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September 2018 issue of F A D A Journal

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Published by FADA Journal, 2018-10-03 01:06:17

F A D A Journal - September 2018

September 2018 issue of F A D A Journal

President’s Message

Auto Sector Goes Through a Short-Term Blip

At F A D A, it’s time for the new flag bearers to come in!

speakers who will surely make the event worth to
attend. I am sure that you will not want to miss out
on the mega event which F A D A is organising in
Nagpur.

By the time this issue of F A D A Journal reaches
you, I would have completed my second year as F
A D A President. This tenure of mine was another
action packed year for F A D A. While in my 1st
year, we tried to reach out to all OEMs personally,
during the 2nd year we aimed at reaching out to our
members by going to their State Capitals. This small
step of ours is already showing results as F A D A
Membership Cell has never been so busy as it was
during this year! To give you a sense of membership
addition during the last 12 years, we added 44%
during last two years of FY17-19 vis-à-vis 56% in
ten years between FY 08-17.

Dear Dealer Colleagues, One of the most arduous, yet fruitful efforts, has
Domestic passenger vehicle sales witnessed a been the recognition gained by F A D A as the apex
mixed trend in August with carmakers, barring a representative body in the automotive retail
few, either reporting decline in sales or little industry, in matters related to the Government.
growth, impacted by rising fuel rates, hike in F A D A keenly pursued issues, both at the policy
vehicle prices by some companies and possibly level and also in its implementation stage, when a
emanating from adverse impact of heavy rains in host of disruptive measures unleashed by the
many parts of the country and floods in Kerala. On Government, rocked the industry.
the other hand, while the commercial vehicle F A D A’s aim is to make the Federation every Auto
segment continued its growth momentum during Dealer ’s one stop destination for any concern
August 2018, the two-wheeler sales also saw little related to the Auto Retail Industry. To facilitate
rise in domestic sales, compared to August 2017. this, we organized ‘Vyapar Conference’ in many
As your are aware, F A D A is organising the 1st Auto F A D A State Chapters. The aim was to update the
Retail Conclave on 6th October 18 at Hotel Radisson dealers on the changes in the business dynamics
Blu in Nagpur on the theme Nation Building and thereby keep them prepared for the future
through Employment Creation. Shri Nitin Gadkari, disruptions in this ever-changing environment.
Hon’ble Minister of Transport, Highways & Shipping The F A D A Academy was reignited to prepare
and Shri Devendra Fadnavis, Hon’ble Chief Minister current and future dealer leadership to build front
of Maharashtra has kindly agreed to be our Chief end and back end processes, improve customer
Guest and Guest of Honour, respectively. The and technical operations and enhance financial
conference will be content rich with renowned results of each department of the dealership. Shri
Suresh Prabhu, Hon’ble Minister for Commerce &

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

President’s Message

Industry, was the Guest of Honour during the all quarters, this would not have been possible and
launch of F A D A Academy. F A D A has tied up with let me place on record my thankfulness to one and
Yes Bank and the Indian School of Management & all. A graphical representation has been prepared
Entrepreneurship (ISME) for developing the to showcase the same.
course structure and curriculum in skilling I hope that the above graph presents a good
automobile dealerships, their leadership & ground perspective of what F A D A has achieved during
operations alike. the last year and also gives a direction to its future
Automobile dealers provide jobs locally to people course. As I step down from the Presidency, it gives
all over the Country and hence promotes a more me immense satisfaction, that together as a team,
inclusive growth. It contributes immensely to we could make F A D A discernible as the most
Central and State exchequers by way of taxes and relevant body vis-à-vis the auto retail sector, in
drives the economy in terms of employment and the eyes of the policy makers, OEMs, Dealers and
revenue generation. This strength of the other industries allied to us. Our strength is the
community was leveraged by F A D A, to influence unity of our pack. Let us keep up this vibrancy in
policy formulation concerning the sector at the our work and F A D A can surely scale greater
Government level, so as to make it more conducive heights in the days to come. I once again thank all
to the growth of the sector. But a lot more can be those who associated with me in my endeavours
achieved in the years to come, provided more and and wish the new team all success, along with my
more dealers come forward, unite with us and promise on continued support in every way
partake in our activities. possible.

With the completion of my second term, it is now With best wishes.
appropriate to take stock of the activities of the last Yours sincerely
year, under my Presidency. Though a lot of ground
remains to be covered, it gives me a sense of John K Paul
fulfilment and pride in what has been achieved so
far. Had it not been for the unstinted support from

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



Industry Track

Auto Market Remains Subdued in August 2018

Auto Sales in the month of August 2018 was slow. Passenger In the Mini segment, the Alto and Wagon R together notched
vehicles sale during the month was in negative trajectory. 35,895 units, up 1.3 per cent over year-ago sales of 35,428
However, Commercial Vehicle, Three-Wheeler and Two- units; in the Compact segment - Swift, Dzire, Ignis, Celerio
Wheeler sale kept up the momentum recording positive and Baleno, the collective sale of these five models stood at
growth. Total industry sales during the month stood at 71,364 units against 74, 012 units sold in Aug’17 was down
2,793,288 units against 2,635,447 units during the same by 3.6 per cent. In the Mid-Size segments Ciaz sold 7,002
month last year, registering growth of 5.99 per cent. units in the domestic market gaining by 8.4 per cent y-o-y.
Passenger vehicles sale were down for the second consecutive Hyundai Motor India Ltd (HMIL), the country’s second largest
month during the year due to severe floods in Kerala and carmaker reported 2.8 per cent slide in its domestic sales at
high base in the previous year. Sales were down by 2.46 per 45,801 units and 25.8 per cent y-o-y growth in exports at
cent at 287,186 units in the domestic market against 294,416 16,111 units during August 2018.
units sold in August 2017. In the international market, the Commenting on the August sales, Vikas Jain, National Sales
segment sold 60,811 units registering growth of 7.13 per cent. Head, HMIL, said, “Hyundai continues to register strong
The total passenger vehicle sales during the month stood at growth in export markets with 25.8% and a total volume
347,997 units against 351,182 units, decrease by 0.91 per of 61,912 units and overall 3.4% on the strong performance
cent. of GRAND i10, new ELITE i20 and New 2018 CRETA - Each
Two-Wheeler sales remained muted during the month due to continuing to cross over 10,000 sales mark consistently.”
high base effect, weak demand and adverse policy issues in UV major, Mahindra & Mahindra registered a growth of 2.1
West Bengal. In the domestic market, scooter sales were down per cent in domestic sales of its Cars, UVs and Vans, selling
by 0.6% at 669,416 units and mopeds were down by 13.47 19,737 units in August 2018 as against 19,325 units a year
per cent at 70,883 units. However, motorcycles showed a earlier. The company’s total sales during the month stood at
decent growth of 6.18 per cent at 1,206,512 units. In the 20, 544 units climbing up by 3.5 per cent from 19,858 units
international market 288,880 units of 2-W were sold in August 2017. Export by M&M was on high growth trajectory
recording a growth of 22.15%. shooting up by 51.4 per cent y-o-y to 807 units during the
Commercial Vehicle sales accrued double digit growth at month.
29.56 per cent selling 84,668 units in the domestic market Commenting on the monthly performance, Rajan Wadhera,
and by 27.18 per cent Y-o-Y in the international market selling President, Automotive Sector, M&M, said, “Our CV portfolio
9,274 units. Infrastructure development and improved including Trucks and Buses continue to post robust growth.
economic activity provided the thrust to medium and heavy With the launch of the Marazzo scheduled next week, we
vehicles in the domestic market which grew by 28.54 per cent hope to see buoyancy in our passenger vehicle numbers. With
to 34,072 units and light commercial vehicle sales increased the upcoming festive season, we do expect a much improved
30.25 per cent y-o-y to 50,596 units during the month. traction for passenger and commercial vehicles alike”.
Three-Wheeler sales continued in positive terrain mainly due Tata Motors’ Passenger Vehicles domestic sales in August
to permits released in Maharashtra, Karnataka, Andhra 2018 continued its growth trend at 20,323 units compared to
Pradesh and Delhi. In the domestic market, sales vroomed to 16,261 units, higher by 25% over last year. The Passenger Car
22.83 per cent selling 63, 199 units during the month and segment registered a growth of 4.9 per cent, while the UV
exporting 51,510 units, increase of 61.82 per cent y-o-y. segment grew by 122.2 per cent but Vans de-grew by 0.9 per
Car market leader Maruti Suzuki India Ltd (MSIL) sold a total cent y-o-y. Cumulative sales of PV in the domestic market for
of 156,336 units in August 2018. This includes 145,895 units the fiscal (Apr-Aug’18) grew by 38 per cent, at 88,436 units
in domestic market and 10,441 units of exports. The Company compared to 64,131 units for the same period, last fiscal.
had sold a total of 162,846 units in August 2017. The The company’s sale from export of PVs in August 2018 were
company recorded a 3.6 per cent decline in its domestic sales at an impressive 290 units compared to 98 units last year, a
volume that stood at 145,895 units in August 2018. growth of whopping 195.9 per cent.
Other than the entry-level segment of the Alto and Wagon R Honda Cars India Ltd (HSCI) reflected the subdued consumer
and the new Ciaz, sales were down in all its other segments, sentiment with sales declining by 2 per cent to 17,020 units
particularly UVs whose sale was down by 16.2 per cent during the month of August 2018 from 17, 365 units in August

