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April 2018 issue of F A D A Journal

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Published by FADA Journal, 2018-04-28 02:32:16

F A D A Journal - April 2018

April 2018 issue of F A D A Journal

Office Bearers contents

President PRESIDENT’s MESSAGE 7 Indian Auto Industry: Firing on All Cylinders!
INDUSTRY TRACK 8 Auto Sales Stays on Course
JOHN K PAUL INDIAN ECONOMY
Popular Vehicles & Services Pvt Ltd INSIGHT 10 RBI Keeps Policy Rates on Hold, Cuts Inflation Forecasts for
Kuttukaran Centre, Mamangalam, Kochi PERSPECTIVE FY19 | Headline Inflation Benign
Tel: +91-484-234 1134 / 7872 / 5013
E-mail: [email protected]; E-MOBILITY 12 Future of the Vehicle - BlackRock Investment Institute
KNOW OUR MEMBER
[email protected] 18 What a Teardown of the Latest Electric Vehicles Reveals About
BEST PRACTICES the Future of Mass-Market EVs - McKinsey & Co.
Vice President NADA AUTOSHOW WRITE-UP
22 The Future of Electric Vehicles in India
ASHISH KALE UPGRADES & VARIANTS - Sharat Sasi Kumar, IHS Markit
Provincial Automobile Co. Ltd NEWS BASKET
Kingsway, Near Railway Station, Nagpur 25 Kaizen Motors Pvt Ltd, Solapur
Tel: +91 98226 96777 OPINION
E-mail: [email protected]; CONSUMER CASE STUDIES 26 What Makes a FiveStar Dealership Review
- DealerRater
[email protected] COMPETITION LAW
F A D A HIGHLIGHTS 32 2018NADA Show - Exciting ! Energetic ! Informative
CEO, F A D A and Editor, F A D A Journal - Saharsh Damani, Editor, F A D A Journal & CEO, F A D A
NADA MUSINGS
SAHARSH DAMANI MANAGEMENT 36 • The New BMW X3 Launched in India
Federation of Automobile Dealers Associations SALES REPORT • Audi Introduced 2018 Audi RS5 Coupe in India
805, Surya Kiran, 19, K G Marg, New Delhi
Tel: +91-11-6630 4852, 2332 0095 38 • Bavaria Motors Wins Top BMW Award Globally
E-mail: [email protected]; [email protected] • Ashok Leyland Rolls Out 2,00,000th LCV from Hosur Plant
Web: fada.in • Toyota to Promote Sustainable Mobility via Green Approach

ADVERTISERS’ INDEX 60 40 • Indian Tractor Industry Continues to be in Overdrive: ICRA
• PV Finance to Expand at 16-17% CAGR Over Next 5 Yrs: ICRA
Back Cover • Scooters Drive Two-Wheelers Growth in FY 2018: ICRA
VE Commercial Vehicle
42 NCDRC : Pawan Kumar - Petitioner Versus
Front Inside Cover 2 Nissan Motor India Pvt Ltd & Ors - Respondents
Tata Capital Financial Services

Back Inside Cover 59
Tata Motors

Inside Pages 45 Competition Law Updates

• Mahindra & Mahindra Financial Services 3 - G R Bhatia

• AMPL 4

• Popular Vehicles & Services 6 47 • F A D A Unveils Daily E-Newsletter - F A D A Newsline
• Engagement of GST Consultant
• Shri Ram Transport Finance 14
48 Major developments affecting Automobile Industry in US
• Marikar Group 21

• Mahindra Truck & Buses 35

• Olympia Honda 44 50 The Turnaround

• Maurya Motors Ltd 46 - MVS Prasad, PRASHASTE

• United Group of Institutions 54

• Provincial Group 55 52 Vehicle Sales & Exports and Y-o-Y Growth - March 2018

• Bagga Link 58

For Advertisement query, please contact Printed and Published by Saharsh Damani on beh5alf of Federation of AAputroilm2o0b1il8e Dealers
Ankush Sethi at [email protected]
Associations, 805, Surya Kiran, 19, Kasturba Gandhi Marg, New Delhi-110001.
Printed at Sita Fine Arts P Ltd, A-16, Naraina Industrial Area, Phase-II, New Delhi-110028.
Editor: Saharsh Damani



PRESIDENT’S MESSAGE

Indian Auto Industry: Firing on All Cylinders!

Dear Dealer Colleagues,
Continuing from my last month’s note where I had mentioned about private forecaster Weather Risk
Management Services’s (WRMS) normal monsoon forecast, the Indian Meteorological Department
(IMD) few days back, in its first-stage forecast, has reaffirmed the same. If the forecast holds true, this
will be the third consecutive year of normal monsoon, which means that the Indian Automobile
Industry will continue its uptrend as good rural income will push the demand north for consumer
goods and automobiles as a whole. We should hence plan our inventories well in advance so that
maximum benefits can be squeezed from this phenomena!
Coming back to the Auto Industry, the year gone by has been a record year altogether as all the
segments have leapfrogged in terms of domestic sales. Passenger Vehicles, Commercial Vehicles, Two-
Wheelers and Three-Wheelers have all pushed the accelerator pedal hard resulting in record growth.
Except PV which grew by 7.89%, all the other segments have clocked double digit growth rates. It is noteworthy that the
Industry recovered and expanded even after major roadblocks like ‘Demon’, GST Implementation and the shift to Bharat Stage
IV emission norms in 2-W and CV category.
I firmly believe that the Indian Auto Industry is in a sweet spot on the back of cyclical recovery across all segments. Going
forward, the stage is set for strong growth in vehicle demand due to:
1. Increase in Government infrastructure spending and focus on rural economy;
2. Strong rural demand and higher disposable income in view of 7th pay commission awards; and
3. New launches.
Two-Wheelers, Passenger Vehicles and Tractor sales are most likely to witness double digit volume growth in FY 2018-19,
while Commercial Vehicles growth could be in high single digits.
A strong 20 member delegation attended the NADA Show 2018 held in Las Vegas, USA from 22nd to 25th March. A focus on the
future has always been key to NADA’s mission, and this year’s get together highlighted many challenges and opportunities
auto retail will face in the next century. Autonomous vehicles, Data Security and Social Media were some of the hottest topics
which got discussed and debated upon. There were more workshops than ever which targeted different digital issues –
including special sessions with Facebook, Google and Twitter. Keeping the tradition, our delegation also did Key Dealership
Visits. New age customer retention techniques and ways to successfully use digital marketing were the key takeaways from
our visit. The NADA Show is a crème de la crème event and it is my utmost desire to hold such high class event in India for the
benefit of our fellow dealers! You will find a write-up on this year’s Show written by our Editor and CEO in this issue.
Continuing its work on the Draft Auto Policy, Ministry of Heavy Industries and Public Sector Enterprises had called multiple
round of meetings last month. F A D A has been making its presence felt as we are continuously raising important issues like
Grant of Infrastructure and Industry Status and Single Point Redressal for grievances redressal.
Reverting to our own activities, I am happy to share that F A D A for the first time is in process of freezing the entire year’s
events calendar. I am sure that it will help us plan our future activities in a much better way. I am also delighted to share that
F A D A has started its email newsletter - F A D A Newsline. By now, you must have seen it flowing into your inbox six days a
week! F A D A Newsline will be your complete one stop knowledge centre and has been entirely conceptualised, designed and
maintained in-house. The learning cycle is a continuous process and I hence request you to share your feedback on how can
we further improve F A D A Newsline.
With the new financial year already a month behind us, I hope that we keep the momentum of growth intact and wish all the
best to all of you for exciting times ahead!
With best wishes.
Yours sincerely

John K Paul

7 April 2018

INDUSTRY TRACK

Auto Sales Stays on Course

Automobile sales in the month of March 2018 across various Commenting on the financial year closing, Y K Koo, MD &
vehicle categories registered a growth surge of 18.41%. The CEO, HMIL, said, “With strong commitment to add Brilliant
passenger vehicle sales grew by 5.41%, 2-Wheeler by 18.57%, Moments to the lives of our customers through our Modern
CVs by 23.99% and 3-Wheeler sales by whopping 86.13%. Premium product offerings and Next Level Customer Service
The sales volume built upon the improvement in rural Experience, have closed the financial year 2017-18 on a
economy and partly due to the low base in the second half of positive note with a growth of 5.2%.”
FY17 caused by demonetization. Honda Cars India (HCIL) registered a monthly sale of 13,574
With buoyancy sweeping all segments, automobile units in March 2018, down 28.4% (March 2017: 18,950). The
companies across the board, barring few, clocked robust sales comprised 4,680 City, 4,411 WR-V, 2,473 Jazz, 992 BR-V,
growth. Total automobile sales in 2017-18, including 716 Amaze sedan, 261 Brio and 41 CR-V. The new FY 2018-19
passenger vehicles, commercial vehicles, 3-wheelers and two- offers tremendous growth opportunity for HCIL as the company
wheelers zoomed by 14% at 29,012,960 units, as compared has lined-up three big launches enhancing the product line-
to 25,342,450 units in 2016-17. In the Indian market, sales up with all new Amaze, all new CR-V and Civic. The company’s
grew by 14% y-o-y to 24,972,788 units. In the international export was in tune of 487 units during the month.
market as well sales closed in positive trajectory at 16% at Toyota Kirloskar Motor (TKM) sold 12,539 units in March
the close of financial year 2017-18. 2018 as compared to 13,796 units in March last year in the
domestic market a shortfall of 9.1%. The company exported
Passenger Vehicle sale grew moderately 1,017 units which included 998 units of the Etios series
during the month, thus, clocking a total of 13,556 units. In
Passenger vehicle sales in the domestic market recorded a the month of March 2017, TKM sold a total of 13,796 units in
growth of 6.38% y-o-y to 300,722 units. Total passenger the domestic market and exported 636 units of the Etios
vehicle sales (domestic + exports) increased by 5.41% y-o-y series in March 2017.
to 373,428 units. N Raja, Deputy MD, TKM, said, ”We are happy to have
Car market leader Maruti Suzuki India Limited sold a total of registered a positive growth of 3% in the first quarter as
158,955 units in March 2018, a growth of 14.1% per cent. compared to January-March 2017. The Yaris bookings for
This includes 147,170 units in the domestic market and 11,757 customer will open from April and we expect customers will
units in exports, registering a growth of 15.3% and 1.7% y-o- highly appreciate the product.”
y respectively. The Company had sold a total of 139,285 units Mahindra & Mahindra’s passenger vehicles segment, which
in March 2018. With this the Company finished the 2017-18 manufactures and markets utility vehicles, cars and vans,
with its highest ever total sales of 1,779,574 units, a growth sold locally a total of 26,531 units in March 2018, up 4.7%
of 13.4%. from 25,352 units a year back.
In March, Maruti’s entry level duo of the Alto and Wagon R Tata Motors’ passenger vehicle sales in the domestic market
sales grew by whopping 21.1% selling 37,511 units, compared was largely led by the Tiago and Tigor along with Nexon and
to 30,973 units in the same month in the year gone by. Demand Hexa, grew 34.4% at 22,970 units compared to 17,093 units
for the compact cars comprising of- the Swift, IGNIS, Celerio, in March 2017. While the passenger car segment declined by
Baleno, Dzire and Tour S remained high at 68,885 units, up 4.0%, the UV sales continued to grow by whopping 222.9% at
13.5% from 60,699 units during March last year. The premium 7,753 units during the month. The company sold a total of
Ciaz sedan had de-growth of 12.1% selling 4,321 units in the 23,332 passenger vehicles, which included exports of 362
local market against 4,918 units y-o-y. In the UV category units, marking a y-o-y growth of 34% against sale of 17,411
(Ertiga, Gypsy, S-Cross and Vitara Brezza) sold 22,764 units units during the same month last year.
against 18,311 units sold in March 2017, to post 24.3% American car maker, Ford India also saw its domestic sale
growth. The Omni and Eeco continue to sell well during the plummet to 3,180 cars in March 2018, down 12.8% (March
month, they sold a combined 13,689 units, up 17.7% (March 2017: 3,648). However, the company’s UV sales in the domestic
2017: 11,628). market were up by 15.5% accruing to a total sale of 9,016
Hyundai Motor India (HMIL) registered the domestic sales of units of passenger vehicles during the month, an increase of
48.009 units (44,737 units) an uptick of 7.3%. The company 3.6% y-o-y. On the export front, the sales grew by pace of
exported 12,498 units in March 2018 against 10,857 units in 15.1% over the same period last month.
March 2017, a growth of 15.1%. The cumulative sales of the
company stood at 60,507 units for the month of March 2018.

April 2018 8

INDUSTRY TRACK

Nissan Motor India was stuck in the reverse gear, the India Yamaha Motor registered total domestic sales of 65,920
company’s domestic sales falling by 7.3% y-o-y to 4,922 units in March 2018, down by 13.4% (March 2017: 76,144).
units during the month. Suzuki Motorcycle India sold a total of 52,167 units, 24% up
(March 2017: 42,085). The company sold 46,848 two-wheelers
Improved rural sentiments boosts Two- Wheeler Sales in the domestic market a growth of 30%. Sajeev Rajasekharan,
EVP, Suzuki Motorcycle India said, “We have taken the first
During March 2018, two-wheelers registered domestic sales step successfully towards our objective of achieving
of 1,741,649 units (March 2017: 1,471,636) up by 18.35%. 10,00,000 unit sales in FY 2019-20. The onus in now on us to
Scooters, Motorcycles and Mopeds witnessed uptick of 6.46% sustain the momentum generated by this growth and continue
(518,015 units), 25.13% (1,145,221 units) and 12.38% (78,413 to scale higher peaks.”
units) respectively in domestic sales during the month. On Mahindra Two-Wheelers continued to report negative sales
the export front too, two-wheelers registered a growth of growth in March 2018, clocking domestic sales of 690 units
20.15% (248,672 units). against exports of 2,924 units.
The largest two-wheeler seller, Hero MotoCorp sold 704,874 Royal Enfield registered a growth of 26.7% y-o-y in domestic
units (March 2017: 586,587), an uptick of 20.2%. With an eye sales and 20.1% y-o-y in exports.
on future market demand, Hero MotoCorp invested in ramping
up its production capacity during the fiscal. In March 2018, India M&HCV sales maintain steady growth
it commenced construction at its eighth manufacturing
facility in Chittoor in Andhra Pradesh. The Company launched The sales of M&HCV posted a growth of 16.28% y-o-y in
three new bikes - Passion PRO, Passion XPRO and Super domestic sales while LCVs grew by 31.35%.
Splendor, in the third quarter of the fiscal. It has also lined Tata Motors’ domestic sales of 46,470 units in March’18 was
up a slew of new launches for the fiscal 2018-19, where the up 35.8% (March 2017: 34,216) with its M&HCVs posting a
Company plans to launch four new products in the premium double-digit growth of 20.4% with sales of 21,256
motorcycle and scooter categories – Xtreme 200R and XPulse units (March 2017: 17,648). Its LCVs too performed well,
motorcycles and Duet 125 and Maestro Edge 125 scooters. notching up sales of 25,214 units which resulted in growth
Honda Motorcycle & Scooter India (HMSI) has shown decent of 52.2% year on year (March 2017: 16,568).
domestic growth of 23.2% during March 2018, but this has Ashok Leyland’s total sales locally were up 23% at 21,533
come on the back of its strong motorcycle sales y-o-y. The units sold (March 2017: 17,508). Its M&HCV sales of 16,315
company, which had sold 338,856 units in March last year units marked a 14.9% increase over year-earlier sales (March
in the local market, sold an overall 417,380 units in Mar’18. 2017: 14,200). Its LCVs saw positive sales momentum with
HMSI’s motorcycle sales locally, in March 2018 were 152,355 57.7% growth with sales of 5,218 units (March 2017: 3,308
bikes up 80.0% (March 2017: 84,638 motorcycles). Its scooter units).
portfolio too notched 4.3% growth selling 265,025 units in VE Commercial Vehicles, also registered a double-digit growth
March 2018 (March 2017: 254,218). However, on the of 24.5% in March’18 in domestic sales. In India VECVs-Eicher
international front, HMSI sold 23,110 units in March’18 down sold 8,146 units (March 2017: 6,649).
by 15.1% against sale of 27,234 units in March’17. Mahindra & Mahindra reported M&HCVs sale of 1,599 units
Bajaj Auto registered a decent growth of 5.0% to 158,987 in the domestic market during the month, down 6.3% (March
units during the month against 151,449 units a year ago in 2017: 1,707). Domestic LCV sales in March recorded positive
the Indian market. The company’s export of two-wheelers also growth of 12.7% y-o-y to 23,896 units.
registered a growth of 19.6% y-o-y to 110,952 units during The Indian automotive industry is expected to carry the
the month. momentum forward in FY19 especially with the upcoming
TVS Motor Company sold 265,166 units in March 2018, up State Assembly elections, which is expected to provide a
22.2% (March 2017: 216,995). The company recorded better boost to vehicle sales. Large investments being made in R&D
growth in motorcycle sales than its scooter portfolio during and product development towards implementation of
the month. In the domestic market, while its scooter sales upcoming regulatory changes, especially to meet BS VI
grew 19.3% to 98,334 units in March 2018, from 82,453 units emission norms, and a push towards electric vehicles (EV)
in March 2017; its motorcycle sales grew by 36.5%, increasing and improvement in safety standards all are expected to
to 88,419 units in March 2018 from 64,769 units in March further help to propel the growth of auto sales
2017. The company’s export performance too remained on
course, rising by a healthy 54.8% y-o-y to 50,599 units.

