFSL) and in entire Gujarat the
in Gujarat was established in the year 2000 and has group’s MMFSL market share is 46% which is the highest.
dealerships of Mahindra & Mahindra, Renault, Nissan, Royal The facilities offered at the dealership include 60-minute
Enfield, Honda Bikes, and Triumph Bikes. express maintenance service with 1 bay being specially
Karnavati Group has two dealership of Mahindra & Mahindra earmarked for this service; general maintenance with 11 bays;
based out of Ahmedabad & Gandhinagar. While the Paint booth; and Car-O-Liner. The workshop and the body
dealership in Ahmedabad operates under the name of Punjab shop, managed by the competent manpower, are well
Automobiles Pvt Ltd, the Gandhinagar M&M outlet is under equipped with the latest tools and machines to ensure precise
the aegis of Param Automobiles Pvt Ltd. & proper diagnostic and repair of both personal and
Param Automobiles has four taluks viz. Kalol, Dehgam, Mansa commercial vehicles.
and Gandhinagar under its dealership operations and
operates out of 3 outlets at Gandhinagar, Kalol and Dehgam. Baljeet Singh Bagga Mehul Shah
The 3-S dealership, offering sales, services and spares for
the entire range of M&M is situated at Plot No.1001, Sector Supported by highly motivated workforce comprising 104
28, GIDC, Gandhinagar, Gujarat. In Kalol, the dealership has employees, the dealership achieved a turnover of Rs. 80-90
MADB branch- a four wheel sales point; and in Dehgam, the crore. On a month-on- month basis, the dealership sells
dealership has Smart Zone for the convenience of customers around 80-100 vehicles and services around 800- 1200
for making booking and financing the vehicle without having vehicles.
to travel to Gandhinagar. Shortly, the dealership plans to
open commercial vehicle workshop at Randheja to provide
better and quick service to its commercial customers.
Further, Param Automobiles is the only dealership that
handles all government deals for the entire state of Gujarat
and delivers all orders for Government of Gujarat centrally
from Gandhinagar.
Param Automobiles is an expansive facility built on an area
of 17,080 sq ft. The dealership offers warm ambience to its

fada.in | June 2018 F A D A Journal 33

Know Our Member

Everyone at Param Automobiles firmly believes that customer the time of delivery of vehicle and are sent to the customer as
satisfaction is the key to the growth and success of dealership memorabilia so that he or she remembers the occasion life-
business. The dealership has put in place systems to ensure long. Care is taken that the ceremonial delivery takes place
that its customers cherish the pre- and post-sales experience. keeping the importance of day of the customer in mind-
The dealership has a dedicated customer relations birthday/anniversary etc.
department that keeps its customers engaged and obtains
regular feedback from them for corrective action and To ensure that the customer has a lasting, closer relationship
improvement, if any. with the dealership and the customer relations is not a one-
off activity, Param Automobiles regularly reminds its
Param Automobiles makes sure that every sale of a new customers of periodic maintenance & service dates. The
vehicle is a special occasion for the customer as well as the dealership provides pick-up & drop facility at the time of
dealership to cherish. Puja is performed at the time of delivery first service of the vehicle. Periodically check-up camps are
of vehicle and the delivery is given with all fanfare, with gifts also held to ensure vehicle health and keeping road safety in
being presented to the customer. Photographs are taken at mind.

No wonder then, in view of its excellent customer service and
sales track record, Param Automobiles has bagged a number
of awards & recognitions. In recent times, the dealership
bagged major awards from M&M viz Excellent Support in
Bulk Deals, Best Performance in Personal Sales and Best Sales
in KUV 1OO in entire Gujarat for the year 2018.

The persons driving Param Automobiles to new heights of
growth and success are none other than the dynamic Baljeet
Singh Bagga and Mehul Shah, who are the Directors of the
company. Baljeet Singh Bagga who is the Chairman F A D A
Gujarat chapter looks after the Ahmedabad branch and Mehul
Shah is keenly involved in the day-to-day affairs of
Gandhinagar dealership of M&M.