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

Industry Track

2017. HCIL also exported a total of 597 units in August 2018. Bajaj Auto sold 218,437 two-wheelers in Indian market in
The company has been maintaining strong sales momentum August 2018, which was a gain of 27.2 per cent than the
in the current fiscal year and had sold 79,599 units during corresponding sales figure of 171,664 units for August 2017.
April – Aug 2018 with a cumulative growth of over 9% as Bajaj Auto’s exports also saw a 28.8 per cent positive traction
against 73,012 units in the corresponding period April – at 144,486 units during the month.
August 2017. TVS Motor also recorded marginal growth with its domestic
Rajesh Goel, SVP and Director, Mktg & Sales, HCIL, said, “There sale of two wheelers growing y-o-y by 1.7 per cent selling
was an impact of Kerala floods and heavy rains in many 275,195 units in August 2018.
parts of the country combined with GST related high base Honda Motorcycles and Scooters India (HMSI) posting a
effect of August 2017. We hope to recover quickly and keep contraction of 1.5 per cent in its domestic sales at 577,249
growing strongly with rollout of attractive offers.” units in August 2018 against 586,237 units sold in the same
Toyota Kirloskar Motor (TKM) continued to grow, thanks to month a year ago. Exports at 37,227 units were up by 3.4 per
the hefty contribution of Innova Crysta and Fortuner, clocking cent during the month.
a growth of 17.6 per cent in its domestic sales during the Suzuki Motorcycle India was the other two-wheeler player to
month of August 2018. The company sold a total of 14,638 have bucked the trend with a healthy growth of 30.8 per cent
units during August 2018 as compared to 13,052 units in the in domestic sales at 62,446 units. However the company’s
corresponding month last year. export fell by 20.7 per cent at 7,621 units.
“We have registered strong demand with cumulative sales of Royal Enfield also headed north, by selling 68,014 units and
over 52,000 units from January to August 18 period with a gaining marginally by 1.7 per cent y-o-y.
growth of 13% as compared to same period previous year. Mahindra & Mahindra in the commercial vehicles segment
We thank our customer for their strong support and trust in sold 20,326 vehicles in August 2018, registering a 24.7 per
the Innova brand.” said N. Raja, Deputy MD, TKM. cent growth. In the Medium and Heavy Commercial Vehicles
Ford India’s domestic wholesales in August rose 3.4 per cent segment, M&M sold 1,206 vehicles for the month, a
to 8,042 vehicles as against 7,777 units in the same month significant growth of 113.1 per cent and 19,120 LCVs during
last year. Exports grew to 12,606 vehicles compared the month, gaining by 21.5 per cent. M&M exported a total
to 7,963 units in August 2017. of 2,951 vehicles in August 2018, a growth of 14.3 per cent
Renault India and Nissan India the other players in this segment, YoY.
registered a negative growth rate of 31.6 per cent at 6,557 Domestic sales of Tata Commercial vehicles in August 2018
units against 9,585 units sold in August 2017 and 41.3 per were 37,956 units, up 28 per cent over 29,645 units in August
cent at 485 units against 826 units sold in the corresponding 2017. While the company’s LCV sales numbering 21,442 units
month last year respectively in the domestic market. grew by 35.5 per cent, M&HCV sales of 16,514 units saw a
Keeping up the momentum of strong performance, Hero growth of 19.5 per cent y-o-y during the month.
MotoCorp, the world’s largest selling two-wheeler Ashok Leyland sales tally ensured a decent 39.3 per cent
manufacturer, reported yet another month of strong sales. growth in domestic sales, which stood at 16,628 units in
Riding on sustained demand for its range of motorcycles and August 2018. But the company’s exports were in negative
scooters, Hero MotoCorp sold 685,047 units in August 2018. territory, plummeting by 54.8 per cent to 758 units during the
The Company had sold 678,797 units of two-wheelers in the month.
corresponding month of the previous fiscal. VECV Eicher sales, both in domestic & international markets,
Hero MotoCorp sold a record 3,469,661 units of two-wheelers were positive. In the domestic market, the sales were up by
in the first five months (Apr-Aug’18) of FY’19, thereby clocking 26.8 per cent at 4,843 units against 3,818 units sold in August
a growth of 10% over the corresponding period of the previous 2017; and on export front, the company sold 1,105 units
fiscal, when the Company had sold 3,141,551 units. which was a gain of 57.2 per cent y-o-y.
In the domestic market, Hero MotoCorp sold 663,040 units India’s Industrial Production rose by 6.6 per cent from a year
in August 2018 against 661,490 units sold in August 2017 earlier in July 2018 exeeding the market expectations. With
gaining marginally by 0.2 per cent. Company however, gained good monsoon, strong underlying demand drivers, new
a decent 27.2 per cent growth in exports, selling 22,007 units launches and upcoming festive season, good traction is
during the month. expected in auto market.

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

India Economics

Headline Inflation at 10-Month
Low in August

• India's Consumer Price Index (CPI) inflation eased to a
10-month low of 3.7% in August 2018 from 4.2% in the
previous month. This was in line with market consensus.

• Index of Industrial Production (IIP) rose by 6.6% YoY in
July 2018, higher than market expectations of 6.2% - 6.5%,
on account of a healthy growth in the manufacturing also dipped slightly, touching a five-month low of 5.7%
sector and a surge in the consumer durable output. in the month from 5.8% in July. Inflation in the ‘fuel and
light’ group rose to a five-year high of 8.5% from 8% in
the previous month.
• The RBI had projected inflation at 4.6% in 2QFY19 and
4.8% in 2HFY19, implying a full-year estimate of ~4.8%
for FY19. Lower-than-expected inflation and growth don’t • Further, refinement of CPI items shows that inflation in
suggest the need for a rate hike in the October policy, ‘core services’ rose to a 38-month high of 5.7% in August
however, the recent rout in the INR may prompt the RBI to 2018 from 5.6% in the preceding month. Inflation in this
hike rates. segment has risen by ~200bp since the beginning of 2018.
Inflation in housing eased sharply to 7.6% in August
after coming in at over 8% during the last eight months,
Retail inflation at 10-month low in August 2018 while inflation in goods eased to 2.9% from 3.4% in July

• CPI inflation eases to 3.7% in August 2018: CPI-based 2018.
retail inflation eased to a 10-month low of 3.7% YoY in
August 2018 from 4.2% in the previous month. • The RBI had projected inflation at 4.6% for 2QFY19 and
4.8% for 2HFY19, implying a full-year inflation of ~4.8%
• Core inflation (all items excluding ‘food and beverages’ for FY19. Lower-than-expected inflation and growth don’t
and ‘fuel and light’) eased marginally to 6% in August
2018 from 6.1% in the preceding month. Core-core suggest the need for a rate hike in the October policy;
however, the recent rout in the INR may prompt the RBI to
inflation (excluding petrol/diesel from core inflation), hike rates.

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

India Economics

IIP rises by 6.6% in July 2018 witnessed a YoY expansion in their output in July 2018.
Only 8% of the manufacturing sector (by weight)
• Index of Industrial Production (IIP) growth eased slightly witnessed a YoY decline in output – the lowest in 26
to 6.6% in July 2018 from 6.9% in June but remained months. Output of beverages, tobacco products, coke
healthy compared to an average of 5.8% during the first and refined products, fabricated metal products,
six months of 2018. Like in the previous month, IIP growth computer, electronic and optical products, motor
in July was also at least partly supported by a favorable vehicles, transport equipment and furniture posted a
base; IIP had risen by just 1% YoY in July 2017. double-digit growth in the month. Growth in mining
activity declined to a four-month low of 3.7% from 6.6%
• Growth in manufacturing output picked up to a five- in June 2018, while growth in electricity generation eased
month high of 7% YoY in July 2018 from 6.7% in June and slightly to 6.7% in the month.
an average of 6.3% in the last six months. As many as 20
of the 23 industries within the manufacturing sector

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])