9 April 2018

INDIA ECONOMICS

RBI Keeps Policy Rates on
Hold, Cuts Inflation
Forecasts for FY19 |
Headline Inflation Benign

• The Monetary Policy Committee (MPC) maintained 3.9% in Mar’18. The central bank also sharply cut its inflation
status quo in its first bi-monthly monetary policy forecast for 1HFY19 to 4.7% - 5.1% from 5.1 - 5.6% and trimmed
meeting for FY19 held on 5th April 2018. This decision its 2HFY19 inflation forecast marginally to 4.4% from 4.5%. RBI
was in line with market consensus and taken with a continues to highlight the upside risks to inflation on account of:
majority of 5-1 votes. 1. Higher MSPs for Kharif crops as stated in the Union Budget
2. HRA revisions by state governments
• The RBI revised down its 4QFY18 inflation projection 3. Fiscal slippage by the centre and/or states
to 4.5% from 5.1% earlier, implying inflation of 3.9% - 4. Deficient monsoon and
4% in March 2018. It also cut its inflation forecasts for 5. Volatile crude oil prices.
1HFY19/2HFY19 to 4.7% - 5.1% / 4.4% from 5.1% - 5.6%/
4.5% earlier, while maintaining its GDP growth FY19 growth projections remain unchanged: Although the RBI
projections for FY19 at 7.4%. It, however, stressed that has likely revised FY18 GDP forecast downward (probably,
the risks to inflation were tilted toward the upside. from 6.8% - 6.9%) to 6.6%, it maintained its FY19 forecast at

• Most analysts are of the view that while inflation could • CPI inflation for March came in at 4.3% YoY, in line with
be even lower than the RBI’s projections in FY19, real expectations and little changed from 4.4% in February.
GDP growth may still be capped at 7%, higher than in While food inflation eased more than expected, core
FY18 but lower than the RBI’s forecasts. Consequently, inflation picked up pace. Within food, cereal inflation is
there may not be any interest rate action from the benign, vegetables inflation softened and oilseeds
central bank in 2018. inflation rose (perhaps, reflecting some impact of
import duty hikes). Meanwhile, the pick up in core
RBI maintains status quo: The MPC decided to keep policy inflation (ex-commodities) by 30bps to 5.6% was led
rates unchanged – the repo rate at 6%, the reverse repo rate by a few components such as health, education and
at 5.75% and the marginal standing facility (MSF) rate at pan/tobacco categories, although inflation in other
6.25% – in its first Monetary Policy Review for FY19. The components was stable. Overall, FY18 inflation stands
decision to hold rates was taken with a majority of 5-1 votes. at a benign 3.6%.
Like in the last meeting, Dr Michael Patra voted for a 25bp
hike in this meeting. The MPC continued with its ‘neutral’ • Over the ensuing three-four months, we expect
policy stance. headline CPI to head towards 5%, largely led by low
base especially in food components, and ease
RBI revises inflation projections downward: The RBI revised thereafter. For FY19, we expect it to average at 4.5%
down its 4QFY18 inflation forecast to 4.5% from 5.1% earlier with monsoon, trend in global food prices and second
on the back of lower-than-expected inflation numbers in round impact of rising fuel prices being key monitorables.
Jan’18 and Feb’18. Inflation had averaged 4.8% in these two
months, implying that the RBI expects inflation to come in at

April 2018 10

INDIA ECONOMICS

7.4%. It expects improving global demand and signs of revival reflecting some impact of import duty hikes in recent months.
in investment activity to lead to a sharp uptick in GDP in FY19. Overall, food CPI has averaged ~2.2% in FY18—a benign level
CPI inflation broadly in line with expectations: CPI inflation and lower than 4.4% in FY17.
for March 2018 came in at 4.3% YoY, broadly in line with
expectations and similar to 4.4% in February. With this, FY18 CPI to rise in coming months led by base: Over the ensuing
CPI inflation stands at 3.6%, which is quite a benign level. three-four months, CPI may head towards 5% led by low base,
Food inflation sprung a positive surprise with vegetables but it should begin to ease thereafter. For FY19, CPI inflation
inflation moderating during March. Pulses continue to remain may average 4.5%. The key monitorables, apart from crude oil
in deflation zone and cereals’ inflation is extremely benign, prices, will be monsoon (private agencies are forecasting normal
although oils and fats’ inflation picked up pace, perhaps rainfall this year), trend in global food prices (so far, they are
benign) and pace of demand recovery in the economy

11 April 2018

INSIGHT

Future of the Vehicle

Winners and losers: from cars and cameras to chips

B L A C K R O C K Investment Institute

The global automotive industry stands at the forefront of primarily on technological change, which has near-term
technological change and regulatory risk. We, at Blackrock, implications and define risk not as volatility — but as large
expect profound changes to ripple across auto-related and possibly permanent impairment of capital.
companies in the coming years — and see broad implications Technological advances are making hybrids (using some fuel)
for other industries. and EVs (battery only) more cost competitive. Estimates of
Technological disruption and climate-related regulation are mass adoption vary, but our analysis of industry trends
leading to big changes in the automotive industry. ADAS points to growing shares of both in global auto sales, with
features such as automatic emergency braking being installed combined hybrid and battery EV sales potentially set to exceed
in more vehicles. This is mostly driven by sound economics: those of conventional vehicles in about a decade. China,
falling prices and popularity of such features among aiming at growing its EV fleet to combat pollution, could
consumers, governments and insurers. account for up to 40% of the hybrids and battery EVs sold
The eventual result is likely fully autonomous, or self-driving, annually by 2030, our analysis suggests. We see the EV share
vehicles. of the global fleet rising more slowly, and view the next 12 to
A parallel evolution is happening in the powertrain — from 24 months as crucial for adoption, as lower-priced models
internal combustion engines to electric engines. This start to address the mass market.
transition is key to curbing greenhouse gas emissions. The The auto industry is capital-intensive, with long lead times
global transport sector accounts for nearly half of the in adapting to new technologies — it takes several years to
projected rise in global energy-related carbon dioxide develop a new car. Yet the accelerating pace of innovation
emissions through 2030. poses challenges to traditional ways. Companies able to offer
Technological change is one of the four forces behind asset new features quickly at the same or lower prices can put
owner risk from climate change — the other three being severe pressure on competitors. Changes in the automotive
physical risk, regulation and societal change. Here, we focus industry will also ripple through basic materials, energy,
utilities, real estate, infrastructure and financial services,
we believe.
Bottom line: The deflationary nature of technological
innovation playing out in the auto industry. Lower prices will
redistribute the profit pool, creating as many winners as
losers. We think investors need to stay away from companies
with increasing credit and equity risk.
The future of driving
Vehicles evolving on two parallel tracks: first, Advanced Driver
Assistance Systems (ADAS) and the move toward autonomous
driving; second, the adoption of EVs.
ADAS will be as essential to future drivers as seat belts are
today. ADAS functions include blind spot monitoring,
collision warnings and traffic jam autopilot. The spread of
ADAS technology could pave the way eventually for
autonomous vehicles — cars that can drive themselves. We
see the evolution following that tracked by seat belts, air
bags and anti-lock braking systems in past decades: ADAS
features will move from being options in high-end cars to
standard features, likely costing just a few hundred dollars
— thus crimping assemblers’ profits.

April 2018 12

INSIGHT

We illustrate rough estimates of when disruption from Driver error
ADAS-autonomous technologies may hit in the adapting to Safety is a critical catalyst in the evolution of vehicles. The
autonomous chart. These milestones as potential tipping development and adoption of ADAS may help avoid and
points for pricing and competitive dynamics, rather than minimize the impact of accidents and improve road safety —
forecasts for product rollout. For example, the impact of just as existing safety features such as seat belts and air
adaptive speed control already in force. Limited self- bags have done.
driving, which allows drivers to hand over full control to Deaths from traffic accidents have greatly fallen over the
the car in certain situations, will likely gain in popularity past two decades in most developed economies. Yet it’s worth
through the 2020s. The final phase of ADAS — autonomous noting that traffic fatalities have edged up lately in the richest
driving — is set to start rapid diffusion from the late 2020s, countries.
provided legal, ethical and other concerns can be The US recorded in 2016 a second consecutive year of
overcome. increases in traffic deaths due to a combination of factors
The US administration looks likely to relax fuel economy including drivers distracted by smartphones. This
rules, raising questions about the direction of US demonstrates the importance of enhancing safe-driving
regulation. Yet, we do not expect any regulatory shifts technologies. Humans are hardly reliable operators of
to affect the shift toward EVs and autonomous vehicles vehicles, it turns out. Driver error is the cause of 94% of
significantly. Many US states such as California would vehicle crashes in the US.
likely fight to maintain tougher rules. The rest of the Adoption of safety features has a long way to go elsewhere.
world appears set to tighten fuel economy standards About 90% of the world’s traffic deaths occur in low - and
further. And most importantly, the trends we detail are middle-income nations, which were home to 54% of the
primarily driven by innovation, declining costs and world’s registered vehicles as of October 2015. Road deaths
safety concerns. and injuries cost these countries up to 5% of gross domestic
Diesel engines are under siege — and this could be an impetus product (GDP) annually. Globally, road deaths and injuries
for EVs. Air pollution in some European cities has prompted eat up 3% of annual GDP.
diesel vehicles bans. Carmakers are facing growing regulatory Insurers have an incentive to push for faster ADAS adoption:
scrutiny after scandals over cheating on diesel engine They are anxious to reduce the cost tied to auto-related
emission tests. Without diesel, it may be difficult for claims. In the US alone, the dollar amount of claims per vehicle
automakers in Europe to hit fuel economy standards, raising per year has been rising.
incentives for them to speed up development of EVs and Some insurers are already offering discounts on premiums
charging stations. for cars with certain ADAS features, such as automatic
emergency braking. We expect more insurers to follow suit,
as ADAS features improve further and demonstrate their
ability to prevent collisions — and ultimately, reduce
insurance claims.
ADAS will definitely cause a lot of disruption over the next
five years. a longer and more uncertain timeline for the
adoption of autonomous vehicles — the ultimate goal of ADAS
development.
Tomorrow’s commodities
Vehicles of the future will be equipped with an array of
cameras, radar and other data-collecting and analyzing tools.
Together, they will be able to warn about jaywalkers, wake up
drowsy drivers and help with parallel parking.
Regulators in the US, Japan, Europe and China are mandating
many of these features. Rear view cameras, for example, will
be required in all US new cars from 2018.
Such mandatory requirements are leading to more rapid

13 April 2018



INSIGHT

adoption and putting downward pressure on ADAS equipment Connection matters
prices. Automatic emergency braking costs at least hundreds The timeline for mass adoption of self-driving cars is
of dollars as an option, but will become a standard feature uncertain. Yet this doesn’t exclude some near-term impact on
on new vehicles in the US by 2022. There are dramatic price the automotive industry.
cuts. Many enhanced safety features rely on connectivity —
vehicles need to communicate with each other and with traffic
Share a ride infrastructure to carry out certain safety functions.
The popularity of ride-sharing is growing day by day which Connectivity enables the streaming of navigation and traffic
also contributes to the adoption of autonomous vehicles. information, music and video and other functions such as
The cost per mile of hiring a shared autonomous ride could monitoring EV battery usage. It also brings the threat of car
be 40% cheaper than that of driving one’s own car. The higher hacking.
utilization rate of shared vehicles lowers depreciation, About 35% of vehicles sold in 2015 already had some
insurance and maintenance costs per mile. connectivity capacity. By 2020, almost all vehicles should.
Ride-sharing has swept across cities around the world in We expect most of this connectivity to come from embedded
recent years. In Asia alone, car-sharing and ride on demand software and networking capability in the car, with the rest
have attracted more than $5 billion of funding in 2015, up through integration with the user’s smartphone or “tethering”
from virtually nothing two years earlier. Car ownership is to other networking devices. The US Department of
becoming more expensive inefficient and less appealing for Transportation has proposed a rule facilitating vehicle-to-
urban millennials. vehicle communication on all new light-duty vehicles to help
Greater urbanization and a graying population could improve road safety.
drive demand for a shared autonomous fleet, but Charge up the car
challenges abound, such as consumer anxiety about Tightening emission standards around the world provide an
safety and the need for highly accurate maps. A major incentive for electrification of the global auto fleet. Chinese
hurdle is ethical. cars, for example, are expected to generate 45% less
Would a self-driving car put pedestrians at risk to avoid a emissions by 2020 than they did in 2002. Hybrids and EVs
collision? There are job consequences, too. Autonomous will both be part of the solution.
vehicles could make taxi and truck drivers obsolete.