F A D A wishes Param Automobiles Pvt Ltd, Baljeet Singh
Bagga, Mehul Shah and Karnavati Automobile Group
companies further Success and Growth

Attention: Members

Engagement of GST Consultant

A GST consultant – Ms Puloma Dalal, FCA based in Mumbai, has been engaged by F A D A on retainership to help
members deal with the complexities of GST law and procedures. She will, on reference made by FADA, guide and give
legal opinion on various issues relating to GST as applicable to automobile dealers.
F A D A will forward the queries raised by members to Ms Puloma Dalal for her opinion.
While Ms Puloma Dalal will, essentially, give legal position and clarification, supported by case law, on various
GST issues raised by F A D A members, those wanting to engage her as counsel to fight their cases in litigation, will
have to pay separately as per terms that may be mutually agreed to.
Members seeking clarification or legal position relating to GST as relevant to automobile dealers, may send their
queries to Federation of Automobile Dealers Associations (F A D A), 804-805, Surya Kiran Building, 19, K G Marg,
New Delhi - 110 001 (E-mail ID: [email protected])

34 F A D A Journal June 2018 | fada.in



Post Event Report

F A D A’s aim is to make the Federation every Auto Dealer’s Mr John K Paul, President, F A D A, explaining the intent of the
one stop destination for any concern related to the Federation in holding Vyapar shared that Vayapar would
Automobile Retail Industry. To facilitate this in an organised facilitate networking among the local fraternity which will
way, the Federation in its calendar for FY19 intends to organise lead to better business practices; it’ll expose dealer fraternity
7 state level conferences - VYAPAR in every F A D A State to the various activities of F A D A and how dealerships may
Chapter. make use of it; Vyapar would help to enlighten dealerships
on the new developments that are coming up across the world
After two immensely successful counterparts in Delhi and and help in preparing the dealer fraternity brace the
Mumbai, Vyapar expanded its horizons to the land of disruptions/changes.
Madhubani, Bihar on June 14, 2018. Vyapar Patna: Be Part of Mr Sanjay Kumar Agarwal shared the steps taken by the Bihar
Rural Change was held in Hotel Maurya Patna from 3.30 p.m. Transport Ministry in bringing about radical reforms in the
and concluded with dinner. department through technology, to gear the industry to face
Mr Santosh Kumar Nirala, Hon’ble Transport Minister, and disruptions. These included:
Mr Sanjay Kumar Agarwal, IAS, Transport • Commercial Vehicles to be soon added in Vahan 4.0,
Secretary, Govt of Bihar were the Chief Guest &
the Guest of Honour respectively. reducing the number of visits to RTO;
Mr Mohan Himatsingka, Past President, F A D A • Online tax payment had increase by 50% in the past few
while speaking on the occasion said driving
training schools and Skill Development months in the State;
opportunity was the need of the hour in Bihar. • Issuance of permits had increased and procedure had
This would not only help in creating employment
opportunities in the State, but would provide with become transparent.
a great revenue generation opportunity to the • RC card now took only 24 to 48 hrs in getting issued
dealerships as well.
against 3- 6 months taken earlier;
• E-transport project soon to be introduced by the

department;
• Vehicle registration had increased by 40% and so had

the vehicular traffic on the roads.