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

Goods & Service Tax

Legal Conoundrum of Restriction on Availment of Transitional Credit Continues

Monish Panda, Advocate and Rishabh Sawansukha, Founder GSTStreet

With the advent of GST, the concept of Sale and Manufacture i) Section 140(3)(iv) takes away the vested rights of first
has been replaced with Supply of goods. In the earlier regime stage dealers,
a manufacturer at the time of removal of goods paid excise
duty for the event of manufacture, and VAT (for local sales) ii) there is no reasoning/ justification for imposing the
for the event of sale. The recipient of good was entitled to restriction retrospectively.
avail credit of Excise duty and VAT respectively and if further
used for manufacture were entitled to avail Cenvat of the Whereas, the Bombay HC in JCB India Ltd vs. Union of India,
Excise Duty and Credit of VAT, which were utilized for offsetting has upheld the constitutional validity of Section 140(3)(iv).
their output tax liability of Central Excise Duty and VAT, In our considered view, the Judgment of Bombay HC did not
respectively. Similarly, a First Stage dealer was also entitled consider the fact that Section 140(3)(iv) of CGST takes away
to pass on the Cenvat Credit to the subsequent buyer. If the the vested right accrued to an assessee as on 30.06.2017 by
recipient was a dealer they were entitled to avail Credit of imposing restriction retrospectively without any rationale.
VAT and on further sale of the product can utilize such credit Further, the Bombay HC has solely relied on the objects and
to offset their VAT liability. purpose of GST. Despite the fact that the price paid by the
Under GST, a higher rate of Tax has to be discharged by the dealers inclusive of excise duty and VAT for finished goods
Automobile dealers , which in many cases are equivalent to was more under the earlier indirect tax regime, the Bombay
Excise duty plus VAT being levied in the earlier regime. HC has held that restriction imposed by virtue of Section
Therefore, rationality demands that such dealers should be 140(3)(iv) does not violate Article 14 and 19(1)(g). The Bombay
permitted to avail ITC of the Excise duty element of finished High Court also did not consider that Chapter XX of the CGST
products and inputs, which are lying in stock on the date of Act recognizes that an assesse under the GST regime has the
transition to the new regime, to offset the higher rate of Tax right to avail and utilize Cenvat Credit of Excise duty paid on
they are liable to pay on supply of same goods. goods lying in stock on the date of transition to GST regime.
The Legislature seems to have considered this situation and Having recognized such right, the Legislature could not
has allowed transition of credit from the earlier regime to artificially curtail the right to avail credit by imposing a time
the new regime, under Chapter XX of the CGST Act. However, limit, where the Industry practice demand storing parts over
Section 140(3)(iv) of the CGST Act, imposes an onerous one year.
restriction on availment of Credit of goods lying in stock on While, the Gujarat High Court has considered the Bombay
the date of transition to the new regime. The said provision High Court judgment and has taken a different view. The
restricts availment of transitional credit on only such goods Gujarat High Court has held that the retrospective application
for which duty paying documents were issued twelve months of Section 140(3)(iv) takes away the vested right of the
preceding the introduction of GST. assessee and that there is no justification for applying the
In other words if any dealer has stock of goods which precedes provision retrospectively.
more than one year before introduction of GST, they will not Though, the decision of Gujarat High Court is from the
only have to discharge a higher rate of Tax for supply of such perspective of a first stage dealer, unlike the decision of
goods, but are also being denuded from availing and utilizing Bombay High Court which covers all the dealers, the rationale
credit of Excise duty paid on such goods to offset the higher of the decision of Gujarat High Court will also be applicable
rate of GST. The legislature, seems to have overlooked that to other similarly placed dealers.
various businesses have a much longer cycle (more than one The judgment of the Bombay High Court has already been
year) of goods lying in stock before they are finally sold. challenged in Supreme Court by some of the dealers and in
Some of the dealers have challenged the validity of such all likelihood, the Central Government may also challenge
restriction before different High Courts. the judgment of Gujarat High Court before the Supreme Court
Recently, the Gujarat High Court in the case of Filco Trade and the issue on restriction of availment of Transitional Credit
Centre Pvt Ltd vs. Union of India has struck down Section will be finally settled by Supreme Court. We expect that
140(3)(iv) of CGST by holding that; genuine hardship of Traders will certainly be taken care of
as the new law evolves.

Disclaimer: The views expressed in this article are those of the Authors and do not necessarily represent or reflect the
views of F A D A. For any clarification, write to [email protected]

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



Attention: Members

Enhancement of Capital Sum Insured in Compulsory Personal
Accident Cover for Owner-Driver under Motor Insurance Policies

Reference: IRDA Circular dated 20 September 2018 and Ref. No:IRDAI/NL/CIR/MOTP/158/09/2018
1. General Regulation (`GR`)-36 of India Motor Tariff(`IMT`), 2002 mandates General Insurance Companies carrying on

motor insurance business to provide Compulsory Personal Accident (CPA) Cover for Owner-Driver under both Liability
Only and Package policies. The owner of Insured vehicle holding an `effective` driving license is termed as Owner-
Driver for the purposes of this section. The Cover is provided to the Owner-Driver whilst driving the vehicle including
mounting into/ dismounting from or traveling in the insured vehicle as a co-driver.
2. Currently, the Capital Sum Insured (CSI) under this section for Motorised Two Wheelers and Private Cars/Commercial
vehicles is Rs. 1,00,000/- and Rs. 2,00,000/- respectively. However, a few General Insurers have been offering Add on
covers under Package policies with higher CSI over and above the stipulated CSI, on payment of additional premium at
the option of the Insured. The General Insurance Industry, through its Council, had also taken up the increase for
higher CSI under CPA Cover for Owner-Driver in July, 2017 for consideration of IRDAI.
3. In the meantime, the Hon’ble High Court of Judicature at Madras has, vide its judgement dated 26th October, 2017 in
the matter of Civil Miscellaneous Appeal No. 1428 of 2017 (United India Insurance Co Ltd Vs R. Rekha & Ors), issued
directions to IRDAI which reads as under.
“Enhance the Compulsory Personal Accident Cover from the existing Rs.1,00,000/- to at least not less than Rs.15,00,000/
- so that the amount of Rs.15,00,000/- will add to some succor or solace to the victims of road accidents, who are the
owner of the vehicle, who may incidentally sustain bodily injury or death. Further, an option can be given to the
insured/owner of the vehicle to pay higher premium amount to get enhanced compensation over and above Rs.15,00,000/
- in case the owner of vehicle so desires to such enhanced compensation in the event of any untoward motor accident
which may result in bodily injury or death. ``
4. In accordance with the above directions of the Hon’ble High Court of Judicature at Madras, the Authority, in exercise of
the powers conferred by Section 14 (2) (i) of the IRDA Act 1999 and in consultation with the stakeholders, hereby issues
the following modifications to General Regulation (GR) -36 of India Motor Tariff,2002 on Compulsory Personal Accident
Cover for Owner-Driver.
i ) All General Insurers carrying on motor insurance business shall provide CPA Cover for Owner-Driver under Liability

Only, under Section III of Package Policies to all classes of vehicles and Bundled Covers wherever applicable.
i i ) A minimum Capital Sum Insured (CSI) of Rs.15,00,000/-shall be provided under CPA Cover for Owner-Driver under

Liability Only, under Section III of Package Policies to all classes of vehicles and Bundled Covers wherever
applicable at the premium rate of Rs. 750/- per annum for annual policy. This rate will be valid until further notice.
i i i ) A higher CSI may be provided over and above Rs.15,00,000/-through Optional Covers under Liability Only and under
Section III of Package Policies/ Bundled Covers on payment of additional premium at the option of the Insured.
iv) In view of the above changes, the current Add on covers offering enhanced CPA Cover for Owner-Driver under
Section III of Package Policies and Bundled Covers up to CSI of Rs.15,00,000/-shall stand withdrawn. However,
Insurers willing to offer CSI over and above Rs.15,00,000/- may revise/file Add on cover under Liability only,
Package Policies and Bundled Covers. It is suggested the higher CSI in such Add on cover may be in multiples of Rs.
1,00,000/-. or Rs. 5,00,000/-.
v) As regards premium payable for CPA cover under long term motor policies, insurers may price them in line with
their current approach for pricing. Should the Authority find the pricing approach in variance from their general
pricing philosophy/approach and not in line with actuarial principles, suitable direction may be issued by the
Authority. Insurers may start issuing such covers effective from the date of receipt of this circular even while
ensuring that the filing for these is done under File and Use Guidelines on or before 25th October, 2018.
vii) All other extant provisions applicable for Motor Third Party Insurance shall continue to apply.
This Circular shall come into effect immediately. Please acknowledge this circular and confirm having noted its contents.
This is issued with the approval of the competent authority.

(Yegnapriya Bharath)
Chief General Manager (Non-Life)
CC: The Secretary General, General Insurance Council, Mumbai

14 F A D A Journal September 2018 | fada.in



Insight

Personality of Auto Dealerships Jayant Chandra, PwC

Personality and Life cycle of business and highly competitive market, Dealerships must focus on
The birth of an automobile dealership business is usually a the evolution of their business fundamentals rather than
culmination of guidelines set by an OEM, coupled with optimize their operations.
ideologies of a maverick entrepreneur. To set up operations Failure to effectively evolve this business ideology is when
of a dealership in today’s highly competitive scenario the the business model starts to become redundant. Therefore, it
entrepreneur and the guiding company both are highly becomes imperative for a business model to be progressive.
involved to develop the right fundamentals for a business. This inefficiency of the business model to cope with the
If we track the life cycle of a dealership, both the fundamental changing market scenario often leads to a mindset where the
ideologies and the brand led guidance, change as per the business owner considers the investment done as a sunk
micro & macro market dynamics. Any change in the cost and now expects a monthly minimum quantified amount
fundamental ideology of a business is difficult and has a from the business which Is often considered as a flat business
deep impact on the business operations. Given the dynamic model.
nature of the business, the intensity and clarity of thought in This mindset of a fixed monthly bottom line leads to higher
re-formulatingthefundamentalsofbusinessmay becompromised. opportunity losses and runs a high risk of redundancy.
Tracking the life cycle journey of an automobile dealership At this stage the entrepreneur has two apprehensions which
can help redefine these fundamentals which can make or are the widening of the gap between expected gains from
break the long term sustainability of the business. business and operating profits and the accumulating
Every business has a breakeven point. To reach to a breakeven opportunity losses. This stage usually leads to liquidation
point, efforts are higher & every small aspect of business is of dealership operations.
critically monitored. However, once it is reached, To avoid such a situation and prolong the lifecycle of
fundamentals of business goes through a gradual change. It business, it is important to set new breakeven point (B) which
becomes more inclined towards yielding results in the same will start the process of re-discovery where the dealership
effort which in most of cases reduces as well. management will go back to the drawing board, re-visit their
To understand the reason for this reduced effectiveness of journey and start the evolution process. The moment at which
effort, we must delve into the modifications which have been this paradigm shift happens at a dealership life cycle is the
made over the course of time to the fundamental ideology Point of Inflection (POI).
and purpose of the business. How to define new break even point?
Dealerships at this stage often fall into the ‘Sustainability Buying a car is regarded as the second biggest expenditure
Trap’ where every change being done to the core fundamentals made by an individual after real estate. This High Ticket - B2C
of business is to optimize and increase the operational nature of the product makes the dealership business unique
profitability of business. While this focus on sustainability compared to other retail outlets.
of business may be relevant a decade ago, in today's dynamic