15 April 2018

INSIGHT

All eyes on batteries sales taxes and parking fees. Auto insurance and financing
Cheaper, higher-capacity batteries and the development of are big businesses in their own right.
public charging stations will be key to making EVs more Investors need to consider that the implications of evolving
appealing. Current forecasts point to battery costs declining automotive technologies will likely be far-reaching and in
an additional 73% by 2030. Energy density — the amount of constant flux. One industry’s gain could be another’s loss.
energy that can be stored in a given sized battery — is expected Growth in the EV fleet may put pressure on the supply of
to nearly double over the same period. nickel and cobalt and support copper demand. It could
One potential concern is the pricing and availability of raw also depress the demand for platinum group metals that
materials. Cobalt, a key ingredient in the dominant lithium- are used to produce emission-reducing catalytic
ion battery, could face a supply crunch. Cobalt’s current converters.
global reserves could be exhausted by 2030 if the EV market Carmakers under siege
share rises to 12.5% from under 1% today. Some mining Nearly all major automakers have announced EV plans for
companies are already planning to ramp up their cobalt the next few years, under the pressure of stricter mission
production, expecting a demand surge. standards and competition from impressive product rollouts
EVs’ growth also may eventually eat into oil demand, but the by non-traditional carmakers.
uncertain timeline of large-scale adoption makes that threat New technologies don’t come cheap, and current automotive
less imminent. The additional electricity demand for EVs industry players aren’t as cash-rich as their tech industry
could help offset overcapacity and falling demand faced by peers in general. That is because their profit margins are
utilities in developed markets, while in emerging markets EV typically much slimmer. Automakers face the challenge of
growth could complement the rapid growth of renewable how much to invest in EVs right now. If EV sales disappoint,
energy. they will lose money. But if they wait to see the demand
Investment Implications evolve, they risk being left behind.
The implications of the future vehicle go far beyond the EVs will require more spending on research and development
automotive and technology industries. Energy, raw materials, because they are different from combustion engine vehicles.
real estate and finance will all be affected. They are more expensive to build, mainly due to pricey
Transport is central to modern life. In the US alone, the energy batteries, even as the rest of the EV powertrain costs less
sector derived more than half a trillion dollars per year from than the combustion engine powertrain. Battery prices have
selling fuel. Governments draw revenue from auto and fuel fallen, but still make up 30-50% of the cost of materials in
today’s EV models, our analysis shows. This puts luxury
carmakers in a better place to pursue EVs, because their
generally higher profit margins allow them to absorb the
extra cost and have better pricing flexibility than their mass-
market peers.
Automation will pose other challenges to carmakers. An
automated shared fleet would mean a higher utilization rate
and potentially a smaller fleet. An average car in the US is
parked 95% of the time. If passengers start to treat cars like
a public utility, the brand value that carmakers have taken
decades to build up is at risk of being lost.
Automakers are lagging behind technology companies in
areas such as software and artificial intelligence, which sit
at the core of the future vehicle. Carmakers are luring talent
in these fields, as well as partnering with and acquiring
technology companies in an effort to catch up.
Technology firms are also looking to add new specialized
capacities. We expect the arms race to heat up, and see those
with healthy balance sheets and the ability to pick the right
technologies to pursue gaining an upper hand.

April 2018 16

INSIGHT

A new army of suppliers internet service providers will be another beneficiary.
Automakers and suppliers are taking the challenge head-
Traditional auto part suppliers also face a threat to their on by ramping up their technology capabilities, and some
existence. Can they defend the turf against newcomers from already have competitive products.
the technology industry?
Own the part
ADAS adoption grows the market for both existing and new
suppliers. But EVs could quickly change the market dynamic, The future auto industry could look similar to today’s
as they have fewer parts than internal combustion engine smartphone industry, in which most assemblers make no
peers, and many of the parts are different. We expect money and suppliers owning critical parts do.
suppliers of parts exclusive to the internal combustion
engine powertrain and lead acid batteries to be at risk. Some technology companies’ has already taken interest in
Those without strong exposure to advanced safety, becoming car assemblers fading over time.
automation or electrification trends will likely face an army
of unfamiliar competitors from the technology industry. The investment value in the long run will accrue to the
Some suppliers may be taken over by tech companies aiming categories with the most differentiation and intellectual
to gain access to carmakers. property, as the rest of the vehicle becomes lower-margin
and more commoditized. Batteries make up a chunk of EV
The relationship between carmakers and suppliers is cost today, but potential commoditization puts their
changing. Carmakers have historically led most innovations investment value in question. The average profit margin of
and contracted suppliers to produce the parts they need. battery makers is just 5%. China’s domestic battery suppliers
Suppliers in the future could compete with, or even outpace, could be an exception, since they benefit from the protected
carmakers in innovation. The economics of distribution nature of their home market. China has also set a goal for 5
chains may change too as EV use rises. Fewer parts per million EVs on the road by 2020, versus 1 million today.
vehicle reduce the need for servicing — and for mechanics Chinese battery makers have global ambitions, yet we
to repair cars. caution that history suggests industries reliant on
government directives and subsidies for growth can be
Smartphone on wheels subject to boom-and-bust dynamics.

The technology industry pictures the future car as a giant Asia is already the global centre of battery development.
smartphone on wheels. It is ready to cash in on the growing The region’s technology manufacturing industry will expand
electric content in a vehicle, as well as new services into the auto part supply market as electric content grows
including data connectivity and software upgrades. in vehicles. ADAS market likely growing at least 20% a year
Meanwhile, one-off vehicle sales are set to make up a through 2025, creating plenty of business for manufacturers
declining share of auto revenue in the decades to come. of camera lenses, sensors and other items. Elsewhere in the
world, several companies have built huge battery storage
Recurring revenue from mobility services such as factories in the US, and Israel, which has no native auto
entertainment and navigation are expected to make up over industry, houses many startups working on automation
a fifth of automotive revenues by 2030, compared with technologies.
virtually nothing today.
Chasing the latest technologies is challenging. Producers
The auto semiconductor industry — armed with significant of sensors will need to invest heavily to bring down prices
intellectual property (IP) and better pricing power after and maintain any early-mover advantage. Today’s dominant
recent consolidation — as a big beneficiary and attractive players in various technologies may not always maintain
investment opportunity. ADAS and autonomous driving need their positions in a growing market. They could become
powerful chips. The average semiconductor content in an targets of mergers and acquisitions. Buyers will be seeking
EV doubles that of a combustion engine vehicle, according leading technologies and products, while sellers may find
to Bernstein. Software could also be lucrative. Tech it advantageous cozying up to a big brother in the
conglomerates are gearing up to produce the equivalent of increasingly capital-intensive industry.
a smartphone operating system for vehicles. Wireless

Note: The BlackRock Investment Institute (BII) provides connectivity between BlackRock’s portfolio managers, originates
economic and markets research, develops investment views for clients, and publishes insights.

17 April 2018

PERSPECTIVE

What a Teardown of the Latest Electric Vehicles Reveals About the
Future of Mass-Market EVs

McKinsey & Co.

Will 2017 be remembered as the year when electric vehicles affordable to more customer segments. Once the average
(EVs) made the move to become mass producible? A thought- range of our set of benchmarked EVs has surpassed 300
provoking question for the industry, and reason for McKinsey, kilometers (or 185 miles), OEMs seem to be able to
in partnership with A2Mac1, a provider of automotive concentrate on entering lower-price segments while keeping
benchmarking services, to deepen work in the field. Last year, range up. This indicates that the long-awaited EV volume
roughly 1.3 million EVs were sold globally. While this makes segment—“midsize EVs for the masses”—may be on the verge
up only about 1 percent of total passenger-vehicle sales, it is of becoming reality.
a 57 per cent increase over 2016 sales, and there is little The definition of “good” range varies across the globe,
reason to believe this trend will slow down. Established OEMs depending on geography and city archetype. But average
have announced launches of more than 100 new battery battery range seems to have exceeded the expectations of the
electric vehicle (BEV) models by 2024, further accelerating largest customer segments. This, combined with a decrease
automotive and mobility trends, potentially growing EVs’ in prices for electric vehicles, means the market for EVs may
share of total passenger-vehicle sales to 30 to 35 per cent in be close to a commercial tipping point.
major markets like China, Europe, and the US (20 to 25 per Whether an EV volume segment is (or will be) profitable for
cent globally)by 2030. Moving away from previous “niche OEMs remains a burning question for many in the industry.
roles” such as high-performance sports or midrange city cars, We estimate that many EV models in their base version, and
there will also be a sizable share of midsize and volume- potentially even including options, still may have low
segment vehicles among the many new BEV models. A contribution margins, especially compared with current
prominent, recently launched example is Tesla’s new Model internal-combustion-engine (ICE) levels.
3, with more than 450,000 pre-orders. In this article, we describe success factors on the way to
What will help EVs gain market share is that OEMs have profitable serial production of EVs and discuss essential
reached ranges with their EVs that allow them to focus on practices for paving the road toward the EV mass market.
reducing price points, for example, by increasing design This includes four high-level commitments to design and
efficiency or reducing manufacturing cost in order to become development through the lenses of architecture, integration,
technology, and cost that can help realize a positive business
case for mass-market EVs.

Build a native and inherently flexible electric vehicle

Despite higher up-front investments—in the form of
engineering hours, new tooling, and so on—native EV
platforms have proved advantageous over non-native models
in multiple ways.
Designing the vehicle architecture entirely around an EV
concept, without combustion-engine legacy elements, means
fewer compromises and more flexibility on average.
As native EVs have to compromise less, particularly in their
architecture and body in white, they can accommodate a
bigger battery pack, which in turn correlates with a higher
range. This is evidenced by the fact that native EVs have on
average a 25 per cent larger battery-pack volume (relative to
body in white volume) compared with non-native EVs. One
reason is that the body structure can be fit around the battery
pack and does not have to be integrated in an existing
architecture. This additional freedom in design typically

April 2018 18

PERSPECTIVE A good indicator of the increased level of
integration is the design of the electric
resulting in larger batteries also leads to other cables connecting the main EV powertrain
potential advantages such as higher ranges, more components (that is, battery, e-motor, power
power, or faster charging. electronics, and thermal-management
Further, as battery technology evolves quickly, modules). When looking at the weight and
allowing the newest EVs to have ranges which total number of parts for these cables across
are not a bottleneck anymore, we see early OEMs and their EV models, we observed a
indications that EVs are moving toward practices decrease in both cable weight and the
common in mass-market ICEs, for instance, number of parts in the OEMs’ latest models
offering powertrain options. The inherent compared with earlier vehicles, which
flexibility of native EVs plays an important role reflects the higher integration of more recent
in this as well. For example, battery packs can EV powertrain systems.
house a varying number of active cells while
keeping the same outer shape and variable 19 April 2018
drivetrain technologies can allow players to
produce rear-wheel, front-wheel, and all-wheel
drive on a single platform.
While this may raise the idea that EVs will start
moving toward modular strategies, as we know
them from ICEs, thereby moving closer to
industry-typical mass-production approaches,
we still do not see a clear convergence toward
one standard in design solutions. Players will
need to stay agile on their way to mass-market
EVs.

Keep pushing the boundaries of EV
powertrain integration

Our benchmarking reveals a continued trend
toward EV powertrain integration, with many
parts of the power electronics moving closer
together and being integrated into fewer
modules. Yet, as players keep searching for
additional design efficiency, one “mainstream”
EV powertrain design has not yet emerged—either
for overall architecture or for the design of
individual components.

PERSPECTIVE

In addition to the physical integration of main EV powertrain EVs in our benchmark that have as few as seven physical
components, we also observed a move toward more simple buttons in the interior, compared with 50 to 60 in many
and efficient thermal-management solutions across said standard ICEs.
components. However, while some OEMs are on a consolidation A key enabler of such advancements is the rapid rise in
charge here too, others still rely on multiple systems, and we computing power. While traditional cars often show many
do not see a clear convergence of designs yet. decentralized and standardized electronic control units
Beyond the fact that technology is still maturing, the EV (ECUs), the latest EVs seem to rely on ever growing and
powertrain design variety may also be aided by its intrinsic, increasingly centralized computing power.
higher level of flexibility, as the components are generally ADAS technology, for example, requires a lot of computing
smaller and the degrees of freedom based on available space power for the real-time signal processing of the various
in the underbody and front and rear compartments are higher sensors. When putting the latest ADAS solutions—such as
than for ICE powertrains. To give just one example of different adaptive cruise control, autonomous braking, and potentially
EV powertrain architectures: the Opel Ampera-e seems to even autonomous driving capability—in the context of
leverage an ICE-like positioning of its powertrain electronics, increased ECU centralization, it seems that EVs equipped with
including ICE-typical body and axle components, whereas such ADAS technology further drive consolidation of ECUs in
the Tesla Model 3 integrated most components on the rear of comparison to equally or less ADAS-equipped ICEs or EVs.
its battery pack and the rear axle directly . An OEM’s decision for a centralized or decentralized ECU
It is worth pointing out that such freedom in the positioning architecture can be a strategic question and will be driven
of components also gives more flexibility in overall features by different factors. One reason for a centralized approach
offered, for example, choosing to have room for a bigger trunk may be the choice to “own” a key control point in the vehicle
or to offer superior driving performance due to a lower center by becoming an integrator, which could facilitate advanced
of gravity. software development and potentially open up new revenue
In their ongoing pursuit of mass marketability, EV players streams, for example, from over-the-air updates.
therefore might identify further opportunities in high-level Besides strategic considerations, the ECU architecture may
integration of their EV powertrain systems. Doing so could also affect weight and cost. For example, centralization may
help them capture potential benefits, such as reduced optimize wiring and sourcing efficiency via increased
complexity in development, lower material and assembly bundling. Because they require simpler protocols and fewer
costs, and weight and energy-efficiency improvements. connections compared with multiple, decentralized ECUs—
thereby also reducing the number of operations that could
Stay ahead in the technology game go wrong—centralized ECUs can increase reliability. On the
development side, more ECUs also mean more teams who
Electric Vehicle customers are very tech savvy. At the same must collaborate and communicate efficiently to ensure
time, new technologies are largely getting mature enough to quality across systems. Fewer teams and simplified
be put to practice. This creates a great testing field for the processes can result from centralizing ECUs, and this
new technologies that OEMs and other players hope to push simplification can lead to shorter development cycles.
into cars. But it also almost obligates EV manufacturers to Further, central, high-power ECUs could be the backbone for
equip their vehicles with the highest levels of technology developing fully autonomous driving, thereby equipping EVs
around advanced-driver-assistance systems (ADAS), to be ready for future mass-market characteristics and
connectivity, and other trends that are redefining the driver potential customer expectations.
experience and travel strategies. Ultimately, however, the ECU architecture choice will depend
Next to increasingly introducing ADAS technologies, OEMs on the OEMs’ individual strategy, and as centralization may
meet the needs of their EV customers by enhancing the user require significantly building up additional skills in-house,
interface and infotainment systems. Specifically, they are it will always be an individual business-case decision.
increasingly integrating the control of a wide range of interior
functions into a more central, “smartphone-like” user Apply design-to-cost lever
interface (HMI). For example, controls move from buttons to
continuously growing touch screens—a concept that was first Achieving profitability is still a struggle for EVs, especially
tried in a few models from US car manufacturers in the late due to high powertrain cost. Since OEMs seem to have reached
1980s and now seems to have reached sufficient levels of acceptable ranges by now, rigorous design to cost (DTC) will
technological maturity and customer interest. We observed become more important to pave the road for EVs to

April 2018 20

PERSPECTIVE

successfully enter the mass market. That is, it could help Outlook: Can OEMs make money in the volume
achieve an attractive price point, while not jeopardizing EV market?
margins for the OEM.
Cost efficiency seems to be the home turf of established OEMs Most recently, EVs have gained a significant share in the new
and suppliers, who may be in the best position to leverage product announcements of many OEMs. At the same time, EV
their experience and knowledge in traditional DTC levers. models individually have not yet offered much in the way of
Therefore, it may come as little surprise that ICEs and non- contributing to overall profitability compared with ICEs. As
native EVs seem to be more proficient in DTC than native EVs the global market share of EVs inevitably grows, their margins
due to the makers’ track record of continuous cost increasingly move into focus.
optimization and the possibility to carry over highly Taking the four steps in EV design into consideration may
optimized components from previous models. help OEMs to reduce the higher manufacturing costs
Yet the latest native EVs may be able to quickly catch up. For (including materials, production, and final assembly) of EVs.
example, because of advantages in battery-pack advancements, With a focus on simpler and more flexible platforms, along
native EVs now appear to switch from lightweight to more cost- with a fresh approach to technology and design, we believe
efficient material solutions, such as steel elements in the body that a positive mass-market business case for EVs may exist.
in white. They also seem to apply more rigorous despecification In fact, based on our analysis, the delta from total
and decontenting (for example, in controls and air vents on manufacturing cost to list price for sufficiently well-
the instrument panel) and to invest in mass-production equipped, midsize EVs could potentially reach a level of 40 to
processes, such as high-strength stamped steel instead of bent- 50 percent. While powertrain-independent components and
pipe seat-structure designs. final assembly appear similar in their cost structure to ICEs,
As the move toward the mass market continues, EV major cost drivers still lie in the EV powertrain itself and in
experiments are increasingly becoming a serial-production related uncertainties in the development of battery cost.
game. Nontraditional OEMs will likely study the DTC practices This also highlights that for an overall attractive business
of traditional OEMs, for example, including sourcing case, additional measures—for example, in optimizing the
industry-standard parts, to identify better ways to close the offering logic and channel strategy—will still be necessary.
gap in cost performance and thus increase their profit In summary, we may see an era of profitable mass-market
margins from the product-cost side. Nonetheless, achieving EVs on the horizon, driven by design trends toward flexibility,
a superior cost performance might still be a competitive integration, and simplification that maximizes customer value,
advantage for established OEMs and thus comprises an and under the clear governance of cost efficiency for mass
opportunity to step up against potential new market entrants. producibility.