36 F A D A Journal June 2018 | fada.in

Post Event Report

• Bihar had more demand for 2-W and that the 80% The Panel discussion on Transforming Bihar, Transforming
revenue the State earned from the registration fee was Bharat was moderated by Mr Arund Anand, Director, CIDC
from the registration of 2-W sales; and author ‘Know about RSS’. The panellist included Mr
Sanjay Kumar Agarwal, Transport Secretary; Mr Nikunj
• Improved road infrastructure augmented vehicle sales Sanghi, Past President F A D A and President ASDC; Mr Rakesh
which in turn was helping the economic growth. Road Arora, President & National Sales Manager, Vehicle Loans,
infrastructure had greatly improved in the State. Yes Bank; Mr Ramashankar Pandey, MD, Hella India Lighting;
and Mr Sankalp Goel, Co-Founder at Djubo. The panel
Regarding challenges, Mr Agarwal said the increasing deliberated on how technology was helping to transform
pollution was a cause of concern and so efforts to use cleaner Bihar holistically.
fuel should be encouraged. Also government was keen in the The Session on GST & E-Way Bill Dilemma was taken by CA
establishment of pollution under control (PUC) centres at Jatin Harjai, Partner & Founder, J Harjai & Associates and he
petrol pumps to check vehicular emissions. helped to demystify GST related issues & confusion in the
Road safety was yet another concern. Road accidents in minds of the dealer fraternity related to GST & E way bill. The
Bihar were growing at the rate of 10% every year. To address Session was interactive based on Q&A module.
this, Government was providing subsidy for establishment Mr Arun Malhotra, former MD, Nissan India through his
of Driver Training School and was ready to sponsor students. keynote address educated the august gathering on how to do
This would not only create employment opportunities but things right and stand out in the crowd from the OEM
would address shortage of drivers within and outside the perspective. Customer orientation, employee centricity and
State and would help in making roads safer. financial discipline were the three pillars for running a
Transport Secretary said while Third Party insurance was dealership successfully according to him.
compulsory but pressurising customers to purchase
Comprehensive Insurance policy was a violation of rules
and it must be refrained from.
Mr Nirala added that there has been a growth of 70 lakh
vehicles in the last 5 years. He informed that his government,
in order to improve and encourage public transportation,
was increasing the number of buses being plied on the roads
and was constructing better and more roads to connect
remotest villages of the State.

Mr Rakesh Arora, President and National Sales Manager, Mr Bharat Wakhlu, the Founder of The Wakhlu Advisory
Vehicle Loans, Yes Bank gave a presentation on the courses inspired the gathering and said that improvement can be
that would be introduced by F A D A Academy in association initiated with change in mindset through positive approach.
with Yes Bank covering Business, Finance, Technology Founder and Director of Autoninja, Mr Kshitij Saxena
Adaptation & After Sales to steer dealerships towards educated dealers present on running a Data Driven
excellence and future ready urging dealer principals to Dealership.
support by participating in these course, thereby making the The program ended with Vote of Thanks given by Mr Vinkesh
initiative a huge success. Gulati, Hony Secretary F A D A who thanked the Sponsors viz.,
Yes bank, Shell Lubricants, AutoNinja & Maurya Motors and
the distinguished speakers whose support and cooperation
made Vyapar Patna possible. He also thanked the dealer
fraternity of Bihar for making Vyapar Patna a full house!
Leaving with a promise to make F A D A’s BIHAR Chapter more
interactive, in times to come!

fada.in | June 2018 F A D A Journal 37















Dealer in News

Volvo Cars India Opens New Dealership in Kolkata

The Swedish luxury car company Volvo Car India opened a SPL Volvo, Kolkata is built on an 8,100 sq ft showroom with a
new facility – SPL Volvo - in Kolkata on June 1. The dealership dedicated service centre in 20,000 sq ft plot. This fully
is a 3S facility with showroom in Rajarhat – The new Auto- operational state-of-the-art facility will cater to the increasing
hub of the east and the workshop nearby. The Kolkata facility demand of the high-end luxury cars in West Bengal
was inaugurated by Charles Frump, MD, Volvo Car India. Charles Frump, said, “Kolkata is the gateway to the east and
home to a lot of affluent families. It is a high growth potential
hub that caters not only to the metropolis, but also to nearby
markets. Having strong partners is the right step in achieving
our mid-term goal of doubling our segment share by 2020. I
am confident that our partners SPL Volvo will help us in
achieving our sales and service objectives in the market.”
Nikunj Sanwaria – Dealer Principal, SPL Volvo said, “We are
delighted to associate with Volvo Car India and have already
generated a lot of interest in the market by getting good enquiry
for Volvo cars. Customer Service is the core differentiator for
us and we will strive to provide unmatched service for our
customers. The entire range of Volvo cars will be retailed and
serviced from our new facility.”