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

Insight

Often questions are raised on the expected return on The best case scenario is the Open Self quadrant where the
investment on running a dealership when there is generation core fundamentals are established and business stakeholders
change in the managing entrepreneur or in case of dwindling are apprised of the same. It’s the effective integration of
returns in the entrepreneurs business portfolio. external and internal fundamentals which forms a basis of a
While there are industry benchmarks & margin calculations successful ongoing strategy.
which can be done to arrive at a quantifiable return on The downsides to being in any quadrant other than Open
investment, the operational challenges of running such a Self may not be apparent in the immediate scheme of things,
complex business make reviewing of actual profits a however if we analyze the industry using a top down
retrospective activity. Since the business is highly capital approach, the picture becomes clear. Currently,
intensive and each setup has its own unique characteristics automobile industry players are competing in an
and challenges, the benchmark should be defined keeping in environment where customer demand is constantly
mind three aspects, the fundamental purpose of the business changing and OEMs are modifying their production lines
setup, the prevailing condition of the operation including to cater to these demands.
understanding on resource optimization and the futuristic Dealerships who consider themselves in the Blind Self
outlook where you would like to see your business heading. quadrant need to open up to feedback. This feedback may be
Each sub profit cetre of the business which is adding revenue biased coming from employees or the manufacturer. It is
or contributing to overall growth should be well analysed to important for the management to step up and be vulnerable
set a fundamental of a new life cycle. Decision of formulating to negative perceptions from unbiased sources which may
this new benchmark (B) can be based on multiple ideologies be customers, third party business partners or co-dealers.
and factors; One key aspect which cannot be missed is to Dealerships who consider themselves in the Unknown Self
study the personality of your business. quadrant have hit a rocky patch and must go back to the
Markets have become dynamic and automobile sector is drawing board and start a process of Re-discovery. Re-
evolving because of regulations becoming more stringent and formulating and re-visiting of fundamentals may be required
manufacturers becoming aspirational. “Reach” to address along with a fresh management approach to the business.
varied target audience through a varied product range is the Hidden self quadrant dealerships are aware of their
new fundamental to make portfolio stronger. In such a fundamentals and have their core competencies in check.
scenario, it’s the personality of business which should be Such dealerships need to work on self-disclosure which
well defined and integrated with the product differentiation involves letting stakeholders know the fundamentals and
strategy which will form a new way of life. ideologies of their business.
How to define personality of business? How do we know what we don’t know ?
Over the years, in our lifecycle we build a personality on the If the person assessing the personality of a dealership is
basis of our actions/reactions related to different situations. actively involved in Dealership operations, it is highly
Similarly, dealerships also build a personality which is likely that the self-assessment process will suffer from
carried through out the journey and is translated to stake tunnel vision and the resulting decisions will not be
holders dependent on internal & external fundamentals. optimal.
Internal fundamentals are based on processes, manpower, This is where third party assessment and customer perception
ideologies & long term strategy whereas external comes into play and the image projected to customers
fundamentals talks about customers and their experiences. becomes important. Since a car purchase is high involvement
In a competitive scenario when companies are diversifying activity and products with dealers are bound to cross over to
into different segments, in turn addressing larger target various customer segments, it becomes critical to build the
audience, it is important to have diversified personality of right perception in the minds of customers.
business. Limiting to a specific personality trait will always It might seem trivial to consciously work upon the identity of
limit horizon leading to a possible loss of an opportunity. a dealership, however given the highly competitive times to
To understand type of personality of a business, we can take come it might just be something fatal to ignore.
reference from a tool which is know as JOHARI window. It’s a At a stage where customers, products and the market – all
correlation of what the business can offer, the ideology, are evolving; it only beckons for every dealership to listen to
objectivity & reason for existence, to what is getting their customers and evolve.
communicated to my end customers?

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



Dealership Profitability

It’s Time for a New Way to Sell Cars

The Boston Consulting Group

IMAGINE picking out a car from a vending machine and using sources to new forms of guidance and recommendations,
your phone to pay for it. including social media influencers. When they are ready to
Such a car shopping experience may sound futuristic, but it buy – whether it’s dinner, or a vacation they expect service
already exists. Since Carvana built its first used car “vending that make shopping convenient and first, owing to their
machine” in 2015, the phoenix-based company has opened interactions with e-commerce giants such as Amazon and
13 of the glass-enclosed structures which look like parking Alibaba. Consumers’ twin expectations of efficient service
garages and can hold up to 30 vehicles. Drivers choose the and instant gratification are now spilling over into their views
car they want from the company’s website and go to the about buying bigger-ticket items, including cars.
appropriate physical location to pick it up. In 2017, a In particular, changing sentiments are reshaping how
Singapore luxury-car dealer opened what it claims is the consumers spend the time they devote to car shopping .Gone
world’s tallest auto vending machine, a 15-storey tower that are the days of browsing through classified ads to identify
displays up to 60 used BMWs and Bentleys. Those services available options or making multiple trips to a dealer’s lot
are limited to used cars, but Chinese e-commerce giant to look at vehicles there. In a recent BCG survey of 3,000 car
Alibaba has begun opening technology-based kiosks to sell shopper in various parts of the world, we found that the vast
new vehicles. majority (95%) spend more than four hours doing research
Everything about cars is changing, from how companies online before they visit a car dealer. (See Exhibit 1). We also
design and build them to who owns them to who drives them. found that four out of five buyers jump between browsing for
As the preceding examples show, how companies sell cars is information online and visiting dealers or other auto sellers.
changing too. As more consumers shop online and find it Another change is that they don’t visit dealers as often, a
natural to buy online dealers are experimenting with sign of dealers’ diminished impact. Over the past decade or
alternatives to traditional sales, including near-online-only so total dealer visit per sale have dropped from about four to
and direct sales. 1.4.
The stakes are high. Automakers that take the wrong steps-or Shifting preferences are also leading consumers to consider
cling to the status quo-risk losing a large portion of their alternative methods of purchasing and paying for car. In Asia,
revenue and profits, expand. If they aren’t already doing so for example, approximately 40% of respondents to our survey
automakers must adopt bold
measures to ensure that they
and their dealer networks are
well positioned to accommodate
future auto trends, regardless of
how events play out. This entails
making existing sales channels
as efficient as possible while
simultaneously experimenting
with new sales and marketing
methods.
CAR SHOPPERS ’EXPECTATIONS
ARE CHANGING
The growth of mobile devices, e-
commerce, and social media
has changed the way people
shop. Today, when consumers
research products ahead of a
purchase, they are likely to look
beyond traditional information

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Dealership Profitability

said that if they were to buy a car in the next five years, they collect data through the vehicle’s connected-car systems. The
are willing to order and pay for it online; in South America, OEM can use that data to proactively recommend
the corresponding number is close to 25%. Even so, only 5% maintenance or suggest other aftermarket purchases.
of consumers said that they would be willing to buy a car THE FOUR FUTURE SCENARIOS OF AUTO RETAILING
without seeing or test-driving it, a clear sign that offline Changes in consumer preferences and advances in technology
channels. offer car companies the chance to modernize their business
models and launch projects to better serve consumers’ needs.
As the number of dealer visits per car purchase drops, the But those same factors pose major threats to existing retail
traditional car sales funnel is changing dramatically. With channels for both automakers and their dealers partners.
upstream activities moving online, OEMs have more Current trends are shifting toward four distinct retail
opportunities to interact directly with end customers – and scenarios. (See Exhibit 2) while we believe that all four will
to collect information such as a prospect’s specific interests exit to some degree in the future, it is not clear which one will
or needs, which could be used as sales leads. In addition to account for the largest portion of sales. If newcomers capture
collecting such information through their own websites, OEMs significant market share from more established players, it
can obtain it from the dealers, aggregators, or financing could lead to a rebalance of power in vehicle sales. For this
companies they work with. reason, automakers must be prepared to address all four
scenarios.
Consumer sentiment is not the only thing affecting auto The most recognizable scenario is the one most typical of
retailing. Ride-hailing services such as Uber and Lyft operate auto sales today-namely, sales that occur mainly offline under
in large part of the world and have changed attitudes about the control of traditional OEMs and dealers. In a related
car ownership, which could drastically affect sales and future scenario, existing OEMs and dealers could build on
eventually lead to fleet sales playing a larger role in the their current standing to move more sales online. Such
industry. enterprises could include online-only ventures by car
companies that begin as separate divisions or spinoffs
Technological advances are also reshaping automaker’ created to sell a new brand or model in order to avoid
relationships with consumers. By analyzing data collected compromising existing dealers partnerships. An example of
from connected-car systems and digital components, that approach is Lynk & Co, created by Chinese automakers
automakers can create a more direct relationship with Geely Automotive, which also owns Volvo. Geely started the
consumers than was possible in the past, when dealers were online-only Lynk & Co sub-brand to market a new compact
car buyers’ closest contacts. For example, by inviting
consumers to sign up for test drives through its website, an
OEM can collect data about the make, models, and features
that each potential buyers
prefers, and it can use the
information to ensure that
the shopper’s preferred
model is on a dealer’s lot
in time for a test drive,
improving the odds of
making a sale. Automakers
can also aggregate and
anonymize the
information they collect on
car shopper with existing
data on consumer
preferences to make more
informed recommendations
of others vehicles that
individual consumers
might be interested in. The
connection can continue
after a sale, as the
company continues to