21 April 2018

E-MOBILITY

The Future of Electric Vehicles in India

Will India achieve its target of selling only EVs by 2030?

Sharat Sasi Kumar, IHS Markit

Introduction production of 7.9 million units. While this translates in to a
The automotive market in India is among the fastest-growing compound annual growth rate of almost 8%, the PEV market
globally and is forecast to be the third-largest car is estimated to stay well below 1% of total market share in
manufacturing nation by 2025, with an annual production terms of the propulsion system split.
base of circa 8 million passenger cars. Whilst India is India has ambitious plans to become all-electric by 2030.
forecast to become the world’s third-largest car manufacturer However, the country’s PEV sales remain negligible as India
by 2025, it is already the third-largest oil importer and spends continues to favor micro and mild hybrids over complete
circa USD150 billion annually on imports. To reduce India’s electrification or full-hybridization of powertrains. Moreover,
dependency on oil and facilitate the transition to e-mobility, the Indian automotive sector has invested heavily in the
federal authorities have initiated various missions and think switch from Bharat Standard (BS)-IV to BS-VI fuel standards
tanks, such as the National Electric Mobility Mission Plan which will be enforced in 2020. In the wake of the
2020 (NEMMP), Faster Adoption and Manufacture of Electric announcement of moving towards alternative propulsion by
Vehicles in India (FAME), the National Council for Electric 2030, India is surrounded by an air of confusion and cost
Mobility, and the National Board of Electric Mobility. These worries as automakers prepare to make future investment
institutions are jointly working towards promoting decisions. With no imminent change foreseen in the PEV
environmentally-friendly modes of transportation in the uptake pattern, IHS Markit maintains a conservative outlook
country. This includes battery electric vehicles (BEVs), hybrid towards the 2030 vision.
electric vehicles (HEVs) and plug-in hybrid electric vehicles India 2030—The plan and opportunities
(PHEVs). In 2015, the Indian government initiated the FAME scheme to
Furthermore, these projects are reinforced by the government- incentivize and promote the sale of clean-fuel vehicles.
backed think-tank, National Institution for Transforming However, the scheme did not receive the expected response,
India, or NITI Aayog, which released a report in May 2017 despite offering purchase subsidies as high as INR 140,000
stating that the electrification of India’s car parc could save on certain models. Now, NITI Aayog is working with the
as much as USD60 billion in energy costs and reduce up to 1 concerned parties in creating a framework to propel India’s
gigaton of carbon dioxide emissions by 2030. PEV uptake. In Sep’17, India’s state-owned Energy Efficiency
PEV growth in India Services Ltd signed an INR 11.2 billion supply agreement with
IHS Markit believes that a nation’s uptake of plug-in electric Tata Motors to supply 10,000 EVs. These EVs are expected to
vehicles (PEVs) is a good indicator of its appetite for electrified replace the existing petrol and diesel cars used by government
transportation as well as its ability to eliminate obstacles officials. Apart from EVs, the regulatory authorities also expect
preventing it. While EVs comprise of all vehicles powered by to source e-rickshaws and e-autos soon.
electricity in some form (including hybrids), a vehicle is The government feels that it is capable of handholding the EV
classified as a PEV if its non-auxiliary battery can be charged industry during the initial years, to the extent of offering
externally through a power outlet. As such, the term PEV incentives that would allow consumers to purchase EVs
broadly groups BEVs and PHEVs. without an upfront payment, until it becomes self-sufficient.
IHS Markit forecasts global PEV market share to grow from This means that consumers would be able to purchase EVs
its current level of 1% to 8% by 2025, at a compound annual without an initial payment. Alternatively, users will pay for
growth rate of 130%. Global PEV uptake is increasing because the EV over a fixed period from savings made on fuel. While
of various market forces, like stricter emission norms, the efforts seem aggressive, it is essential to reduce India’s
motivating major automotive manufacturers to increasingly energy imports, which are expected to double to USD300
shift their focus towards electric cars. Many OEMs have billion annually by 2030. Additionally, India’s commitment
announced their intent to electrify their product line in the toward the Paris climate treaty also requires the nation to
near future. Based on the IHS Markit Light Vehicle Sales reduce its harmful emissions; India plans to reduce its carbon
Forecast, the Indian automotive market is expected to almost footprint by 35% by 2030, a move that will be benefited by
double in size by 2025, reaching an estimated annual switching to cleaner fuels.

April 2018 22

E-MOBILITY

Key incentives and subsidies Many similar patterns exist in the deployment of incentives
E-mobility continues to garner attention from governments, across nations, but their success and overall contribution to
automakers and technology suppliers alike and the EV uptake vary greatly by country. For example, consumers
importance of this segment of the wider transportation Norway, considered to be the most EV-friendly country in the
industry continues to grow. Whilst the success of EVs used to world, enjoys significant government incentives. Norway does
be the primary prerogative of automakers and associated not house any major passenger vehicle manufacturing plants
supply partners, in recent times, governments across the and is entirely dependent on imports for its road transportation
world have started playing an active role in stimulating the fleet. The government generates significant taxation revenue
rise of this burgeoning market. Their objective with such on these vehicles by applying some of the highest taxes in the
interventions is the electrification of passenger vehicles, world, but at the same time, it also offers prospective owners
which is a key aspect of the world’s sustainable mobility a reduction/exemption from import tax on PEV purchases.
agenda. But whilst EVs are enjoying prolific growth, the overall This coupled with other incentives and subsidy schemes make
market size, when compared to traditional internal the total ownership cost of PEVs comparable, if not lower,
combustion engine (ICE) vehicles, remains low. The EV segment than ICE alternatives. On the other hand, in vast markets like
is still, and will continue to be, heavily dependent on support that of Germany that lack the political impetus and
from governments in nations harboring aspirations of a opportunity to provide such lucrative relief options,
significant uptake in electrified light vehicle transportation. conventional ICE vehicles continue to dominate the market.

23 April 2018

E-MOBILITY

The infographic shows some of the most common subsidies Outlook
and their impact in PEV uptake: The nascent EV market of India seems unlikely to grow at the
India 2030—Opportunities versus deterrents scale the Indian government forecasts. However, the
IHS Markit believes that while a nation’s PEV uptake depends government has commenced the deployment of charging
on 7 pillars (showcased below), India’s case might be infrastructure and begun facilitating technology transfer
considered somewhat unique. Since it is a developing between the public and private sectors to help reduce battery
economy, each opportunity promoting the EV industry costs. The financial years 2017–18 budget has allocated an
presents an equal threat to the nation’s burgeoning ICE vehicle INR795 core toward developing e-mobility in the country.
industry. Nevertheless, the extent to which infrastructure barriers, lack
of consumer wealth, lack of affordable and available products
Some of these aspects are discussed below: prevent uptake, despite the implementation of typical
incentives, shows that these stimuli alone cannot bring about
a thriving EV marketplace. Significant battery- and motor-
related technological developments and ensuing economies
of scale will need to be realized (globally, just as much as
locally) before progress is observed in such an environment.
The wider car market in India remains broadly split between
gasoline and diesel, with Maruti Suzuki India Limited making
up 50% of sales in the region. Our longer-term projections do
not forecast this to greatly change in the coming five years,
despite the efforts to pursue an EV agenda. Subsidies and
incentives to encourage purchases of EVs are generous, and
many government-sponsored initiatives have been proposed
and offered to companies and universities to aid in the
process of engineering and instigating a paradigm shift in
consumer behavior.
It remains unclear whether the incentive packages and
government proposals can bring about an increased uptake
in PEVs. However, this seems highly unlikely until PEVs are
engineered and produced to retail at a much lower price
point to make them a compelling proposition in a market
dominated by ICE vehicles.

April 2018 24

KNOW OUR MEMBER

Kaizen Motors P Ltd, Solapur

Kaizen Motors Pvt Ltd, located at 165/8, "Sindgi Icon", Old Bijjarg, Kaizen Motors has grown to a company with a turnover
Employment Chowk, Solapur, Maharshtra and established in of over 150 crores in all businesses combined over a period
2004 has dealerships of Honda 2-wheelers and 4-wheelers. of 13 years. Kaizen Motors sold 16,500 units and serviced
A Life Member of F A D A, Kaizen Motors is 4-S set-up in 130,000 units of 2-W while in 4-W segment, the dealership
Solapur with Sales, Service, Spares and Safety. sold 690 units and serviced 8,000 units, in FY 2016-17.
Kaizen Motors started off with a dealership of Honda for Nitin Bijjargi continuously strives for the employees’ welfare
two-wheelers under the name and style Kaizen Honda in and well being, thus strongly believing in the philosophy of
Solapur. Making rapid strides in its growth journey, the inclusive growth where the employees and business grow
dealership has since added and set up 3-S dealerships at together. In this, the dealership is supported by a dedicated
Ichalkaranji under the name Kaizen Wheels; and at Solapur strong team of 400 employees who run the dealership
& Latur under the name Kaizen Auto Cars P Ltd. operations efficiently and successfully.

While Kaizen Wheels, Ichalkaranji sell Honda 2-W; Kaizen The Kaizen Motors strongly
Auto Cars P Ltd in Latur & Solapur sell Honda 4-W. believes in the life-long
The dealership at Solapur encompasses world-class relationship with its customers,
showroom covering an area of 24,000 sq ft with an automated employee satisfaction and cost
workshop offering better ambience, facilities, utilities and efficiency, which are
culture that drive customer satisfaction. fundamentals for the
The dealership offers a range of services and processing all dealership’s growth and
its CR activity under one roof with its centralised in- house success. Keeping Customer
Call Centre covering both four wheeler and two wheeler Satisfaction as the pivotal
activities. To enable all its customers to have easy access to point, Kaizen Motors has an in
the dealerships, Kaizen Motors have moved all the reach house centralized call centre to
numbers to Hotline IVR services to provide hassle free contact cover customer grievance; has
to its customers. In addition, the dealership has installed an a dedicated pick & drop team
in-house Paint booth for providing better and faster paint for Service Assistance under the
job quality under one roof. To conserve water, Kaizen Motors name & signature ‘KSA- Kaizen
has installed ETP Water re-cycling plant under its CSR towards Service Assistance’; and a
environment. dedicated CR team which works Nitin Bijjargi
Nitin Bijjarg, the man steering Kaizen Motors.is a young
energetic automotive enthusiast. Thanks to the closely with all customer touch
entrepreneurial abilities, dedication and hardwork of Nitin points to improve customer experience in their dealerships.

F A D A wishes Kaizen Motors, Nitin Bijjargi and his team all
the best in all their endeavours

25 April 2018

BEST PRACTICES

What Makes a Five-Star Dealership Review?

What motivates your customers to write absolutely glowing The ability to provide both a great buying and service
reviews – those five-star shout-outs that attract more experience is the single-most important factor influencing
customers to your lot? On the other hand, why do customers positive dealerships reviews. Customers call out a great
write blistering criticisms that cost you sales and create buying experience as the second-most important attribute
permanent heartburn? contributing to a five-star review. But great service overall,
At a time when eight out of 10 shoppers use online car reviews including an excellent service department, constitutes the
and car dealership reviews to inform their purchase, these most important factor. Customers have high standards:
are no small questions. the words “great customer experience” or “excellent
Anatomy of a Five-Star Review customer service” occur most often in positive dealership
Based on our research of 1.4 million reviews of dealerships reviews, followed by variations of “best” or “great buying
and salespeople, here are the top five reasons customers experience.”
leave five-star reviews:
1. The dealership provides a consistently great experience The purchase is just the beginning.
The service lane is where a dealership’s reputation is really
on the lot and in the service lane. made. Customers often use phrases such as “best service
2. The dealership’s entire staff acts like customer service department” in explaining why they rate a dealership
highly. In fact, a great buying experience sets an expectation
professionals. that the dealership will follow through with excellent
3. The purchase process is painless. support in the service lane.
4. Customers feel like they get a deal – but not necessarily 2. THE DEALERSHIP’S ENTIRE STAFF ACTS LIKE CUSTOMER

the lowest price. SERVICE PROFESSIONALS
5. Dealership s offer hand s-o n ex periences with Words such as “friendly,” “helpful,” and “knowledgeable”
emerge often in positive dealership reviews. Note that the
vehicles. entire staff make a difference. We often find phrases such as
“everyone” and “staff” associated with high praise.
What Makes a Dealership Look Great?

1. THE DEALERSHIP PROVIDES A CONSISTENTLY GREAT
EXPERIENCE ON THE LOT AND IN THE SERVICE LANE

April 2018 26

BEST PRACTICES

Overall, these are the attributes that make up a winning staff: 4. CUSTOMERS FEEL LIKE THEY GET A DEAL – BUT NOT
• Being approachable. Being friendly and showing a sense NECESSARILY THE LOWEST PRICE

of humor are frequent themes in positive reviews. One of the top attributes of a highly rated dealer is offering
• Being helpful. “Everyone helpful” is an enormously a deal. Shoppers want to feel like they get the “best deal
possible,” a phrase that comes up often in positive
popular phrase in strong reviews. And what does being dealership reviews. We also see “great price” and “price
helpful mean? Most often, helpfulness comes down to wanted” appear frequently in strong reviews – but not
answering customers’ questions thoroughly, asking the “lowest price.”
right questions, and assisting in the customer’s research.
Helping a customer find the right car and then test drive
it definitely puts customers in your corner.
• Being low-key. Providing a stress-free experience goes a
long way. Phrases such as “never felt pressured” and
variations of it account for buyers giving dealerships
props – so often that “Stress Free” is a category unto
itself.
3. THE PURCHASE PROCESS IS PAINLESS
Speed and ease of service throughout the entire buying
process are essential. Phrases such as “buying process easy”
crop up often in reviews, along with words such as “didn’t
waste time.” Once customers are at the buying stage on the
lot, they’re eager to act. They don’t want to wait around
completing paperwork.