Isuzu Motors Expands its Network in Uttar Pradesh

Isuzu Motors India inaugurated a new 3S (Sales, Service and
Spare) dealership facility of ‘Speed ISUZU’ in Kanpur, on June
22. The dealership has been associated with Isuzu Motors
India for over 3 years and is selling the D-MAX Pick-ups and
mu-X Sports Utility Vehicle (SUV) in Uttar Pradesh from its
outlet in Lucknow. With the new facility in Kanpur, Isuzu
Motors India aims to strengthen its footprint in the state and
address the needs of customers in the city and nearby districts.

Marking this occasion, Isuzu Motors India launched the V- Sandeep Narain, Director, Speed ISUZU, said, “We are very
Cross - India’s First Adventure Utility Vehicle, ISUZU mu-X - 7- happy to represent ISUZU brand in Kanpur as well. ISUZU is
seater, full-size SUV, D-MAX S-CAB – 5-seater ‘Smart’ known for making durable and reliable vehicles with a strong
Commercial Pick-up and D-MAX Regular Cab in the presence build quality, and this value proposition will continue to
of the top management officials of ISUZU, Speed ISUZU and find strong traction in the region. We will maintain our focus
customers. on high customer satisfaction and provide a high quality of
Speaking on the occasion, Ken Takashima, Deputy Managing sales and service experience to our customers in Kanpur.”
Director, Isuzu Motors India,said, “Uttar Pradesh is one of The new 3S (Sales, Service & Spare) facility in Kanpur, spread
the key pick-up markets in India and we see a huge potential over 7,000 sq ft area, is strategically located so as to provide
for mu-X and D-MAX commercial Pick-up range. Kanpur, in a convenient access to the visitors and customers. The
particular, is emerging as an important industrial city with dealership employees have been trained under the supervision
many small and medium enterprises having its manufacturing of ISUZU personnel and will provide a quality customer
base. D-MAX Regular Cab and S-CAB is proving its capability experience to the visitors
and versatility across many businesses in the country, thanks
to the ‘value’ these vehicles offer customers in their business.
V-Cross and mu-X are sure to impress vehicle enthusiasts
and families in the city.”