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Dealership Profitability

SUV Built on Volvo chasses and engines; it began selling the generate sales leads. Although automakers and dealers
cars in china in 2017, and will expand into Europe and the already use digital networks to generate leads, they don’t
US in 2020. coordinate those activities to the extent that they should,
In the future, third parties that are neither automakers nor which results in lost opportunities. Partners need to adopt
dealers could disintermediate existing industry players by more structured communications to improve their
selling multiple brands. This change could happen in either collaborations. They also need to update their lead-
of two ways. In one scenario, companies could create a generation tools to include social media monitoring and
website to help consumers research and buy new or used personalized marketing of services.
cars; buyers could then pick up their vehicles at an auto Another key action that car companies should take is to make
dealer or dealer network that is affiliated with site and pays their dealer and internal retail networks leaner. Right-sizing
it a finder’s fee. US companies such as Truecar and cargurus retail operations can make those operations more efficient
operate such services. and agile, improving single-store and overall economics. To
In the other scenario, e-commerce aggregators coud add auto proceed pragmatically, car companies should conduct a
sales to the ever expanding universe of products they sell systematic performance review of existing retail locations
online through their existing e-commerce market places. with the aim of right-sizing square footage and staff size on
Alibaba already does this. The company has launched “super the basis of existing sales volume and probable future sales.
test drive centres” in Shanghai, Nanjing, and Guangzhou In determining how much space a retail location needs,
through its small e-commerce platform and Taobao mobile consider the types of in-store experiences that each location
app. Drivers who have good credit scores can use facial- will offer in the future.
recognition technology to sign up for a three-day test drive As part of their effort to right-size retail locations, car
of models from Ford and other participating automakers. companies should reconsider their practice of operating
According to the company, the sign-up process takes about all-under-one-roof retail stores in favour of operating
10 minutes. Alibaba expects to open similar auto vending segmented physical locations designed to meet different
machine-type centres in Beijing, Hangzhou, and elsewhere in customer needs. Traditionally, companies combined new and
coming months, and it may make the technology available used car sales, service centres, and back-end operations at a
industry-wide in the future. single location. That’s not always necessary, and in some
The rewards for successfully navigating the new retail cases it could hurt sales. For example, car buyers in the city
landscape for auto sales may be very large indeed. By 2035, might not want to travel to a suburban auto mall to look at
e-commerce aggregators and other new forms of auto retailers new vehicles. Opening small showrooms in high-traffic city
could gain enough traction in the market to put up to 30% of malls, service centres outside the city, and a centralized
OEMs’ present revenue at risk. On the other hand, OEMs that facility for back-end operations in lower-density areas can
generate new revenue streams from data, connectivity, on- bring services closer to the places where people want them
demand mobility, and other innovative services could and reduce by curbing needlessly expensive property leases.
increase their current revenue by as much as 20%. One automakers taking a segmented approach is Mercedes-
Merging into the Auto Retailing Fast Lane Benz, which has opened Mercedes Me concept stores in
To be on the winning side of coming trends, carmakers and central locations in Munich, Moscow, Melbourne, and five
their dealer partners should pursue two strategic efforts. other cities. The primary function of these outlets is to
One is to take no-regret steps to make existing sales introduce potential customers to the brand. Combining
operations and networks as lean and productive as possible- elements of a cafe and a showroom, the stores serve coffee,
moves that will be beneficial to the company regardless of host events, and include a Mercedes vehicle as part of the
what the future holds. The other, simultaneous effort is to decor. Digital displays and brand specialists share
devote resources to experimental test-and-learn ventures that information and answer questions about specific car models.
will help them prepare for more radical industry Mercedes is also operating after-sales service outlets near
developments. In both cases, companies should aim to airports on an experimental basis to better address new
extensively leverage data and predictive analytics to customer needs and expectations.
determine the best course of action. Another no-regret move is to use data analytics to make
No-Regret Moves. Starting at the beginning of the sales decisions such as where to locate news retail stores. OEMs
funnel, automakers and dealers must improve the away, they can map out an ideal network of store locations after
analyzing multiple data layers, including demographics,

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Dealership Profitability

local competition, and car registrations. Then they can match Looking to other industries for inspiration can be
that data against existing locations to indentify priorities worthwhile. Not so long ago, apparel companies thought
for expanding existing facilities, opening new locations, and the barriers to selling online –including customers’ desire
closing under-performer. Adopting this type of analytical to touch and feel items before deciding to buy –were too
approach can help operating teams by moving decision formidable to conquer. But, new digital tools that show
making tools and processes to the local level. consumers what a pair of pants or skirt would look like on
In addition to pursuing initiatives that focus on physical their body type have helped remove the old barriers. Those
locations, automakers must expand online sales. Part of that tools, along with quick checkout, free deliver, and easy
task involves establishing clear goals for an online presence return policies, have made shopping for clothes online a
and setting a strategy for accomplishing those goals. In doing mainstream practice, effectively revolutionizing the apparel
so, it is important to gradually integrate online and offline industry.
channels to create as seamless value proposition for end Just as fashion retailers developed online tools, automakers
customers. A key objective in the process is to ensure that should continue to experiment with digital technologies that
existing IT systems can handle data from multiple sources could help car shoppers put themselves in the virtual driver’s
and keep it secure. If data from online and offline sales leads, seat of a new or used vehicles. Online car buyers, for example,
connected car systems, and other sources currently feeds might gravitate towards virtual showrooms, while people
into different database, OEMs that lack integrated systems shopping at a dealer might respond well to AR technology
may not be able to connect the dots and capitalize on all of that lets them view new car features or see what a car would
the available data. Our client experience indicates that many look like in a different colour.
auto OEMs underestimate the
difficulty of merging such customer
information from different sources
and, as a result, struggle to unlock the
full value of omni channel initiatives.
Teat-and-Learn ventures. While taking
steps to streamline marketing and
sales, OEMs and dealers must also
devote resources and personnel to
testing new projects to prepare for the
various future scenarios that could
take over the market. Projects should
incorporate agile ways of working so
the organization can generate ideas,
test them, and adapt quickly to changing
environments or market trends.
High on the list of test-and-learn
priorities are pilot e-commerce projects
to expand a company’s online presence.
Possibilities include launching a new
model vehicle through an existing or
new online platform partnering with an
e-commerce marketplace on a broader
selection of products in specific
markets, and responding creatively to
new consumer retail preferences.
Because they have so many options
companies should ask themselves a
series of question to help determine
that best way to achieve the results they
want. (See Exhibit 3.)

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Dealership Profitability

Another possible project could involve creating a new customer- beyond the auto industry to monitor what’s happening in
centric product or service – an app that guides a person those other areas. Companies that lack such a research
through buying or financing a car, for example, or one the capability need to build it up.
schedules oil changes or other regular maintenance. Apps Make people a key part of the transformation. New ways of
can serve a dual purpose: they can help shoppers or car selling require personnel who have new skills. Automakers
owners handle specific tasks, and they can give the company and dealers must work together to invest in training and
direct insight into consumers’ preferences and behaviours, technology to help existing personnel – in particular, dealer
which the company can use to solidify the relationship. sales personnel – obtain those skills. In bygone days, dealers
OEMs can also test new sales methods, such as the highly needed salespeople who not only knew a lot about the cars
automated vending machine sales model that Carvana helped they sold but also were comfortable using aggressive tactics
pioneer, or a showrooms-based sales model similar to those to close a deal. As consumers do more to their own research
operated by Hyundai and Tesla. before visiting a showroom and want a more collaborative
Another possibility is to team up with a multi-brand dealer experience, dealer personnel must develop appropriate
group or aggregator platform to launch a pilot program that customer-service skills. We see auto dealers’ showroom staff
capitalizes on the increased market power of such a operating in a similar manager to Genius Bar staffers in Apple
partnership. In July 2018, Ford began selling cars at an outlet retails stores, answering questions about product features
of the UK based Next retail chain in Manchester through a and options, and providing customers with other concierge-
partnership with UK-Based auto seller Rockar. style support. In the auto industry, companies such as Tesla
WHAT’S NEXT? FOUR GUIDING PRINCIPLES FOR THE JOURNEY already employ in-store concierges.
AHEAD Work collaboratively with existing sales channels. Automakers’
To map out their responses to future trends, automakers and work with dealers must go beyond retraining existing
dealers need to create a transformation plan that personnel. As automakers pursue more direct relationships
incorporates both no-regret moves and test-and-learn with customers and as they experiment with different sales
ventures. The plan should be consistent with the company’s formats, dealers remain an important link in the auto supply
current brand positioning while taking into account ongoing chain. Consequently, as the relationship between OEMs and
industry trends. It should aim for the long term – Not two to dealer networks evolves, they must continue to collaborate
three years out, but closer to five to ten. We recommend taking on innovations, such a designing and implementing new
several other important factors into account when digital tools to man leads and improve data sharing. For
formulating a plan. example, the partners might decide together how to invest in
Include contingencies to fast-track changes. OEMs should build and deploy augmented reality technology to support virtual
into their transformation plan the ability to fast-track changes test drives. If automakers are planning to roll out iPads for
in response to unexpected major market disruptions that sales and marketing personnel, they should consult with
threaten the status quo. A disruption could be a new market dealers about what content to put on the devices. It’s easy to
entrant, such as Tesla when it shook up the industry by selling see the value of moving activities such as booking test drives
high-end electric cars from showrooms in suburban shopping online, but only by working together and sharing data can
malls. Or it could be the appearance of new technology, such carmakers and dealers make that happen.
as a virtual-reality systems that car shoppers could use one Evolving Consumer Shopping preferences are changing
day to test drive a vehicle without leaving home, making real- auto retailing – and with it, automakers’ and dealers’
life test drives less relevant. traditional roles. Although car companies will continue
Improved Monitoring of retail trends. Consumer expectations to work with dealer networks in some capacity, they can’t
about shopping continue to evolve with regard to how they ignore the opportunities that new sales channels offer,
want to buy goods and services and how they want to pay for investigating these opportunities will encourage car
them. In response, car companies must upgrade the way they companies to take a more active role in the pre-sale funnel,
track trends in order to stay abreast of relevant buying including steering lead generation. Such a step could push
patterns and habits. Because e-commerce, retail, mobility, OEMs to restructure their dealer networks to meet their
and other industries influence consumer expectations about needs in the future more successfully. Even then, OEMs
car shopping, car companies’ market research must extend and their partners must continue to look for ways to
collaborate, improve communications, and better serve
their customers.