Speed and simplicity are key.
Examine the buying experience from the moment
someone is on the lot to the moment the customer
drives off the lot. Test your own process by assuming
the role of the customer and critiquing your approach.
How long does the process last? How easy is it? Are
there any opportunities to digitize some processes
such as the completion of finance paperwork?
Salespeople can relieve pressure on the car shopper by:
• Giving customers the time they need.
• Reading each person on the lot and adjusting their

sales approach accordingly. As we’ve noted in
other research, not every person on the lot is
motivated to buy. People who are doing initial
research are not ready to talk price and do a test
drive.
• Making customers comfortable. Offer to clarify any
questions they have. Listen to them carefully. And do
little things such as offering amenities to make their
stay comfortable.

27 April 2018

BEST PRACTICES

Shoppers simply want to feel like they are being treated fairly What Does a Bad Customer Experience Look Like?
– which is not the same as getting a rock-bottom price.
Bad Service and Maintenance
Explain the why behind the price. Bad service and maintenance dominate the themes that
Is the manufacturer offering a special promotion that appear in negative reviews. And what do bad service and
wasn’t offered a month ago? Does the price include features maintenance look like? Here’s what we found:
that you believe are especially important to the shopper • Slowness. The phrases “oil change” and “tire rotation”
you’re talking with based on their budget and lifestyle
needs? appear often in bad reviews, as do the Phrases “2 hours
Take time to provide clarity oil change” and “3 hours oil change.” When we took a
Price is definitely a topic which shoppers typically have closer look at the data, we uncovered a root problem:
questions and uncertainty. Taking time to explain a price people expect procedures such as oil changes and tire
and why it’s the best deal possible for a shopper – with rotations to be fairly easy and quick – and when
your data cross-checked against what shoppers are finding dealerships take longer than expected, customers write
on sites such as Cars.com – will make the difference. negative reviews. Dealers need to take a closer look at
5. DEALERSHIPS OFFER HANDS-ON EXPERIENCES WITH the expectations they are setting and manage their service
pipeline more effectively. Let customers know ahead of
VEHICLES time that if they’re dropping off their cars on an especially
When you offer test drives, you look good. Test drives are busy day, their service may take longer than normal.
mentioned in positive reviews almost as frequently as • Surprises. Many of the problems in the maintenance
providing a stress-free environment. The decision to buy a category relate to check engine or tire pressure lights
car may come down to two people shaking hands on a lot – coming on, most certainly with used cars. An engine light
but experiencing the vehicle creates the all-important coming on, in and of itself, does not inspire a negative
emotional connection. Dealerships may discover, though, that review. The problem happens when dealers don’t address
shoppers on the lot are not yet interested in a test drive, these surprises. The best way for dealerships to avoid
especially if they are at the initial phase of planning for a these problems occurring is to ensure that their inventory
vehicle. That said, if a customer contacts a dealership ahead is properly prepped and free of defects – or manage
of time to set up an appointment, making it clear that you’ll expectations if a car has known issues. If a surprise
have a car prepped for a test drive sends a message that happens after a customer drives off the lot, dealerships
you’re making their visit a top priority and encourages the need to understand how upset a customer is going to be
shopper to get behind the wheel. and address the issue immediately – or offer alternatives
such as loaner cars if the issue takes time to fix.
• Not minding the details. Complaints about temporary
tags appear often in negative reviews. The complaints
typically came down to sloppy management of
temporary tags, such as issuing tags that had expired or
making a customer wait for them. Dealers who don’t
manage these crucial details well will likely reveal other
signs of sloppiness such as dropping the ball with
scheduling maintenance or neglecting to return phone
calls in a timely manner. Good service means thorough
service. Bad service means lapses in attention to detail.
People problems
Unresponsive staff loom very large in negative reviews. We
found frequent instances of phrases such as “won’t return
phone calls” and “never called back” in negative reviews. To
be sure, being busy is often a sign of success. But to stay
successful in the era of the on-demand economy, dealerships
need to be more responsive than ever. Especially in the always-
on mobile age, customers expect near-instant responses. It’s
time for dealerships to step up their game.

April 2018 28

BEST PRACTICES

In addition, perceptions of the finance department influence Partnering Like a Consultant
negative reviews, with customers expressing confusion and When you look at both positive dealership and positive
distrust of the person managing the terms of their financing. salesperson reviews, a common theme emerges: salespeople
Here is an opportunity for finance professionals to improve distinguish themselves by being knowledgeable and taking
their standing by offering clarity around how financing works time to ask questions and listen to understand what the
and which options are best for the consumer, just as customer really wants. In fact, so many reviewers use phrases
salespeople need to explain the “why” behind pricing. such as “answered every question” in strong dealership
At a time when online financing is becoming an option to reviews that the ability to provide clarity to the buying process
customers, your finance team needs to work more like a surfaces as a top factor influencing positive reviews. It’s also
customer service team to build customer goodwill. no surprise that clarity occurs alongside the ability to satisfy
Setting the Wrong Expectation first-time buyers.
Another common theme among negative reviews: dealerships No Pressure
failing to set the right expectation with their marketing, “Never Felt Pressured”: salespeople should take those words
especially for service. A common complaint: advertising free to the bank. They appear often in positive reviews of
oil changes that turn out to be anything but free. Setting the salespeople. It’s no surprise that words such as “easy” and
right expectations comes down to consistency in what you “stress free” also appears in the most positive reviews. The
say and what you do – all across the online/offline world. fact remains: buying a car can be stressful even under the
Dealerships should re-examine the accuracy of your content most ideal circumstances. It’s one of the most expensive
on your website, third-party sites, and anywhere else purchases a person will make in their lifetime. Customers
customers encounter your brand. If you are running a service want help making a decision, yes, but they also want to relieve
promotion with a limited shelf life, make sure you remove the stress of making this decision.
the content when the promotion ends. Ensure that the details
about your on-the-lot inventory are consistent with the Win on the Lot
content of your digital VDPs. Get the basics right to build
trust. Now that you know what makes for a good and bad review,
you can step up your game by treating customer reviews as
What Makes a Salesperson Look Good? a process that you manage all year round. Reviews are not
a necessary evil. They’re a source of differentiation. You
Service, Service, Service! assign a team member the job of monitoring, responding to,
The most common phrases in five-star salesperson reviews and managing the publication of reviews as a crucial
are “great customer service,” “excellent customer service,” and function.
“best buying experience.” These findings underscore two A review program not only improves your overall performance
realities: but also contributes to improvements in areas such as
• People make the brand. When salespeople make employee turnover. Get ready to win with reviews.

customers happy, dealership reviews also benefit. Capitalize on goodwill – ask for reviews.
• Great salespeople are not salespeople. A sale is a Doing so shows confidence in your dealership and
generates more great reviews. Don’t be shy. Ask customers
transaction. A strong relationship based on customer for reviews.
service means business for life
BOTTOM LINE: getting a great customer review comes down
to acting like a customer service representative.

About DealerRater
Founded in 2002, DealerRater, a Cars.com (NYSE:CARS) company, is the world’s leading car dealer review website that
connects consumers with the right person at the right dealership. With a reachable audience of more than 31 million
consumers monthly, the site offers 4 million sales and service reviews across 41,000 US and Canadian dealerships,
including a network of more than 5,600 Certified Dealers.

29 April 2018





Exciting | Energetic | Informative

Las Vegas, USA | 22nd – 25th March, 2018

- Saharsh Damani |Editor, F A D A Journal |CEO, F A D A

If Digital Retailing was the unofficial theme from the 2017 Apart from the most powerful speakers which the show
National Automobile Dealers Association Convention and attracted, Mr Wes Lutz, NADA’s new Chairman announced his
Expo, this most recent edition in Las Vegas was Digital Retailing: priorities for the year, which included advocating for new-
The Sequel! car dealer concerns within the industry, where legislative
According to the NADA, the expo this year featured more than and regulatory affairs are concerned. He also discussed
7,00,000 square feet of exhibitions by more than 500 changes in the industry and outlined the positive side of it
manufacturers and suppliers. On the education front, all, noting that there will still be a place for cars and dealers
delegates witnessed more than 120 educational sessions in the future. He also encouraged dealers to continue adapting
falling under eight learning tracks in traditional workshop to the “retailing challenges ahead.”
settings, interactive sessions and peer-to-peer learning “Just because a new system pops up, doesn’t mean the ‘old
opportunities. one’ is dead. Just because technology changes, it doesn’t mean

F A D A Delegation

to 2018 NADA Show

John K Paul and Philip Chacko
Mundanilkunnathil (Popular Vehicles &
Services); Ashish H Kale (Provincial
Automobiles); Samar Vikram Bhasin and
Nivedita Bhasin (Pratham Motors); Anish
Muthuswamy (Sree Saradhambal); Awadh
Poddar (Premsons Motors); Saboo Tanay
Vinay (RKS Motor); Prem Bagga (Bagga Link
Services); Gautam Satish Kale (Ketan Motors);
Sandeep Usman (Ayaan Exclusive); Pramod
Krishna Manchikatla (Sai Ram Krishna Cars);
Rohit Satish Kale (Jaika Automobiles);
Kunhahamed Kutty (Uniride Honda); Hashim
Basheer (Shymas Automobiles); Afzal Ahamed
and Ahamed Sheriff (Ghani Motors); Chitriki
Prashant (Annapoorna Motors); Chandra
Pavan Reddy (Pavan Motors); Dilip Patil (Sai
Point Automotive); and Abdul Jabbar (Amana
Toyota).

2018 NADA SHOW

that a car’s usefulness is gone. At almost every turn, dealers posed at NADA was “How can the dealer community navigate
have faced challenges — some major ones. But our troubles these changes and not only come out alive, but stronger?”
didn’t define us. How we responded to them did,” said Lutz. To that end, many discussions were centered not around the
Based on the thoughts gathered from the show, I put together threat that autonomous vehicles pose to dealerships, but the
a list of key themes that this year’s NADA Show 2018 seemed opportunity there for those who are willing to seize it. At the
to really sink its teeth into: end of the day, self-driving cars are still cars, and cars need
to be serviced.
Technology The dealers who do that effectively are also likely to be the
ones who embrace the latest technology in the first place.
Technology has been a key topic at NADA shows for over two Digital marketing software platforms, designed and tailored
decades now, but as they say, there’s a time and place for exclusively with the sensibilities of dealers in mind, are
everything. rapidly gaining market share and, in turn, boosting the online
We’re at a tipping point of finally seeing the new technology presence and sales efficacy of dealers around the country.
that we’ve been anticipating for years, and between AI This is where the Google’s and Facebook’s of the world are
(artificial intelligence) and its implication on autonomous playing a big role in adding their magic by upgrading the
vehicle technology, the mainstreaming of dealer-focused Dealer’s websites which in turn is doing wonders!
online marketing software platforms, and the shift in Everything from social media management to reputation
consumer behavior driving the desire to complete an entire monitoring, even managing and improving the sales process,
vehicle purchase from the comfort of one’s living room is is being made exponentially easier through turn-key software
very fast becoming today’s reality. The million-dollar question
that operates how dealers think and
naturally gives a boost to the efforts
already underway.
Key Notes and Panels stressed upon the
fact that by the end of this year,
dealerships in advanced countries who
snub to upgrade to these software’s will
increasingly find themselves on the
unfortunate side of history.

Flexible ownership models & the
rise of Mobility-as-a-Service

How will dealers innovate and continue
to sell when customers of the future
insist on paying not to own, but to
simply hail rides on demand?
While adoption of autonomous vehicles
will be a slow and gradual process, the
story within it that gets less airtime is
the fact that overall number of vehicles
hitting the roads will continue to rise
for at least the next several years. As
John Possumato (Twitter handle:
@car_esq) states—wryly, perhaps
rightfully—on the NADA blog itself back
in January, while driverless vehicles may
be squarely within our forecast, “self-
maintaining” or “self-cleaning”
vehicles certainly are not.

33 April 2018

2018 NADA SHOW

It then raises the question: who, if not dealers, are better 2) primes dealers to adapt to the future of mobility when a
positioned to fulfill this role within this evolved value chain? customer expects the type of vehicle of their choosing to
Dealers are uniquely suited to leverage their existing footprint be ready on demand, at the push of a button. By operating
and infrastructure for storing and maintaining fleets to with a leaner model of only housing what’s needed and
become a natural partner for ride-sharing and mobility allowing for just-in-time delivery, dealerships can reduce
solutions. When customers are no longer interested in buying overhead and stay more profitable, weathering the rapid
cars but instead paying to use them on demand, dealerships changes within the industry.
are already equipped to store, service and track a variety of
vehicles in a single, centralized portfolio. 3) Finally, the word that everyone seems to be talking
The savviest dealerships are looking to partner with about these days: Blockchain. Simply put, instead of
technology providers who understand how to disrupt the a ledger residing within a single company, that ledger
industry and can utilize the scale and experience of is distributed across millions of individual
dealership networks to make the transition from selling the computers that verify transactions more securely and
Mobility-as-a-Product business model that has dominated ensure a far greater degree of accuracy and
industrialized society for the past century, to selling the next accountability. The implications of this are rather
natural business model destined to define automotive for exciting, to say the least.
the next century and beyond—Mobility-as-a-Service.
To convert theory into practice, F A D A Delegation also did
Big Data: from Buzzwords to Blockchain Key Dealership Visits. This resulted in learning techniques
which the dealerships were successfully using for customer
In developed nations, the fight for big data ownership is on, retention and how usage of digital marketing kept them
with dealers and dealer management system (DMS) ahead in the game.
companies embroiled in a battle for ownership over customer To sum it up, from dealer-focused workshops & sessions
information. While traditional methods of tracking customer to inspirational discussions around performance, new
interactions and sales have long been essential to driving technology products to countless networking
traffic at dealerships, unlocking the power of big data would opportunities and key dealership visits, the NADA Show
allow for optimizing sales via marketing spend, boosting 2018 was as exciting, energetic and informative as it has
customer retention and satisfaction for dealerships and, ever been
overall, preparing them for an increasingly competitive
future.
Today, data scientists and retail digital tech companies are
the new gold miners. Dealers need to sharpen their digital
picks to protect their prospects and ever-more valuable data.
By identifying those who are in the market for a car purchase—
whether from historical customer data about the end of a
lease, or by engaging with prospects who visit the dealer’s
website looking for more information about a specific vehicle
model—they can focus their promotional efforts, and more
importantly, ad spend—only where they are most likely to
lead to a sale.
Social media, in concert with traditional media, has allowed
for dealerships to create highly customized and engaging
content for their unique marketing audiences. Big data even
has the potential to streamline dealer operations by enabling
advanced forms of inventory management. Software that
allows for dealers to centralize inventory information and
adjust availability with real-time -
1) facilitates a seamless experience at point of sale,