fada.in | June 2018 F A D A Journal 45

Fuel Watch

Sanctions and Oil Prices

Steve Austin for Oil-Price.net

Ever heard of harmony in oil prices? Recently, Brent crude rose to 1.1 million barrels, while EIA puts the figure a lot
oil hovered near the $80 mark, the maximum since higher at 2.2 million barrels in the week to April 20. This
November 2014. So it goes. Oil prices are on a rage, riding is a bit of a shock as many analysts expected a decrease
on a more than three-year high. The increase in prices of two million barrels. Now you know why oil hasn't
comes on the backdrop of geopolitical tensions and shocked us at $90. Yes, a delicate balance still plays
sanctions tightening the supple oil market. Well, the recent because of shale oil in the US. However, reinstating the
escalation in prices is, to a greater degree, down to the economic sanction on Iran will tilt this balance.
fear of sanctions against Iran. Let's look at the swirling Basically, of all the recent factors, the prospect of sanctions
sanctions and mixture of other factors that drove oil prices on Iran is the most significant reason for the rally in oil
to where they are now - North! prices. The UK, France, Germany, Russia and China, the other
nations in the nuclear deal, want the agreement to remain
Iran sanctions in place. However, the Trump administration wants to fix
what it calls, 'terrible flaws' in the accord by mid-month.
In a mighty flourish, the oil prices have been rallying for If the sanctions are, in fact, imposed, crude will move
much of April. At the crux is an integral fear of sanctions. further North in no time. You ask why? Again? See, Iran
The US President is on the threshold of a crucial decision will not be able to export its crude oil as easily. It would
on whether to withdraw from the Iran nuclear deal of 2015. be rather hard for Europe and India to bypass the US and
The Trump administration has made it clear that any move buy oil from Iran. In which case, expect an increase of $5
by Iran to restart the nuclear program would lead to 'bigger a barrel. Now, will it happen? If you think sanctions are
problems'. The threat is real. A flick of the President's hand too spooky and that the threat is rather high on something
is all that's needed now. Fact is oil prices soared called, 'emptiness,' realize that we are talking about the
immediately after President Trump called the Iran nuclear Trump administration. This administration's decision can
deal 'insane'. The posturing is seen as an important step over-run logic, as we've seen in plenty of cases. Whatever
in re-imposing sanctions on Iran. As it is, Saudi Arabia be the President's ruling on May 12, if you are an oil
has been fiercely lobbying for the sanctions. The Kingdom investor, relax and let the oil prices go lower as they
is desperate for high oil prices as it plans to list the state should. In which case, oil would be where it ought to be -
controlled company, Saudi Aramco later this year. below $50.
Naturally, sanction on Iran is the easiest way to go.
Why are investors allergic to sanctions? Well, the essence Russia in the bargain
is, investors are wary of uncertainty in the market. A sniff
is enough to scuttle them for cover. This time, though, The US has placed financial sanctions on Russia for its
there's more than enough reason for the panic. Re- role in the US elections as well as for meddling in Syria
introducing sanctions on Iran will squarely squeeze the and Ukraine. As a result, the Russian rouble took an
supply of world's oil. Iran is the third biggest oil producer immediate hit and slumped down. For now, the investment
in the OPEC. Further, it was responsible for 4% of the world's flows are back to normal but sanctions in place are never
oil this March. Any sanction on Iran can tighten oil good news. Remarkably, unlike Iran where the sanctions
supplies, leading to the disappearance of 500,000 barrels are yet to be imposed, Russia is already under the weight
a day just like that. As you know, Russia and OPEC have of them. The barely contained crackdown affects the oil
reduced output since early 2017 in a bid to reduce the sector too. Rarely relenting, the price of oil has increased.
global supply of oil. This restriction in output is expected And, paradoxically, it hurts Russia less, while consumers
to last till the end of 2018. Although the cuts have reduced in the rest of the world suffer.
supply, the surge in oil production in the US has managed Taking to Twitter, President Trump has blamed the OPEC
to offset the impact, somewhat. cartel for keeping the prices artificially 'very high'. As we
The objective of OPEC to reduce crude inventory in the US saw earlier, the cut in production by Russia and OPEC has,
has shown mixed results. Belying expectation, crude indeed, reduced the flow of oil in the global market. At the
inventories showed a healthy color this month. According same time, how can sanctions rectify this scenario? In
to the American Petroleum institute, crude oil inventories