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



Future Mobility

Boosting Car Incentive Effectiveness

With car incentives at record levels, automakers need a better way to manage this spending, starting at the dealer

McKinsey & Co.

The automotive industry has a reputation for counting Prevailing trends, such as partially stagnating Western
pennies, with one glaring exception: incentives. Rebates and markets, discounting, and increased price transparency,
incentives may be the most undermanaged expense category suggest that incentive spending will continue to grow. Drivers

include the following:

Product. Average product life
cycles declined to 91 months,
from 130 months, between 2000
and 2017, compelling
automakers to boost incentives
to clear out end-of-life-cycle
vehicles more often. In Europe,
ongoing discussion about the
future of diesel has cut into
sales, necessitating higher
incentives.

Channel. Increases in fleet and
rental businesses in markets
such as the United Kingdom
result in greater fleet discounts,
and the emergence of new online
players boosts price
transparency and competition.

in an industry known for fretting over everything from the Competition. With more than ten
cost of reusable containers to that of lost kanban cards. mainly low-cost automakers (for
What’s more, the value at stake is example, Chinese players) expected to enter core markets
substantial. An automaker usually over the next six years, OEMs will see increasing price
spends about 10 to 20 percent of pressure. Core markets continue to stagnate, with some
its revenues on incentives—for a
$50 billion company, that’s $5
billion to $10 billion (Exhibit 1).

Climbing incentives

Never trivial, spending on
incentives has grown to record
levels (Exhibit 2). For example,
Germany’s rebate index climbed 54
percent between 2010 and 2017,
while the relative incentive
spending per unit in the US climbed
seven to eight percentage points
during the same period (based on
data from the Center of Automotive
Research).

fada.in | September 2018 F A D A Journal 25

Future Mobility

expecting negative growth through 2024, thus requiring dispersion of incentive spend (across dealers, models,
automakers to offer higher incentives just to maintain market and regions, for example).
share. 2. Keep incentive spend structures simple: define a clear
As these trends unfold, complexity is increasing (Exhibit 3). taxonomy with a limited number of campaigns.
Take the US market, for example: automakers continue the 3. Define incentive guidelines to foster upselling.
practice of making key monthly changes to dealer incentive 4. Build a digital/IT environment to run automated analyses
plans and customer offers with varying eligibility and intelligent reporting cockpits to support
requirements, further complicating things. One dealer we interventions.
talked to noted 57 different programs and complained that 5. Build incentive spend management capabilities in target
its managers spent more time understanding these programs markets and shift the organization toward making this a
than they did focusing on customer sales and service. Other signature element.
elements contributing to complexity include the proliferation 6. Build a management alliance to solve the inherent
of vehicle models and options and an increase in dynamic, conflict between incentive spending and volume.
tactical promotions, as opposed to marketing spending
focused on brand building. 7. Become more customer-
centric in the way you set
When mistakes happen or circumstances change—and they your incentives—for
often do—companies typically attempt short-term fixes using example, consider and
tactical incentive spending to close critical gaps and to ensure understand the amount of
sales while machines continue to run. This spending often dealer incentives passed on
lacks transparency and even the basic management to the customer.
techniques.
Optimizing incentive spending Operating based on these seven
Optimizing incentive spending in automotive requires rules will require the right
transparency at the customer-order level and dynamic data capabilities at both the
updates to facilitate robust management of incentive headquarters and at the country
campaigns. or regional level. However, it is
The following seven “rules” can help to optimize incentive also an opportunity to transform
spend: the organization, enabling it to
1. Steer incentive spend based on facts, not just experience; set consistent spending
guidelines and to adopt a data-
for instance, seek a granular view (at the level of the driven decision-making process
vehicle identification number, or VIN) and manage the to optimize incentive campaigns.
A dynamic approach to incentive-spend management, based
on these rules, can drive ~5 percent improvement, which
translates to approximately $250 million to $500 million in
yearly impact for a $50 billion automaker (with $5 billion to
$10 billion incentive spend baseline).
The impact is driven by operationally steering the level of the
incentive (for example, incentive amount along models,
engines, or grades to promote upselling), the design (for
example, an in-kind benefit or finance support versus a pure
cash rebate), the mix between the channels (such as setting a
discount grid for corporate sales, thereby fostering discount
rigidity), and the link to key performance indicators (for
instance, incentives versus dealer performance).
Furthermore, measures to strengthen the brand—for example,
shifting away from short-term incentives towards marketing
spend—could unleash additional potential.

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Future Mobility

Such an approach should integrate all relevant VIN data and enables OEMs to deploy best-practice interventions to
include dynamic updates. Preconfigured, customizable address gaps and track them to ensure they produce the
analyses can aid rapid visualization and uncover hidden desired impact. Ultimately, the overall transformational
insights. These analyses focus on model, grade, trim, and approach can help companies change their DNA.
version-level incentive spend, customer discounts, and dealer
and manufacturer profitability. This approach also makes The battle for sales at the automotive dealership level will
regional, dealer group, and dealer-level performance intensify, compelling automakers to increase their incentive
tracking possible, helping users understand the sources of spending. This fact of life, however, doesn’t mean OEMs need
any performance disparity. Likewise, stock-level promotion to continue to throw good money after bad to maintain their
analysis can identify which incentive types can effectively market positions. Instead, the new approach can deliver
drive volume as units age. Channel-level performance substantial savings while making an OEM more competitive
indicators can involve retail, fleet, and government customers. by providing more tailored, customer-specific pricing and
Exhibit 4 shows some example analyses. The approach offerings.

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

Know Our Member

United Cars P Ltd, Mangaluru

United Cars P Ltd, Mangaluru a life member of F A D A is finance needs of the customers looks after the finance
a 3S Toyota dealership at NH 75, Near Padil Junction, and insurance part. In nutshell, United Cars is a
Padil, Mangaluru. The dealership was established in the dealership, which is professionally managed by a team of
year 2000. competent managers and highly trained & skilled

employees, who spare no effort
to ensure exhilarating
experience and “Happy Riding”
for their esteemed customers.

The dealership sold 809 vehicles
and serviced around 24,211
units earning a total turnover of
approximately Rs. 148.45 crore
in FY18.

Having set benchmarks in
Customer Satisfaction, United
Cars is not resting on its
accomplishments. The
dealership continues to pursue
excellence relentlessly without a
pause. The improvement and
The dealership apart from
selling new cars also deals in
pre-owned car sales, provides
Financial Services, Insurance
Renewal and Vehicle detailing
Services to the customers.

The dealership recruits trained refinement in the working of dealership and service to its
manpower from institutes customers is an ongoing activity at United Cars. Stringent
supported by Toyota under T-TEP quality controls and checks are followed to the core as
initiative; its technicians are per Toyota’s exacting standards. From initial query
continuously groomed through handling to vehicle delivery and after-sales service, every
Toyota Global Training System; process is monitored to ensure reliable and efficient
and the Service Advisors are services.
trained to high Toyota Standards Special services and features of the dealership include:
to ensure the customers feel Service schedule reminders; Tele-calling for feedback on
satisfied at the dealership in their very first visit, service; Vehicle delivery communication; Prompt billing
contributing to the dealership’s success.

Supported by a dedicated team of 295 professionals, the
dealership is providing the best sales and service
experience to its customers. A marketing manager heads
the sales team comprising of sales executives for
showroom and field separately. The service department is
looked after by a Chief Service Manager, who is supported
by a strong team of company trained service engineers
and mechanics. A team specially trained to cater to the

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

Know Our Member

and paper formality; Refreshments for customers; and an automotive & related businesses in Southern India. With
elegant customer waiting lounge with facilities like TV and a proven track record of more than 6 decades, the Group
Wi-Fi. The dealership also offers pick-up and drop facility comprises not only the 4-Wheeler dealership, but is also
from customer place. In addition, if any customer rates engaged in the business of Veedol (Tide Water) brand
the service satisfaction below 5, proper feedback is taken engine oils & Lubes; and also
for addressing the concern. Every customer coming in for supplies washed and graded
the first service, is taken for a Service Shop floor visit and Silica Sand to Foundries
for understanding specific washing requirement which is (Tata,, Bajaj, Kirloskar Group
confirmed during delivery. etc).

The dealership firmly believes that it is the quality of after- Ramgopal Aroor Rao is
sales service and follow-up that keeps the customer the young man behind
engaged and sustains the automotive business in the long United Cars P Ltd. He is
run. No wonder then, the customer satisfaction has been the Director – Sales &
the focus of United Cars since its inception. Acknowledging Mktg, at both the outlets
the stellar role of United Cars, the dealership has been in Mangalore and
awarded best dealer in South 2 (Karnataka, AP and Udupi. He has been
Telangana) region for 2017. leading the sales,
United Cars is a part of a business group dealing in the service, spares and VAS Ramgopal Aroor Rao

verticals of the company for past 15 years. Further,
he has spearheaded the business verticals of Finance
& Insurance, Accessories sales, Value Added Sales
and Used Cars, which lead to higher profitability of
the dealership. He never compromises with the
quality of service and settles for nothing short of
the best. His motto is ‘Excellence with Efficiency’.
Imbued with a strong never-say-die spirit, he has set
exacting standards of work & ethics, enabling his Business
Group to scale new heights with each passing day.

Ramgopal is Bachelors in Engineering (IT) from NMAMIT,
Nitte and has undergone a Leadership Development
Programme from IIM-B.