but also,

April 2018 34



UPGRADES & VARIANTS

The New BMW X3 Launched in India

BMW launched the third generation of BMW X3 The innovative diesel engines from BMW EfficientDynamics
in diesel variants on April 19 with starting Ex- family offer considerably more spirited power delivery. The
Showroom price of Rs. 49.99 lakh. two-litre four-cylinder diesel engine of BMW X3 xDrive 20d
Vikram Pawah, President, BMW Group India said, produces an output of 140 kW / 190 hp and a maximum
“BMW X3 established the premium mid-size torque of 400 Nm at 1,750 – 2,500 rpm. The car accelerates
sports activity vehicle segment in India and from 0-100 km / hr in just 8 seconds.
became a trailblazer with its modern character. The eight-speed Steptronic automatic transmission performs
The new BMW X3 is set to write the next chapter smooth, almost imperceptible gear shifts. For even greater
in its success story with an even more striking, driving pleasure, the eight-speed Steptronic transmission is
dynamic design language, powerful yet efficient available with steering wheel paddle shifters.
drive systems and luxurious equipment.” BMW xDrive, an intelligent all-wheel-drive system, in the new
The new BMW X3 has been reinterpreted with a BMW X3 monitors the driving situation constantly and is
striking design language, featuring a compelling quick to respond. Adaptive suspensions, electronically
front with a boldly enhanced distinctive double controlled ‘Automatic Differential Brakes/locks (ADB-X)’,
kidney grille. Fully Adaptive LED headlights and extended ‘Dynamic Traction control (DTC)’, Hill Start Assist
LED fog lamps featuring the new hexagonal design and Hill Descent Control helps to conquer every terrain.
ensure a prominent stance on any road. At the BMW Efficient Dynamics doubles the Sheer Driving Pleasure
rear, LED expressive taillights combined with a with features such as Auto Start-Stop, ECO PRO mode, Brake-
low-slung roof spoiler and exhaust tail pipes on Energy Regeneration, Electronic Power Steering, 50:50 Weight
both sides in chrome make for a powerful conclusion. Distribution and many other innovative technologies.
Automatic tailgate operation allows convenient opening and The new BMW X3 features cutting-edge safety technologies.
closing of the tailgate. It provides optimal support in any situation with six airbags,
The interior impresses with an accomplished balance of Attentiveness Assistance, Dynamic Stability Control (DSC)
dynamic driver-orientation and luxurious comfort. The including Cornering Brake Control (CBC), electric parking
exquisitely embossed X logo in the elegant chrome located brake with auto hold, side-impact protection, electronic
on the doors and the centre console is a true eye-catcher. A vehicle immobilizer and crash sensor, ISOFIX child seat
clever concept provides numerous easily accessible storage mounting and integrated emergency spare wheel under the
compartments. load floor.
Ambient Lighting with six dimmable light designs creates an
atmosphere for every mood. The luggage compartment has a
capacity of 550 litres extendable to 1,600 litres.
BMW X3 comes with game-changing technologies such as
the BMW Display Key that allows drivers to keep in contact
with their car round the clock. Welcome Light Carpet welcomes
passengers in glamorous style. Rear-view camera with Park
Assist, assists in parking or maneuvering into parallel or
lateral space. The smartphone holder integrated into the
centre console allows inductive, wireless charging for mobile
phones and the BMW Display key.
BMW X3 is equipped with an extensive range of BMW
ConnectedDrive systems like the 12.3-inch Multifunction
Instrument Display, BMW iDrive, including touch controller,
BMW Navigation Professional (with 10.25-inch touch screen),
600 Watts high-end Surround Sound system from Harman
Kardon, Apple Car Play, BMW Apps and Connectivity through
Bluetooth and USB.

April 2018 36

UPGRADES & VARIANTS

Audi Introduced 2018 Audi centrally positioned inside the V of the engine and each of
RS5 Coupe in India them supplies a single cylinder bank. The B-cycle combustion
process with central direct injection represents a new level
Audi launched the second generation Audi RS 5 Coupé in of efficiency within the RS family.
India on April 11. With the new Audi RS 5 Coupé, Audi Sport is
presenting its first model to feature the new RS design The other features include:
philosophy in India. The Coupé’s new 2.9 TFSI bi-turbo engine • Sportier Singleframe grille: wider and flatter
produces 331 kW (450 hp) and delivers 600 Nm of torque. • Matrix LED headlights as standard with dynamic rear
The standard quattro drive distributes the power to all four
wheels. The distinctive racing details coupled with high indicators, as well as three-dimensional LED rear lights
performance of a V6 engine makes the new Audi RS 5 Coupé • Length: 4,723 millimeters, +74 millimeters compared with
the most desirable model in the Audi A5 family. Priced at INR
1,10,65,000, the new Audi RS 5 Coupé is now available at all the predecessor model; wheelbase: 2,766 millimeters,
Audi dealerships across India. +15 millimeters compared with the predecessor model;
“Audi Sport signifies the transition of Audi’s racetrack width: 1,861 millimeters, +1 millimeter compared with
technology into production ready performance cars. Born on the predecessor model; height: 1,360 millimeters, -6
the track, built for the road - the all new Audi RS 5 Coupé is millimeters compared with the predecessor model
the gran turismo among the RS models from Audi Sport. The • 48.26 centimeters, 10 star design, Aluminium forged
car’s V6 bi-turbo engine has been developed from the ground wheels 265/35 R19
up and provides significantly more performance coupled with • Panoramic sunroof
higher efficiency. The all new Audi RS5 Coupé combines the • From 0 to 100 km/h in 3.9 seconds
performance of a sportscar and the comfort of a sedan which • Maximum speed of 250 km/h
makes it a desirable machine for our customers and • Eight-speed tiptronic specially tuned for sporty, dynamic
enthusiasts who are smart yet adventurous and want to make driving
an incomparable style statement,” said Rahil Ansari, Head • Infotainment system, MMI navigation plus with MMI
Audi India. touch
The new Audi RS 5 Coupé is mated with the 2.9 TFSI bi-turbo • Audi Smartphone Interface for connecting Apple and
engine which produces 331 kW (450 hp) and delivers 600 Android smartphones
Nm of torque. The top model in the A5 family sprints from 0 to • Park Assist (rear view camera with parking system plus)
100 km/h in just 3.9 seconds, and reaches a top speed of 250 • Six Airbags
km/h. Both turbochargers of the 2.9 TFSI engine unit are • ABS, EBD, EDL, ASR, ESC with torque vectoring

37 April 2018

NEWS BASKET

Bavaria Motors Wins Top BMW Award Globally

BMW honoured its best dealers from around the world at a BMW invited the 41 winners to a three-day visit to Munich
celebratory awards evening in the BMW Group Classic. Pieter which included sight- seeing, fine-dining and exclusive
Nota, BMW AG management board member responsible for experiences, as well as the awards ceremony. A tour of Munich
Sales and Brand BMW handed out the awards to the 41 top in historic BMW cars offered the dealers a very special way
dealers, saying they were a thank-you from the company to to experience their brand’s home city.
its international dealer body, which had worked so hard to “We are currently in the biggest model offensive in our
make 2017 yet another successful year. company’s history. With exciting new models like the BMW
“2017 was the seventh year in a row where we achieved a X2 and the BMW X3, together with the BMW X4 and BMW 8
new sales record. This consistent success is only possible Series Coupé coming later this year, I am sure that together
with strong partners in the dealer organisation,” said Pieter with our partners and investors in the dealer body, we will
Nota. “Satisfied customers are what we all strive to have. We make 2018 another record year,” said Pieter Nota in the course
are all working with the common goal to become even more of the event.
customer-focused and service-oriented. Today’s winners are
setting a great example and the Excellence in Sales Award is
our thank-you to them, recognizing their achievement,” he
continued.
The Excellence in Sales Award is given in six different
categories, plus a special Jury Award. In total, 3,100 dealers
from 85 countries entered the competition. The highly-
qualified jury selected the 41 winners in the categories Sales,
Aftersales, Customer Service, Luxury Class and BMW i & BMW
i Performance. The Manager of the Year award recognises the
exceptional engagement of individual entrepreneurs. The area
of sustainability was given particular importance, with the
introduction this year of the “Most Sustainable Dealer”
award. An overall winner was then selected in each category.

Ashok Leyland Rolls Out 2,00,000th LCV from Hosur Plant

Ashok Leyland announced on April 4, the roll out of its gained the trust of 2,00,000 customers whose livelihood
2,00,000th LCV from its Hosur Plant. The first LCV ‘DOST’, was depends on Ashok Leyland products. Over the years the
commercially launched in September 2011. The 1,00,000 Company has gained trust of these customers by delivering
milestone of DOST was achieved within three years, in March on the promise of ‘Aapki Jeet, Hamari Jeet’.
2015. The Company, since its entry in the LCV segment, has Commenting on the milestone, Nitin Seth, President, LCV, Ashok
Leyland, said, “Ashok Leyland LCVs have been segment defining
by delivering customer experience like no other brand. Having
2,00,000 LCVs on road in about six years is a proof of trust
that our customers have placed in us. Even with our limited
portfolio and no-discount policy, we have always maintained
our market share. FY18 was very significant for us as we
achieved our highest LCV sales of 43,441, a growth of 37%
over the previous year. Also in FY18, we upgraded the DOST
brand with newly DOST+. We ended last FY on a high note by
crossing the 5,000 mark per month for LCV sales for the first
time since we got into the LCV business. For us, this milestone
is the beginning of our next growth chapter, where we focus
on bringing in more LCV products in the market.

April 2018 38

NEWS BASKET

Toyota to Promote Sustainable Mobility via Green Approach

Recognizing the fundamental role of sustainable mobility to citizens,it is our duty to create a safer& sustainable
challenge the environmental changes, thus create environmental frameworks for our future generations. Forum
asustainable future, Toyota Kirloskar Motor (TKM) in like this brings to light several challenges that rise with the
association with the Federation of Indian Chambers of growth of mobility, and supports to develop sustainable
Commerce & Industry (FICCI) hosted an astute seminar – reforms under long-term roadmap. I do hope today’s
“Towards Responsible Mobility for Safe, Sustainable and deliberation further enhances the awareness through multi-
Green Society” in New Delhi. The comprehensive platform fold dialogues in benefit of our planet.”
brought together distinguished opinion leaders and Speaking at the forum, Shekar Viswanathan, VC & Whole-
stakeholders from varied scope of areas to engage in time Director, TKM and Chairman, FICCI Taskforce on Electric
dialogues that emphasized the need for integrated and Vehicle, said, “The most effective and sustainable solutions
efficient safety and eco friendly technologies for driving the are those that come from thought leaders and innovators
ever better future of mobility. thriving to understand the cause at grass root levels & deliver
ever better mobility. We at Toyota, always believe in playing
The event inaugurated by Shri Babul Supriyo, Hon’ble Minister a much greater role than just manufacturing world-class cars.
of State for Heavy Industries and Public Enterprises also Today, the world is plagued by energy crisis, pollution and
witnessed the representations from Government, Research ever-increasing accident rates. The future of mobility should
Institutes, Academia, Testing Agencies & Industry Bodies, and be an inclusive and viable one, where emphasis on safety
Non-Governmental Organization (NGOs). and sustainability should be of paramount importance. We
Guided by India’s commitment towards safety and are here to build solutions by leveraging our prowess in
sustainable goals in mobility needs, the event comprised of technology and innovation, facilitating the socio-economic
insightful sessions on broader themes of: development of people & nation in a sustainable manner.
• Safety with discussions on importance of safe vehicles, Through facilitating this session and bringing together
stakeholders from various automotive facets, we hope to
advancement in safety technologies, road user behavior envision a Quality environment for everyone to live.
and awareness/ training programs As a fast-paced economy, a balanced development continues
• Environment with dialogues covering emission to be the focus of the nation. Driven by the mission of not
scenarios, importance of establishing sustainable eco- only promoting development but also ensuring a greener and
system and need for alternate fuels and technologies to low-carbon eco system, the concentrated efforts of all related
achieve fossil fuel saving stakeholders such as Government, Industries, NGOs, Research
Shri Babul Supriyo, said, “Today’s event mirror’s Government Institutes, Industry Bodies, Academia, etc, has accelerated
of India’s framework on sustainable development. The several foresighted plans where mobility solutions is also
growing demand for moving people and goods has led to an integral part. Missions like Automotive Mission Plan for
heightening threat not only to the environment but also 2026 encompass a larger objective of improving mobility
increasing road congestions & accidents. As responsible solutions while minimizing the negative consequences arising
from the rapid development of transport systems, such as
pollution, congestion, global warming, road accidents etc.
Corporates have also aligned their objectives with this
mission and are looking beyond profitability and put
relentless efforts on sustainable agendas.On a long term
perspective, it becomes vital to learn & understand the gravity
of holistic implications by analyzing the varied xEV
technologies, assessing material resources, stakeholders’
perspectives, challenges related to setting-up R&D infra,
evaluation of carbon intensity of technology applications,
different drive train approach for electrification, investment
& employment scenarios, etc., to achieve the ultimate
outcome of reduced fuel imports & carbon footprints

39 April 2018

OPINION

Indian Tractor Industry Continues to be in Overdrive: ICRA

The domestic tractor volumes continue to chart a growth continue to support the demand for tractors going forward,
story in the current fiscal, with the volumes expanding by the financing availability, a key demand driver, is expected
19.4% during April-February FY2018 (on a Y-o-Y basis). As per to remain healthy over the short to medium term, led by a
an ICRA note, while the growth in Agriculture Gross Value relative moderation in delinquencies in the asset class for
Added during FY2018 is projected to moderate from previous various non-banking financial institutions.
years’ levels, partly on account of decline in crop yields While the Indian Meteorological Department (IMD) is yet to
following an uneven monsoon precipitation, the tractor come out with a forecast for the monsoon’s performance, as
industry’s volume growth has showed no signs of slowing per early estimates, the possibility of El Nino conditions
down, with favourable crop cycles, on the back of two developing in time to adversely impact the monsoon
consecutive near normal monsoons, leading to an precipitation remains low; if the forecast holds, a third
improvement in farm cash flows. Additionally, increased consecutive normal south-west monsoon augurs well for the
haulage demand from usage of tractors in construction farm community. ICRA expects the tractor industry growth to
activities, as investments in infrastructure creation picked moderate in FY2019 (growth in volumes of 6-7%), given the
up across country, coupled with various Government of high base attained in the current fiscal. As the profitability
India’s (GoI’s) support programmes, has supported demand of OEMs in the tractor industry remains linked to industry
to an extent. While there continues to exist variations in demand, the operating margins for the various manufacturers
growth across regions, a majority of the regions have are expected to remain at healthy levels, with benefits from
recorded a moderate to healthy growth in volumes, helping economies of scale on account of expanding volumes helping
the industry volumes touch a new peak (on pan India basis) offset the impact of an expected hardening in raw material
in the current fiscal. prices. In the absence of any significant capital expenditure
Even as an improvement in non-farm income through plans, the credit profile of the entities in the industry is also
deployment of tractors for commercial use is expected to expected to remain healthy.