46 F A D A Journal June 2018 | fada.in

Fuel Watch

reality, sanctions (against Iran or Russia) will only worsen Higher oil prices mean higher inflation affecting all of us.
the situation. With the exception of Japan, inflation isn't good news for
It is no coincidence that the demand for oil continues to the rest of the world. That said, Saudi Arabia, should it
rise. The IEA puts the demand growth at 1.5 million bpd in choose, will opt for higher oil price every single time. US
2018, while we at oil-price.net forecast the growth at more shale oil production is definitely on the rise. That's
than 2.5 million barrels a day. On top of that, demand in definitely positive news. On the other side, we have a
Asia is expected to hit a record high this April. US combination of potentially deadly factors at play: OPEC's
production last week stood at 10.54 million barrels per production cut continues; demand for oil is ever on the
day, a jump by more than a million barrels a day since increase and surplus oil is disappearing fast.
January. This positive news ought to have dampened the The US is the primary supplier of weapons to Saudi Arabia
oil prices. That hasn't happened. In fact, the sanction will along with Europe. If there's someone who can help Saudi
only deepen ties between Russia and Saudi Arabia. Arabia achieve its goal of $100 oil, it's none other than
Elsewhere, President Trump is also considering additional President Trump. He only has to impose few more
blocks on Venezuela for the internal crisis. In this case, sanctions, and see how the oil rockets to $100 a barrel.
sanctions are as a response to President Nicolas Maduro's
hasty decisions affecting his country. Evidently, this will Oil price expected to rally in 2018
only increase the oil prices. Even with declining
production, Venezuela produces an incredible 1.488 million There's a plethora of factors at play, all of which deserve
barrels as day as of March. due consideration, while predicting oil prices. From
Well, being unhappy about high oil prices is natural but forecast of $50-60 a barrel for the latter half of this year,
aiding the oil prices to soar higher with sanctions is adding on the back of some severe bullish sentiments, many
fuel to the fire. Can someone explain the psychology behind analysts have raised the range to $80-$90. By all means,
this high risk and acute irony? the thorny productions cuts by OPEC and allies will
extends well into 2019. O il demand continues to rise
The profound Saudi Factor on the oil scene and a supply deficit may well happen by the end of this
year.
The influence of Saudi Arabia is never subtle on the oil Standard Chartered Bank raised its forecast by $10 with
market. Any change in oil price, high or low, you can bet Brent and WTI benchmarks averaging $71 and $68 a barrel
Saudi's hand in splitting the edifice. It's no different this respectively this year. The 2019 price forecast was also
time too. For sure, there is geopolitical tension in the revised by $13 a barrel with Brent at $75 and WTI at$71.
Middle-East with the launch of unsuccessful missiles by Saga Nagoya Securities also predict a rally in oil prices
Yemen against Saudi Arabia. Yet, it's nothing unusual to this year. Want more? Here we go. The World Bank says
warrant changes in oil price. the oil prices will average $65 a barrel this year, which is
It's no secret that Saudi Arabia wants oil at $100 a barrel. lower than the forecast of others.
Certainly, apart from the revenue, higher oil price will reap Meanwhile, the rig count in the US rose to 820, the highest
higher valuation for Saudi Aramco's $2 trillion IPO. Selling in more than a year. The US crude oil output has already
five percent of Aramco will fetch more than $100bn with surpassed Saudi Arabia's. The US produces 10.4 million
the rallying oil prices. With a budget deficit of more than barrels to Russia's 11 million, a country it can beat very
$50 billion, lofty oil prices will also help bridge the huge soon. The combined exports of crude and petroleum
fiscal deficit. More specifically, it will also help the products in the US also scaled a weekly record of 8.3
Kingdom get back its dominance in the oil market. million barrels a day. See, good news.
Lest we forget, Saudi Arabia, with twenty two percent of the
world's reserves, is the world's top oil exporter. The supply Conclusion
cuts that are in place have reduced Saudi oil output by 1.8
million barrels a day. Nevertheless, Saudi Arabia still retains Global economic growth is rising at a healthy pace, while
a formidable presence in the oil market. In the meantime, demand is accelerating, so don't be surprised to see
Libya and Nigeria have limited production to a combined 2.8 consistently high oil prices. Apart from geopolitical
million barrels a day since this January. Thus, conformity tensions, sanctions can spearhead a rise in oil prices. Left
level of OPEC and other oil producing countries has touched to Shale, we may see healthy oil prices. Leave it to
149% with 300 million barrel decline since implementation. President Trump with his sanctions and face the shock of
higher oil prices