F A D A wishes United Cars and Ramgopal Aroor Rao All
the Best.

fada.in | September 2018 F A D A Journal 29

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

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

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

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

Membership

We Welcome Our New Members

No. Dealer Principal Name Dealership Name City State Franchise

1 Mr Srinivas Kumar Vadupu Sreedevi Cars Pvt Ltd Kakinada Andhra Pradesh Hyundai

2 Mr Gaurav Himatsingka Himatsingka Automotives LLP Banka Bihar Ashok Leyland

3 Mr Anurag Poddar Poddar Solutions Pvt Ltd Gaya Bihar Honda Cars

4 Mr Manoj Kumar Bairoliya Shree Bajaj Darbhanga Bihar Bajaj

5 Mr Venkat Muppana MVR Automobiles Pvt Ltd Panjim Goa Audi

6 Mr Hitendra A Nanavati Nanavati Motors Pvt Ltd Surat Gujarat Toyota

7 Mr Rajesh Natwarlal Patel Rajdeep Automobiles Ahmedabad Gujarat Hero

8 Mr Harishbhai J Chandra Atul Motors Pvt Ltd Rajkot Gujarat Maruti Suzuki

9 Mr Mehulbhai P Dholakiya Apco Motors India Pvt Ltd Ahmedabad Gujarat VECV

10 Mr Deepak Parashar Dreams Automobiles Pvt Ltd Gurugram Haryana HMSI

11 Mr Danish Ghazi Stag Trading Pvt Ltd Srinagar Jammu & Kashmir KTM

12 Mr Diloo B Parikh Mithila Motors Pvt Ltd Jamshedpur Jharkhand Tata Motors

13 Mr D Rajendra Kumar Matrix Auto Ventures Udupi Karnataka HMSI

14 Mr Ravi Kumar Rahul Cars India Pvt Ltd Shivamogga Karnataka Hyundai

15 Mr Latif Hussain Saphire Motors Pvt Ltd Bangalore Karnataka Hyundai

16 Mr Afaq Razvi K J SKMS Motors Pvt Ltd Davangere Karnataka Hyundai

17 Mr Suresh Kumar Bafna Vinayak Cars Pvt Ltd Bangalore Karnataka Hyundai

18 Mr Gurjit Singh Elite Automobiles Pvt Ltd Bangalore Karnatka Honda Cars

19 Mr Samir Choudhry Trident Automobiles Pvt Ltd Bengaluru Karnatka Hyundai

20 Mr Manoj Kurup Radhia Motors Trichur Kerala Force Motors

21 Mr Sabu Johny EVM Automobiles Kochi Kerala HMSI

22 Mr V ikram Valsraj Cannanore Automotive Co. Kannur Kerala HMSI

23 Mr George A Thayyil Johns Biwheelers Thrissur Kerala HMSI

24 Mr Shyam Gupta Sumedha Vehicles Pvt Ltd Gwalior Madhya Pradesh Nissan

25 Ms Jyotsna Sanghi S G S Motors Pvt Ltd Indore Madhya Pradesh JLR

26 Mr Shailesh Bhandari B U Bhandari Auto Ltd Pune Maharashtra Volkswagen

27 Mr Manjari Budruk Dhone Cars Pvt Ltd Pune Maharashtra Ford

28 Mr Sumit D Soni Fine Autolines Aurangabad Maharashtra HMSI

29 Mr Kaushik Kothari Kothari Auto Link Pvt Ltd Pune Maharashtra Honda Cars

30 Mr Chayan Raj Chadha Kundan Automobile Pune Maharashtra Hero

31 Mr Rajan Sharma Neelam Automobiles Pvt Ltd Mumbai Maharashtra Hyundai

32 Mr Jigar Nivrutti Gavali Platiinum Auto Pune Maharashtra Royal Enfield

33 Ms Sneha Abhijit Shivarkar Rishaan Auto Pune Maharashtra TVS Motor

34 Mr V ijay Paltewar V inay Automobiles Yavatmal Maharashtra TVS Motor

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

Membership

No. Dealer Principal Name Dealership Name City State Franchise

35 Mr Deven Bhandari B U Bhandari Motors Pvt Ltd Pune Maharashtra Mercedes
Maruti Suzuki
36 Mr Suresh MKankariya Kankariya Automobiles Pvt Ltd Ahmednagar Maharashtra Mahindra
VECV
37 Mr Jitendra Shah Jitendra Motors Pvt Ltd Nashik Maharashtra HMSI
Honda Cars
38 Mr Avichal Dhingra Sincere Marketing Services P Ltd New Delhi Delhi Honda Cars
HMSI
39 Mr Anesh Agarwal Sun Automobiles Baripada Odisha Maruti Suzuki
TVS Motor
40 Mr Karandeep S Chatha Deep Automobiles Pvt Ltd Amritsar Punjab Mahindra
Hero
41 Mr V ishal Juneja AKC Motors Pvt Ltd Ludhiana Punjab Maruti Suzuki
Tata Motors
42 Mr Jyoti Prakash Arora Arora Motors Jodhpur Rajasthan Royal Enfield
Mahindra 2W
43 Mr Ram J Bhatia Bhatia & Company Kota Rajasthan Honda Cars
Tata Motors
44 Mr Neeraj Chugh Darshana Automobiles Alwar Rajasthan Mahindra
Mahindra CV
45 Mr Rajendra Agarwal Evergreen Motors Kota Rajasthan Renault
John Deere
46 Mr Kanwal Khatri K K Motors Baran Rajasthan Royal Enfield
HMSI
47 Mr Rajesh Mittal M G Motors Alwar Rajasthan Ford India
SML Isuzu
48 Mr Pramod Gupta Matsya Automobiles Ltd Alwar Rajasthan Maruti Suzuki
Hyundai
49 Mr Rahul Kumar R S Motors Alwar Rajasthan Hyundai
Hero
50 Mr Sumit Shukla Sunidhi Tractors Alwar Rajasthan Audi
Ford
51 Mr Yash Sharma P L Cars Pvt Ltd Jaipur Rajasthan Bajaj
Ford
52 Mr K Chandrasekhar KLN Automobiles Pvt Ltd Chennai Tamil Nadu Bajaj
HMSI
53 Mr Pratheep Kumaran V SKS Automobiles Salem Tamil Nadu

54 Ms K Kavitha Sri Lakshmi Automobiles World Salem Tamil Nadu

55 Mr Singareddy P Reddy Autologic Motors India Pvt Ltd Hyderabad Te l a n g a n a

56 Mr Gopal Reddy Gattu Balaji Automotives Mahabubnagar Telangana

57 Mr Samyuktha Reddy Gattu Harshithh Automotives Mahabubnagar Telangana

58 Mr V V G V Prasad Katakam Katkam Honda Khammam Tela ngana

59 Mr Nihar K Modi VSN Commercials Pvt Ltd Secunderabad Telangana

60 Mr Ajay Kumar Jain A V Motors Hyderabad Tela ngana

61 Mr B Satyanarayana Goud Adarsha Automotives Pvt Ltd Karimnagar Te l a n g a n a

62 Mr V Ratna Prabhu Rvan Ventures Pvt Ltd Hyderabad Te l a n g a n a

63 Ms Maddi V ineela Reddy Sansai Motors Pvt Ltd Nalgonda Te l a n g a n a

64 Mr V ijay Chaturvedi Brij Biwheelers Pvt Ltd Mathura Uttar Pradesh

65 Mr Gautam Garg Four Wheels Auto Pvt Ltd Kanpur Uttar Pradesh

66 Mr Raj Dhar Mishra GSR Motors Pvt Ltd Varanasi Uttar Pradesh

67 Mr Akhilesh Sharma JPS Bajaj Lucknow Uttar Pradesh

68 Mr Hitesh Kanal Kanal Ford Jhansi Uttar Pradesh

69 Mr Ayush Agrwal Krishnamani Motors Mirzapur Uttar Pradesh

70 Mr Girish Mishra Maa Ambey Automobiles Jhansi Uttar Pradesh

fada.in | September 2018 F A D A Journal 35

Membership

No. Dealer Principal Name Dealership Name City State Franchise

71 Mr Utkal Seth Novation Automotive Pvt Ltd Sultanpur Uttar Pradesh Yamaha
Uttar Pradesh Maruti Suzuki
72 Mr Mayank Mehrotra Oneup Motors India Pvt Ltd Lucknow Uttar Pradesh Hyundai
Uttar Pradesh Skoda
73 Mr Pradeep Kumar Singh Shiva Autowheels Pvt Ltd Azamgarh Uttar Pradesh Bajaj
Uttar Pradesh Tata Motors
74 Mr Ankit Gupta Shree Grand Auto Pvt Ltd Allahabad Uttar Pradesh BMW
Uttar Pradesh Renault
75 Mr Manish Agarwal Shree Tirupati Distributors Sultanpur Uttar Pradesh Bajaj
Uttar Pradesh HMSI
76 Mr Anuj Agnihotri Society Motors Ltd Kanpur Uttar Pradesh Hero
Uttar Pradesh HMSI
77 Mr V idit Narain Speedsafe Auto Pvt Ltd Lucknow Uttar Pradesh Tata Motors
Uttar Pradesh Royal Enfield
78 Mr Ankur Varshney Sri Sai RR Motors Pvt Ltd Aligarh Uttar Pradesh Maruti Suzuki
Uttar Pradesh N/A
79 Mr Subhash Mohan Bery Subhash Tractors Gorakhpur
Uttarakhand Hyundai
80 Mr Anubhav Mishra Swastik Wheelers Pvt Ltd Kanpur Uttarakhand Tata Motors
West Bengal VECV
81 Mr Manish Talwar Vishal Auto Agencies Varanasi West Bengal Honda Cars
West Bengal Hero
82 Mr V ivek Agarwal VK Zone Honda Sultanpur West Bengal Ford
West Bengal Hyundai
83 Mr Pankaj Kumar Agarwal Singhal Motors Azamgarh West Bengal HMSI
West Bengal Nissan
84 Mr Pramod Kumar Shiva Riders Ghaziabad West Bengal Hero
West Bengal TVS Motor
85 Mr Ahsan R Khan Varanasi Motors Pvt Ltd Varanasi West Bengal HMSI
West Bengal Ashok Leyland
86 Mr Rajesh Agarwal Allahabad Auto Dealers Kanpur West Bengal HMSI
Association West Bengal TVS Motor
West Bengal HMSI
87 Mr Anand Kumar Agarwal Bindal Enterprises Pvt Ltd Rudrapur West Bengal HMSI
West Bengal Mahindra
88 Mr Ankit Agarwal Gola Ganapati Motors Haldwani West Bengal Hero