PV Finance to Expand at 16-17% CAGR Over Next Five Years: ICRA

The overall passenger vehicle (PV) credit is expected to grow FOCs were faced with higher competitive pressure from
at 16-17% over the next five years and reach a portfolio size banks post demonetisation following strong deposit
of about Rs. 6.5 trillion by March 2022, from Rs. 3.1 trillion inflows into banks, and their growth moderated post
as on March 2017. As per an ICRA note, this expansion in December 2016. FOCs with their ability to raise fund at
credit will be driven by PV sales volume and realisation competitive rates, are however expected to remain
growth, changing customer preference (to higher-end competitive in the new PV financing segment and grow
vehicles) and some increase in finance penetration. Overall their retail PV portfolio at about 18-20% going forward,
bank PV credit grew at a CAGR of 18% over the period April vis-a-vis an estimated overall NBFC-PV credit growth of
2014 to March 2017, while NBFC credit expanded at 12% 10-12%.
CAGR. The share of banks in particular increased to 70% in FOCs also extend wholesale credit to the OEM dealers,
March 2017 from 65% in March 2014, they have been quite which accounted for about 28-29% of the total FOC
competitive in this segment by offering finer rates and thus loans. Asset quality in this segment was impacted on
garnering the prime borrower segments. account of the stress in a few large exposures. Ability
Within the NBFC space, Foreign OEM Captive (FOCs) to undertake recoveries in the wholesale book and
financiers, however, expanded at a higher pace of 35% improvement in dealer assessment process would be
CAGR during the above period and increased their share crucial from an asset quality perspective. At the same
by about 200bps in the overall PV credit. The sharp growth time, as their retail portfolio expands and seasons
in the past could partly be attributed to the low base. further, the asset quality in this segment could also
Says A M Karthik, AVP & Sector Head, Financial Sector witness some moderation from current levels; 90+ days
Ratings, ICRA, “FOCs expanded their share in the respective past due in retail PV loans of FOCs stood at about ~
OEM sales to about 15-25% in a 3-5 year period with access 2.0% in September 2017.
to funds at competitive rates and with operational support Access to funds at competitive rates and low leverage
from the OEM’s franchise.” supports the current profitability indicators of FOCs.

April 2018 40

OPINION

Scooters Drive Two-Wheelers Growth in FY 2018: ICRA

Motorcycles are back on double-digit growth track

The two-wheeler volumes in domestic market grew at a variants by major OEMs with engines displacement of ~160cc
healthy rate of 14.8% Y-o-Y during FY2018 – the highest growth segment offering higher power, all other sub-segments
since FY2011, with multiple factors influencing the growth reported growth during FY2018. Moreover, the higher
trends as the year progressed. The highlight of the growth displacement premium motorcycles continue to expand their
during the current year was a robust demand in the sccoters share in the domestic motorcycle pie and accounted for 7%
segment that outpaced the industry growth and also a strong of the total volumes in FY2018 from mere 2% in FY2014. This
recovery in rural demand, which reflected in a pick-up in trend is expected to continue with the premiumisation being
motorcycle volumes, especially at the entry level. driven by improvement in disposable incomes.
Anupama Arora, VP and Sector Head- Corporate ratings, ICRA, Even though the two major segments of the two-wheeler
said, “The year was marked by sharp fluctuations in the industry grew handsomely, the volumes of mopeds contracted
wholesale volumes, with multiple one-time events unfolding. by 3.5% during FY2018. This is a single product segment and
Channel-filling and inventory correction by OEMs to with shift of consumer demand towards lower displacement
replenish dealerships with BS-IV compliant stock post motorcycles that witnessed various refreshes, this segment
massive discounting in March 2017, supported wholesale suffered during the current fiscal.
volumes during the first two months of the fiscal. Overall for FY2018, the two-wheeler volume growth for
Subsequently, the growth slowed down in June 2017 as the domestic market surpassed ICRA’s expectations, riding on
dealers de-stocked to transition to the new tax regime, which demand recovery from rural households and healthy urban
was offset in subsequent quarter post-GST implementation. demand. The demand recovery from rural households drew
With the early arrival of festive season in the current fiscal, strength from improved farm sentiments as well as cash flows
there was a slight moderation in sales in October 2017; following two seasons of near normal monsoons and
however, the overall growth momentum in the fiscal continued resultant healthy crop output. This optimism exhibited by
to be maintained. Moreover, the growth rate during Nov- farm community is being complemented by Government’s
Mar’18 benefitted from the contracted base of previous fiscal.” increased focused on financial inclusion, increased
According to ICRA, as for the performance of various budgetary support towards investments in infrastructure,
segments, scooters reported positive demand trends especially irrigation, roads as well as housing and their ripple
throughout the year with 19.9% growth in volumes during effects on employment generation. Moreover, Government’s
FY2018, continuing to outpace the industry growth and gain vision to double farmer’s income by 2022 bode well for the
share in the overall domestic two-wheeler mix. The growth sentiments supported by expectations of higher Government
has been derived majorly from urban areas while rural and expenditure in FY2019 in the backdrop of this fiscal being
semi-urban areas have also witnessed increased acceptance the election year. In the near term, consumption demand from
of scooters with improved road quality, unisex appeal as rural sector is also driving support from an expectation of
well as growing women participation in work force. This is normal monsoon precipitation as indicated by weather
also supported by deepening product portfolios of the OEMs, forecasting agencies, even as spatial distribution can create
who have launched products targeting different customer disparity in demand trends.
segments. “Going forward, ICRA expects domestic two-wheeler volumes
For the motorcycle segment that had witnessed stable to to grow at 8-10% during FY2019, on an expanded base of
muted volume growth during FY2013-2017, FY2018 turned FY2018. In terms of segment wise growth trend, scooters to
out to be year characterised by secular growth across most continue to outpace the overall two-wheeler volume growth
sub segments with overall domestic sales growing by 13.7% in domestic market in FY2019. Motorcycles are expected to
Y-o-Y during FY2018, a double-digit growth for the segment register high single digit growth in FY2019 with a broad based
after a hiatus of five years. The growth has been driven notably volume recovery across various sub segments with Premium
by the 75-110cc sub-segment supported by general segment continuing to find favour. Additionally, the recovery
improvement in rural demand sentiment on the back of near in oil prices has resulted in higher demand from select
normal monsoon. international markets, which coupled with new markets
Except for the 125-150cc sub-segment, that witnessed some explored by OEMs would drive export growth in the current
demand transition to 150- 200 cc driven by new products/ fiscal,” added Anupama Arora.

41 April 2018

CONSUMER CASE STUDIES

National Consumer Disputes Redressal Commission, New Delhi

Rekha Gupta, Presiding Member

Pawan Kumar - Petitioner

Versus

Nissan Motor India Pvt Ltd & Ors - Respondents

Revision Petition No. 2276 of 2017 Decided on: 03.01.2018

(Against the Order dated 24.03.2017 in Appeal No. 95/2015 of the State Commission Jharkhand)

Consumer Protection Act, 1986 – Sections 15, 17, 19 and 21 – Automobile Manufacturing Defect – Complaint dismissed by
State Commission in appeal – Petitioner has admitted that he has not filed any documents which reflect report of any
mechanic that vehicle emits black smoke more than normal – He had obtained a certificate from Pollution Authority and
Pollution Authority had not raised any objection with regards to any kind of defects in vehicle including black smoke-
Petitioner has failed to place on record any job cards regarding free service given to him as also for visits for getting vehicle
repaired – He has also failed to place on record any expert opinion regarding alleged Manufacturing Defects in his vehicle
– Revision Petition Dismissed. (Paras 10 and 11)

Important Point

Allegation of Manufacturing Defect must be proved by evidence of Mechanic.

Order

1. Rekha Gupta, Presiding Member - The present Revision (ii) Rs.5,00,000 for mental harassment and loss of time
Petition has been filed against the judgment dated 24th and peace;
March 2017 of the Jharkhand State Consumer Disputes
Redressal Commission, Ranchi ('the State Commission') (iii) Interest at the rate of 18% per annum since the
in First Appeal No. 95 of 2015. date of payment till the date of refund; and

2. The brief facts of the case as per the Petitioner/ (iv) Cost of case.

Complainant was that the Petitioner purchased the 3. In spite of notice, Respondent No.5/ OP No. 5-the dealer
vehicle in question from Respondent No. 5/OP No.5, i.e., did not appear, however, the District Consumer Disputes
Nissan Dealer, Dhanbad, Jharkhand, on 03.7.2013. From Redressal Forum, Giridh ('the District Forum') while
the very beginning the said vehicle emitted 'Black smoke' declaring them ex parte held that no case was made
and never gave mileage of more than 12-13 kms per out against the dealer.
litre, whereas, the advertised mileage was 21.64 kms
per litre. The Petitioner made a complaint to the dealer 4. Respondent Nos. 1 to 4 denied the allegations. They
who advised that after the first service (after 1000 kms) further stated that the vehicle in question was duly
rectified by Respondent No. 5, the dealer on 02.09.2013
the said problem would be rectified. Accordingly, the and thereafter no problem was reported by the
Petitioner handed over the vehicle to the dealer in July
- August 2013. On 01.09.2013 and on 02.09.2013, but Petitioner and as such there was no cause of action to
file the complaint. There was no manufacturing defect
the dealer failed to rectify the defects. The Petitioner as alleged. The Petitioner had been using the vehicle
made several correspondence in this regard but nothing
was done. Hence, the Petitioner filed a consumer and it covered thousands of kms. The present complaint
has been filed for the obvious purpose of making a
complaint before the District Forum praying for the wrongful gain as he has not paid for repair of his car or
following reliefs:
for replacement of parts but made a demand for
(i) Rs.10,46,455 being the value of the car including Rs.10,46,455 plus Rs.5,00,000 with interest of 18% per
price, tax & insurance which may be kindly be annum.
ordered to be returned after taking back the
defective car; 5. The District Consumer Disputes Redressal Forum, Giridh

April 2018 42

CONSUMER CASE STUDIES

('the District Forum') vide its order dated 20.05.2015 performed the following work on the vehicle;
while allowing the complaint observed as under: 1. Injector calibration

"The Opposite Party Nos. 1 to 4-Nissan Motors India 2. ECM Black smoke update

Pvt Ltd and OP No. 5 are hereby directed to replace the 3. Air filter clean.
new Nissan Sunny XV Spl. D1 Car of similar description
free from any defect to the house of Complainant After every service the problem kept coming back.
This time, we rectified the black smoke complaint with
thRough OP No. 5 in lieu of motor car sold to the the above mentioned process."
Complainant within 60 days from the receipt of this
order. The said car lying in the garage of the Complainant
be taken back by Nissan Motors India Pvt Ltd, at their 12. There is no allegation in the Complaint Petition that
own expenses. While giving the delivery of the replaced after the dealer rectified the defect of Black smoke
motor car to the Complainant the amount of on 02.09.2013 any complaint was made by the
Rs.10,46,455 lying with OP No. 5 be adjusted towards Complainant till the filing of the complaint on
the price of new replaced motor vehicle. If Nissan 19.12.2013.

Motors India Pvt Ltd, fails to replace the new car to the It was argued that several complaints were made
Complainant within the given time, the amount of
Rs.10,46,455 shall carry interest at the rate of 18% per after 02.09.2013 but it appears that those were
made after filing of the complaint and therefore, are
annum from 04.07.2013 till the replacement of New not relevant for deciding this case.
Nissan Sunny Xl Spl. D1 Car.
13. Further, the said Exhibit 6 heavily relied on behalf of
The Opposite Party No. 1 to 5 are directed to adjust the the Complainant, does not show that there was any
amount of Rs.10,46,455 towards the price of the
replaced new car including accessories, road tax and complaint about the low mileage.
insurance premium to the Complainant. We make it
also clear here, that the price of the car given in 14. Thus, it has to be held that the Complainant could
replacement of the defective car supplied earlier will not prove that there was manufacturing defect in
be the same prevailing on 03.07.2013 and if the the vehicle or there was any deficiency in service on
Ppposite Parties feel any difficulty in replacement of the part of the manufacturer and the dealer. Further,
the said car with all amenities as stated above, then in in the present case, expert opinion was necessary for
that case they may make payment of Rs.10,46,455 to holding that there was manufacturing defect in the
vehicle.

the Complainant through account payee cheque. 15. After hearing the parties at length and carefully

Under the facts and circumstances no order as to perusing the records, we find no merit in this Appeal.
compensation and cost towards litigation. Accordingly, the Complaint Petition is dismissed, the
impugned order is set aside, and the Appeal is
In the result, the case of the Complainant is allowed allowed."
partly."
7. Hence, the present Revision Petition.
6. Aggrieved by the order of the District Forum, the
Respondent Nos. 1 to 3/ OP Nos. 1 to 3 filed an Appeal 8. I have heard the learned counsel for the Petitioner -
before the State Commission. The State Commission Sanjay Kumar. He contended that the vehicle was
while allowing the Appeal and dismissing the complaint emitting black smoke and hence, there was
observed as under: manufacturing defect which could not be rectified by
the OPs. He stated that the State Commission had failed
to appreciate the importance of the letter dated
"11. The Complainant and the District Forum has mainly 02.09.213 from Animesh Nissan, which reads as under:
relied on exhibit No. 6 which reads as follows :

Dear Sir, "Dear Sir,

From the date of delivery of the vehicle at customer From the date of delivery of the vehicle at Customer
premise, customer complained about black smoke. Premise, customer complained about black smoke.
Customer came to our workshop 3 to 4 times. Every Customer came to our workshop 3 to 4 times. Every time
time, he complained about same things. We he complained about same things. We performed the

43 April 2018

CONSUMER CASE STUDIES

following work on the vehicle; defect of black smoke was rectified by injector
1. Injector calibration calibration and cleaning of air filter as also ECM Black
2. ECM Black smoke update smoke update. As is seen from the cross examination
3. Air filter clean. of the Complainant, as on 28.11.2014, the vehicle had
After every service, the problem coming kept back. But already run 7000 kms. The Petitioner has admitted that
this time we rectified the black smoke complaint with the he has not filed any documents which reflect the report
above mentioned processes." of any mechanic that the vehicle emits black smoke
9. He further contended that the OPs had given an more than the normal. He had obtained a certificate
application for getting the vehicle examined by an from the Pollution Authority and the Pollution Authority
expert. However, the State Commission did not allow had not raised any objection with regard to any kind of
the same. He admitted that no such application had defects in the vehicle including the said 'black smoke'.
been given by the Petitioner/ Complainant to support Further, the Petitioner has failed to place on record any
his contention that the said vehicle had a job cards regarding the free service given to him and
manufacturing defect. also of the visits for getting the vehicle repaired. He
10. I have gone through the record. The complaint filed by has also failed to place on record any expert opinion
the Petitioner is very sketchy and vague and it does not regarding the alleged manufacturing defect in his
give details of any manufacturing defect in the vehicle vehicle.
except that it gives black smoke and mileage of about
13 kms per litre. Admittedly the vehicle was taken to 11. In view of the discussion above, I find no
the workshop only on two dates i.e., 01.09.2013 and jurisdictional error or material irregularity in the
02.09.2013. As per the letter dated 02.09.2013, the said impugned order which may call for interference in
exercise of powers under section 21 (b) of the
Consumer Protection Act, 1986. Revision Petition is
dismissed with the complaint