fada.in | June 2018 F A D A Journal 47



Competition Law Updates

Competition Commission of India (CCI) dismisses Charges were also levied on Maruyasu’s wholly-owned
complaint against BMW-India for abuse of dominance U.S.A subsidiary, Curtis-Maruyasu America Inc.
However, charges against Maruyasu ’s sales
G R Bhatia, Partner & Head, A complaint was filed representatives were dismissed, with prejudice, and
Competition Law Practice Group, against BMW-India by a the sales executives will be required to cooperate with
dealer for BMW vehicles the government in all related future prosecutions.
Luthra & Luthra Law Office in Gujarat, who was Supreme Court stays Competition Appellate
under a dealership Tribunal’s (COMPAT) order that imposed penalty on
agreement with BMW 3 car companies
India since 2007, which The COMPAT by its order dated 09.12.2016 concurred
was being renewed from with the findings of the CCI and directed Ford, Toyota
time to time. In and Nissan, to remove all restrictions imposed through
December 2017, BMW agreements on auto parts suppliers so as to open up
India intimated the market for spare parts and remove all restrictions on
complainant through a supply by original equipment suppliers to authorized
letter that it will not be dealers.
renewing the dealership On appeal, the Hon’ble Supreme Court has stayed the
agreement which was to operation of the COMPAT’s order and the matter, last
expire at the end of the listed on 19th April 2018, will now be taken up on 18th
month. July 2018.
Sharing technical information is the only way to
The complainant filed a complaint before the CCI monitor competition in automobile industry:
alleging non-renewal of his dealership agreement and Australian Competition and Consumer Commission
an alleged abuse of dominant position by BMW-India. (ACCC)
A recent study conducted by the ACCC has found that
The CCI, while dismissing the complaint, noted that a mandatory scheme to share technical information is
the passenger car segment was dominated by a the only way to achieve a competitive aftermarket in
number of players and BMW India had negligible share the automotive industry. This recent statement
in said market, and cannot be said to be a dominant reaffirms the focus on competition in the automobile
player and the question of abuse of dominant position industry and conduct by market participants.
will not arise. The ACCC chairman has observed that since car
manufacturers can control the access to the complex
Japanese auto parts company pleads guilty in technical information and data required to repair cars,
antitrust issue concerning steel tubes they often use this control to favor their own dealers
over independent repairers.
Japanese automotive parts manufacturer, Maruyasu It was however noted that despite voluntary
Industries Co. has agreed to pay a $12 million fine for commitments by manufacturers to provide
its role in price-fixing, bid rigging and customer independent repairers with the same access to
allocation of steel tubes used in vehicles sold in the information as dealers and preferred repairers, these
United States of America (USA). independent repairers still have difficulties accessing
the information, and therefore a mandatory scheme
According to the plea agreement, Maruyasu is required.
participated in a conspiracy to suppress and eliminate
competition by agreeing to fix prices, allocate
customers, and rig bids for automotive steel tubes sold
to automobile manufacturers in Japan and
incorporated into vehicles sold in the USA, which is in
violation of the provisions of the antitrust law of USA,
the Sherman Act.

fada.in | June 2018 F A D A Journal 49

Best Practice

Save Today…
Gone Tomorrow

Doug Austin, StrategicSource

There is no question that dealerships are focused on Lack of organized effort – purely tactical approach going
cutting costs in 2018. We see it in our business, we heard after a few select categories
it at NADA, and we talked with suppliers who were honing Lack of Time/Patience – nobody has the time or desire to
in on that message as well. Cut costs and track the organize the effort and/or they lack the patience to see it
reductions…a great objective for any business or through if an effort is created
nonprofit. Lack of expertise – even if they did have the time, most
So how are dealerships going after cost reductions? What management teams don’t know where to start with an
is the prevailing cost reduction strategy used by effective cost reduction strategy
dealerships? And is the strategy effective? Wrong Philosophy – If the objective is to obtain a cost
Most Common Dealership Cost Reduction Strategies decrease today, with no eye toward the future locked in
The dealership approach to cost reduction initiatives is pricing to control costs, the effort will provide negligible
often informal and not very organized. This is probably results
due to the fact that they are operating with little Senior Management – Management has failed because
information and the resources they have are already taxed. they have not developed a plan, have not defined the
The approaches we see most often include the following: objectives, there are no metrics defined and no follow-up
Senior management will advise managers that costs are mechanism in place to measure success.
too high and give them the freedom to figure out how best The Dealership Opportunity
to approach the problem. Based on research and our 2017 metrics, you can
Management will encourage managers to call in the largest reasonably plan that you are overspending by a
suppliers for new negotiation session and new pricing minimum of 26% of your supplier payables! Where did
Aggressive managers will call in other suppliers to “Grind this data come from? Purchasing research and our
them down” for new price concessions benchmarks.
Hope…hope that someone in the organization will make a Imagine, if you are spending $2.0mm a year with suppliers,
dent in expenses because they are paid on profitability what kind of effort would you put forth to reduce those
Increase Sales – Increasing sales can hide a lot of costs by 26% and watch those expenses turn into new
operational sins (expenses) profitability. What kind of effort would be worth $500K
Top 5 Reasons Many Cost Reduction Strategies Fail per year to your organization?
Some cost reduction efforts succeed and move the needle Review your 2017 total year-end sales…you can
on expenses. Others never really get off the ground and reasonably plan that you will spend 5-6% of total sales
can fail for the following reasons: on supplies and services, across 130 expense
categories.

50 F A D A Journal June 2018 | fada.in


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