April 2018 44

COMPETITION LAW UPDATES

Competition Commission of India (CCI) to probe In addition, in the braking system market, the Commission
allegations against Honda Motorcycle and Scooter found two cartels operating. The first concerned the supply
India (HMSI) of hydraulic braking systems by TRW, Bosch and
Continental, while the second revolved around the supply
Following a complaint of electronic braking systems and involved Bosch and
from an Aurangabad- Continental. Companies received combined fines of €75
based dealer of HMSI million.
alleging tie-in Daimler AG and BMW AG plan to merge car-sharing
arrangements, resale operations
price maintenance and In a joint statement, the two luxury car companies have
discount control stated that they will form a 50-50 joint venture to include
mechanism, the CCI has Daimler’s Car2Go and BMW’s DriveNow businesses as well
decided to carry out a as services including smartphone apps for calling taxis,
detailed probe by noting locating parking spots and recharging electric autos.
that a prima facie case of Subject to approval by the relevant competition
contravention of Section 3 authorities, the merger would allow Daimler and BMW to
and 4 of the Competition share the risk of operating services such as car sharing,
G R Bhatia, Partner & Head, Act, 2002 is made out ride-hailing, parking, charging and multimodality.
Competition Law Practice Group, against the company. It will be seen whether the combination poses antitrust
issues or not depending on how the market is classified.
Luthra & Luthra Law Office Competition Commission of India plans study on taxi,
auto aggregators' market
The Relevant Market has been decided as market for The CCI has planned to conduct a study on surge pricing
manufacture and sale of scooters in India and it was along with other aspects related to the market for auto
noted by the Commission that the restrictions imposed and taxi aggregators in an attempt to persisting concerns
by HMSI for sale of oil, lubricants and batteries are over possible anti-competitive practices with respect to
unfair. tariffs charged, specifically, surge pricing. This refers to
price at a particular point of time when the demand is
Additionally, it was also noted that HMSI has imposed generally high compared to the availability of services.
prohibitions on its dealers from dealing in any manner CCI Chairman DK Sikri said that the regulator is looking to
with any competing product and has imposed territorial carry out a study on the market for cab booking apps in
restrictions on sales. This has an effect on intra-brand order to develop a better understanding of the market
competition and shows a prima facie contravention of and enhance its sectoral knowledge.
the provisions of the Competition Act, 2002. Uber-Grab deal may violate competition act:
Competition Commission of Singapore (CCS)
EC imposes penalty of € 76 million on spark plug The CCS has begun an investigation into Uber's deal to sell
manufacturers in cartel settlement its operations in Southeast Asia to rival ride-hailing firm
Grab. It has proposed interim measures that will require
The European Commission (EC) has imposed a combined Uber and Grab to maintain their pre-transaction
penalty of € 76 million on Bosch, Denso and NGK for independent pricing. Under the deal, Uber will take a
participating in a cartel concerning supply of spark plugs 27.5% stake in Grab, which is valued at around $6 billion,
to car manufacturers in the European Economic Area and Uber CEO Dara Khosrowshahi will join the Singapore-
(EEA) for nearly ten years. based company's board

Through bilateral contracts between Bosch and NGK,
and between Denso and NGK, the three companies
engaged in fixing of prices as well as the share of supplies
to customers. The Commission imposed fines of over €
45.8 million on Bosch and € 30.2 million on NGK. In
determining the fines, the EC took into account the
companies' sales generated in the EEA from the supply
of spark plugs to car manufacturers with production
facilities in the EEA.

45 April 2018

ATTENTION:MEMBERS

GoM on Transport Deliberates upon One Nation - One Tax & One Nation- One
Permit in Guwahati on April 19, 2018

Recommendation included uniform Road Tax structure & National Permits for Buses and Taxis
The Group of Ministers headed by Shri Yunus Khan, Minister for Transport, Rajasthan and comprising State Transport
Ministers constituted by the MoRTH recommended a uniform structure of road tax for vehicles across states: One
Nation- One Tax and One Nation- One Permit proposal on April 19, 2018. The meeting in Guwahati was inaugurated by
Assam Chief Minister Shri Sarbananda Sonowal.
The ministers observed that a uniform tax structure would put a check on people registering their vehicles in low tax
states and running them in other states. The measure it was felt would provide necessary relief to genuine cases
requiring transfer of vehicles. Deliberation by the ministers sought to find solutions to the various problems plaguing
the road transport sector to improve road safety and facilitate ease of transport.
The GoM has also recommended a national bus and taxi permit on lines of such permit for goods transport. Public
transport in the country is growing annually at a rate of just about 2 percent, as against a 20 per cent annual growth in
private transport. A national permit would give the much needed fillip to public transport and help reduce road
congestion and its attendant problems.
In order to promote alternate fuel for vehicles, the GoM has proposed liberalization of permit system for Electric
Vehicles (EVs). In addition, it has recommended raising the tax on diesel vehicles by 2% while lowering the tax on EVs.

MoRTH vide Notification RT-11028/12/2015-MVL dated April 18, 2018 has given exemption to all
public service vehicles from the provisions of rule 125H of the Central Motor Vehicles Rules,
1989 (of equipped with or fitted with vehicle location tracking device and one or more emergency
buttons) upto the 1st day of April, 2019.

MAURYA MOTORS LIMITED

Tata Authorised Dealer for Passenger & Commercial Vehicles

Plot No. C-1, Industrial Area
Patliputra

Patna - 800 013

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

April 2018 46

F A D A HIGHLIGHTS

F A D A Unveils Daily E-Newsletter -
F A D A Newsline

Dear All,
It gives us immense pleasure to share that F A D A has unveiled
its latest and brand-new product, F A D A Newsline!
F A D A Newsline, aims to cover the entire news gamut on
the Indian Automobile Industry picked from an exhaustive
set of sources. We will keep adding newer sources as and
when we come to know about it. At present, the Newsletter
covers select set of International News, Select Videos which
should be watched, select research reports from the names
like McKinsey, BCG et al, F A D A upcoming event detail(s)
and much more. The aim is to make F A D A Newsline a one
stop destination to know anything to everything about the
Indian Automobile Industry, of course, with international
flavours.
F A D A Newsline has to potential to showcase multiple
advertisements providing the kind of mileage an advertiser
will get on showcasing its brand on this digital platform as
the newsletter is going to approximately 15,000+ email ids
every day!
You will be happy to note that F A D A Newsline, from its
inception to execution, has been completely built in-house
and we are sure that you will appreciate this fact about the
product. I am doubly sure that your feedback will make F A D
A Newsline more robust, more enriching and a Mariana
Trench of knowledge for its readers!
Happy Reading!

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])

47 April 2018

NADA MUSINGS

The Future of Personal Vehicle Ownership

NADA commissioned a large-scale research project that included consumer focus groups and a national survey about the
future of personal transportation. And what we found cuts against much of the “conventional wisdom.”

Peter Welch, NADA President & CEO

It’s hard to attend an automotive conference these days
without hearing about the end of personal vehicle ownership.
According to so-called “conventional wisdom,” the
proliferation of ride-hailing options like Uber and Lyft
combined with autonomous vehicles (AVs) are destined to
align and make the prospect of owing your own vehicle too
inconvenient or too costly.
I get it. We’re living in exciting, changing times, and technology
is normalizing things today that for decades weren’t even on
anyone’s radar. We’re also living in an era that rewards bold
predictions far more than rationality.
But as we all know, rationality still drives behavior. So the
National Automobile Dealers Association (NADA) has been
probing to find out what people really think about AVs, ride-
hailing, car sharing and personal ownership. NADA
commissioned a large-scale research project that included
consumer focus groups and a national survey about the
future of personal transportation. And what we found cuts
against much of the “conventional wisdom.”

Here are the key findings: But put a 30-year-old millennial in the suburbs with kids,
and they start looking, thinking and acting just like the rest
Car owners have little, if any, interest in giving up their car of us. Actually, millennials are buying new cars at a higher
keys. rate today than 10 years ago. Last year, the percentage of
Only 11 per cent of car owners in our survey were interested new-vehicle sales to consumers under the age of 35 was 19.3
in giving up their personal vehicles to move exclusively percent vs. 16.6 percent in 2007.
toward a ride-hailing service—even under the assumption People won’t trade time for money.
that the service was widely accessible, safer and more According to the US Department of Transportation, the
affordable than human-operated vehicles. This was true average US household takes about 10 trips per day (stopping
among all demographics—age groups, geographic regions, at the grocery store on the way home from work counts as
and education and income levels. two trips). The survey found that the ride-hailing users on
Cars are convenient to own. average waited nine minutes for each Uber or Lyft ride. Do the
Silicon Valley and Wall Street have been pushing the false math—that’s a lot of waiting. And even if ride-hailing services
narrative that owning a car is a hassle—an expensive, save money, folks aren’t willing to trade their time for that
unnecessary purchase that folks would rather do away with. savings. Half of the people surveyed reported that they’d need
The survey showed the complete opposite. It found that only to save at least $50 per day to compensate for an extra hour
6.5 per cent of car owners viewed car ownership as a hassle. of waiting for ride-hailing services. Under the rosiest
Millennials aren’t much different. scenarios, autonomous taxis might lower transportation
Talk to anyone on the topic of millennials and you’ll hear costs—but nowhere near enough to compensate for the
something about how they are a virtually different species of additional cost and inconvenience of waiting.
consumer. But millennials in our survey were not that different Bottom line
from the rest of consumers. Only 19 per cent of them would People want the freedom, flexibility, convenience and control
give up car ownership for exclusive ridesharing. And most of that only vehicle ownership provides.
those were the youngest, most urban and mostly single subset.

April 2018 48

NADA MUSINGS

Fully 90 per cent of car owners surveyed said that, at every want both, not “either/or.” In the future, ride-hailing services
moment, their car provides them the freedom and flexibility will supplement personal vehicle ownership, not supplant
to go where they want, when they want. Respondents cited a it.
number of reasons—including the ability to make multiple This also means that the chief threat to personal vehicle
trips on an errand-run, take an impromptu trip to another ownership is not the marketplace. It’s the government. In
city or state, drive unexpectedly to an emergency room and February, Uber, Lyft, Zipcar and Didi Chuzing (China’s largest
have the ability to leave an event earlier or later than ride-hailing service) signed a self-serving statement of
planned—as key benefits of personal vehicle ownership. Such principles supporting a mandate that all AVs in urban areas
benefits would all disappear if they relied exclusively on be part of shared fleets—not personally owned. That’s not an
ride-hailing. action of the marketplace—it’s one that would require
The survey found that ride-hailing services provide some government intervention. If there’s a threat to personal vehicle
great benefits—especially in urban areas and in places where ownership, that’s it.
parking is an inconvenience. But if real consumers have Owning your own vehicle is as American as apple pie. And as
anything to say, the future of transportation will be built local dealerships that represent our customers as much as
upon the foundation of personally owned vehicles, whether our businesses, we need to be vigilant about protecting the
human operated or autonomous. Consumers will continue right of every American to retain the freedom, flexibility,
to purchase their own vehicles and use ride-hailing services convenience and control of owning their own vehicle and the
as a supplement whenever it’s more convenient. Consumers ability to drive it when and where they want.

Chinese Auto Tariff Concessions? US-based Auto Industry Could Benefit

China plans to lower tariffs on imported vehicles to avert a The business case for a vehicle export strategy would get a
potential trade war with the US could help bolster the US- boost from the shift in Chinese tariff policy, although it would
based auto industry. still be more cost effective to build vehicles in China to avoid
The stocks of GM, Ford, Fiat Chrysler and Tesla rose after overseas shipping costs.
China President Xi Jinping signaled that the country could Currently, there’s a 2.5% tariff on cars shipped from China to
lower trade barriers to imported vehicles and bolster the US and a 25% tariff on cars shipped from the US to China.
intellectual property rights. Lowering the Chinese tariff would allow automakers to sell
Chinese sales of US-made vehicles totaled about 266,657 in more foreign-made cars in the world's largest vehicle market.
2017, according to LMC Automotive, representing less than But most vehicles sold in China are built there. GM, Ford and
1% of the world's largest automotive market. other automakers have already established joint ventures
Xi's comments follow a back-and-forth escalation of tariff with Chinese automakers to manufacture vehicles there, as
threats with President Trump, who has bashed Chinese trade required by law.
policy as unfair. Any change to that structure could be a welcome development
It’s too early to say whether Xi's policy changes could bolster for US companies that must currently share 50% of their
American jobs at factories that assemble vehicles for profits with their Chinese automaker partners.
shipment overseas. To be sure, automakers have signed long-term deals with
The biggest winner could be German automakers that build Chinese automakers and are unlikely to sever those ties
luxury vehicles in the US for export to China, analysts said. anytime soon. It helps them to maintain local relationships.
That includes BMW and Mercedes-Benz maker Daimler, which The trade spat between China and the US has been like "a
already send vehicles from plants in the US South to China. game of chicken," said economist Charles Ballard, a professor
BMW shipped 106,971 vehicles from the US to China in 2017, at Michigan State University.
while Mercedes sent 71,198, according to LMC. “Often in a game of chicken, someone eventually changes course,
Ford Motor was the third largest US-to-China exporter with a and a fiery crash is averted,” he said. “It’s hard to predict how
total of 45,145 vehicles in 2017, according to LMC. Fiat this will turn out, especially since one of the players is President
Chrysler was fourth at 16,545 and Tesla was fifth at 14,779. Trump, who seems to thrive on unpredictability. But I am
Tesla makes all of its vehicles at its plant in California. encouraged by signs that we might be able to step back from the
brink, and avoid an all-out trade war.”

49 April 2018

The Turnaround

MVS Prasad
CEO & Founder

‘How a loss making corporate dealership was turned around retention and contribution were measured: business wise –
from a loss of Rs 165 crores to a profit of Rs. 80 Cr in a span of branch wise – activity wise – employee wise and product
6 years during my tenure as the CFO, culminating in a PBT of segment wise. After all, what is measured is monitored and
3% when I was the CEO & CFO’ what is monitored is improved.
This is the question that dealer principals and OEM Managers
ask me during my training sessions on ‘dealer profitability’. NET RETAINED Fig. 2: Performance management cycle
It would be worthwhile to enumerate the few enablers that INCOME
were put in place to enhance the profitability & productivity
of the business which had suffered huge losses year after year. The rupee that
SHIFT FROM PROFIT TO PROFITABILITY matters to a
The first thing we did was conversion of a ‘financial statement’ dealership is the
into a ‘performance mirror’. net retained
Given the varied aspects of a dealership business - multiple income and not
LOBs (Sales, Aftersales, Spares, Pre-Owned), locations, outlets, the turnover.
activities, product categories, customer segments and
employees, a single P&L used by dealerships today merely NRI was
serves as a newspaper report and conceals more than what calculated for
it reveals. This P&L is like a bottle containing a mix of different each line of
waters, a khichdi of good, bad and ugly. it is not possible to business i.e.
distinguish good water from bad water and treat bad water Sales new, Sales used, Service, Spares & Lubricants.
to make it good. If we want our CEO/vertical heads to enhance
profitability, they need to know: NRI Sales = Dealer Margin – Discounts/Commission +
• What is the problem? Finance/ Insurance/ Extended Warranty/ Accessories income
• Where is the problem” + OEM Incentive + Other income (Handling & RTO charges)
• Why is the problem?
• How to overcome the problem? NRI Aftersales = Labor margin + Lubes Margin + Spares Margin
Fig. 1: Dimensions per performance tracking We therefore created a + VAS Margin – Discounts + AMC income + Insurance renewal
income + Scrap/ Black oil/ Tyre/ Battery income + OEM &
performance mirror that Vendor incentives + Other income.
connects financial
outcomes with key COST EFFICIENCY
operational parameters
impacting profitability We stopped looking at costs in isolation and started focusing
to enable the managers on the cost efficiencies. Costs are bound to go up, be it rent,
to identify the triggers of salaries and other inflationary costs. What is critical is the
profitability and act to efficiency and not cost per se.
enhance profits. A
robust performance Increase in overheads by 18% is no concern at all. In fact, the cost
management system was efficiency has improved & profitability has increased by 3%.
established to tag, track, validate, analyze, review, act and
improve. Productivity, profitability, customer acquisition, Table: Overheads as a % of Net Retained Income

Financial efficiencies were tracked to identify the source of
the problem and fix it.

April 2018 50


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