89 Mr Abhi Shankar M Allied Autowheels Siliguri P Ltd Silliguri

90 Mr Abhishek Sharaff B D Automobiles Pvt Ltd Kolkata

91 Mr Siddharth Singhania Balaji Motors Kolkata

92 Mr Ayan Banerjee Banerjee Automart Pvt Ltd Durgapur

93 Mr Deepak Berlia Berlia Motors Pvt Ltd Siliguri

94 Mr Biprajit Singha Roy Binayak Automobiles & Infra. Kolkata

95 Mr V inayak Nayar Chandrani Enterprises Pvt Ltd Kolkata

96 Mr Himadri Das Golden Motors Private Ltd Murshidabad

97 Mr Subhash Kumar Bajoria Krishna Motors Midnapur

98 Ms Rupa Mahansaria Leaders Honda Kolkata

99 Mr Anuj Rajgarhia Rajgarhia Motors Kolkata

100 Mr Sanjib Paul Shiva Wheels Pvt Ltd Kolkata

101 Mr Satyam Goenka Shubh Auto Howrah

102 Mr Mrinal Ghosh SMS Auto Hooghly

103 Mr Om Prakash Agarwala V ikas Motors Co. Kolkata

104 Mr Gopal Majumdar Khokan Motor Works Pvt Ltd Siliguri

105 Mr Shailendra Pandey Basanti Automobiles Memari

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



Consumer Case Study

National Consumer Disputes Redressal Commission, New Delhi

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

Rajendra Chinamal Mody - Petitioner

Versus

Mahindra & Mahindra Ltd and Anr. - Respondents

Revision Petition No. 1938 of 2011 Decided on 05.06.2018
(Against the Order dated 05.10.2010 in Appeal No. 1041/2007 of the State Commission, Gujarat)

Consumer Protection Act, 1986 – Sections 15, 17, 19 and 21 – Automobile – Manufacturing defect – State Commission
ordred the Ops to repair vehicle within 60 days and give certificate to Complainant from an Automobile Engineer - State
Commission observed that if Ops failed to repair vehicle to full satisfaction of Complainant, then Complainant could get vehicle
repaired at any automobile centre and expenses incurred by him would be paid by OPs - Prima facie, it was manufacturing
defect but due to non-maintenance of vehicle, Complainant suffered some problems - No error in order of State Commission –
Revision Petition dismissed.

Important Point

Defect due to non-maintenance of vehicle, cannot be termed as manufacturing defect.

Order

1. Dr B C Gupta, Presiding Member - This Revision Petition filed a consumer complaint before the District
Consumer Disputes Redressal Forum, Rajkot (for short,
has been filed under Section 21(b) of the Consumer 'the District Forum').
Protection Act, 1986 against the order dated 5.10.2010

passed in First Appeal No. 1041 of 2007 by the Gujarat 3. Both the Opposite Parties resisted the complaint by
State Consumer Disputes Redressal Commission, filing their separate written versions. The OP-2

Ahmedabad (in short, 'the State Commission') whereby submitted that the Complainant had never purchased

the State Commission disposed of the Appeal of the the vehicle from them. The complainant was not a

Petitioner No. 1/OP-1. 'Consumer' as per the provisions of the Consumer
Protection Act, 1986 as he had purchased the vehicle
2. The brief facts of the case are that on 18.08.1998, the for commercial purpose. According to the version of
Complainant had purchased a vehicle, Voyager from OP 1, the Complainant was engaged in business of tours
Mahindra and Mahindra Ltd/OP-1 for a sum of and travels; therefore, the vehicle was used for
Rs.5,04,000, with warranty of one year. The vehicle commercial purpose. OP-1 also disputed the territorial
was not running properly, had several faults and on jurisdiction of the Forum, because part of the cause of
number of occasions, the Complainant had taken the action had arisen in Rajkot.
vehicle to the workshop during warranty period. The
major parts like engine gear box were changed, however, 4. The District Forum, upon hearing both the parties,
the engineers of the OPs failed to resolve the problem allowed the complaint and directed both the OPs to
completely. From 01.01.2000 upto 31.3.2001, the pay jointly and severally Rs.5,04,000 with interest @8%
warranty was also extended. Thereafter, OPs had sent per annum from the month of surrender of vehicle i.e.
the vehicle to their Zaheerabad plant on 18.11.2000 September 2001 till realization and also awarded
and after thorough inspection, vehicle was delivered Rs.1,000 towards costs. Being aggrieved, OP-1 filed an
back on 13.01.2001, but the defects continued. Appeal before the State Commission, which was allowed
Therefore, in the month of September, 2001, Complainant and the order passed by the District Forum was set
had surrendered the vehicle to the authorized dealer/ aside. However, the State Commission ordered the OPs
Progressive Motors Pvt Ltd (OP-2) at Rajkot and the to repair the vehicle within 60 days and give certificate
Complainant demanded refund of entire money paid to the complainant from an Automobile Engineer, stating
for purchase of the vehicle. Thereafter, the Complainant that the repair was satisfactory. The State Commission

38 F A D A Journal September 2018 | fada.in

Consumer Case Study

observed that if the OPs failed to repair the vehicle to the Complainant had failed to produce expert evidence
the full satisfaction of the Complainant, then the to prove that it was a manufacturing defect. The counsel
Complainant could get the vehicle repaired at any submitted that OP-2 had replaced the vehicle engine in
automobile centre and the expenses incurred by him their Zaheerabad plant at Telangana.
would be paid by the OPs. Being aggrieved, the
Complainant has filed this revision petition. 7. We have given our thoughtful consideration to the
arguments from both the parties and perused the
5. We have heard the learned counsel for the Petitioner documents on the file. As per the evidence and record
and the OP No. 1. None was present for OP-2. The
Counsel for the Complainant submitted that the vehicle on the file, OP-2 had replaced the old engine to new one
and also gave a fresh warranty for the vehicle in
in question was not in a repairable condition and the question. Prima facie, it was a manufacturing defect
company had already stopped the manufacture of said
model of the vehicle since 2002. The spare parts were but due to non-maintenance of vehicle, the Complainant
suffered some problems, therefore, we do not find any
not available in the market as well as with the dealer. error in the order of the State Commission.
Therefore, the directions of the State Commission to
the OPs to repair the vehicle within 60 days was not 8. Section 21 of the Act under which present Petition has
possible for both the parties. As the OPs were unable been filed, confers rather limited jurisdiction unless
there is some material irregularity, illegality or jurisdictional
to repair the said vehicle, the only option available error, no interference with the impugned order could
was to refund the amount paid by the Complainant as
he claimed. be justified. It was laid down by Hon'ble Supreme Court
in the case of Ruby (Chandra) Dutta vs. United India
6. Learned counsel for the OP-1 submitted that, there was Insurance Co., as reported in 2013 (2) CPR 14 (SC).
no manufacturing defect in the vehicle, and vehicle had
run 38,000 km without any problem. The vehicle was 9. On the basis of foregoing discussion, there is no merit
used by the Complainant for his business of tours and in the instant revision petition, therefore, it is
dismissed.
travels, which was a commercial purpose. Moreover,

fada.in | September 2018 F A D A Journal 39

Surveys & Studies

J D Power Finds Servicing Tractors At Owner's Premises Advantageous

Mahindra Ranks Highest in Tractor Service Satisfaction

Customer satisfaction with tractor after-sales service is respectively). However, only 1 in 5 tractor owners were
higher (up 28 points on a 1,000-point scale) when owners contacted by their dealer to arrange for their service/ repair
choose to have their tractor serviced at their own premises, visit.
compared to when they would have liked but are not offered
this door-step service option by their dealer, according to The following are additional key findings of the study:
the J D Power 2018 India Tractor Customer Service Index
(CSI) Study, released on August 30. • Focus of after-sales services differs by region: Western
states have the highest proportion of dealerships
The study finds that 58% of tractor owners received offers proactively contacting their customers for service.
from their dealer to service their tractor at the owner’s Southern states have the highest percentage of
premises, with 41% of customers selecting this service. customers whose tractor was serviced at the
Additionally, more than one-third (34%) of customers opting customer’s premises during their most recent service.
for the door-step service had a better-than-expected overall Northern states have the highest proportion of
service experience than those who would have liked but customers indicating that their tractor was returned to
were not offered the service (20%). them cleaner after servicing. And Eastern states have

“In a rapidly transforming sector
influenced by growing innovation,
customer expectations of what
defines an exceptional service
experience keep changing,” said Yukti
Arora, Practice Lead, Agriculture and
Construction Equipment at J D
Power. “Customers expect a
convenient and personalized service
from their dealer network, that is
accessible to them through multiple
channels. While the industry is
making consistent efforts to improve
the customer experience, current
service offerings are often seen as
inconsistent and disjointed.
Manufacturers and dealers need to
shift the focus from transactional
sales and service practices to
initiatives that meet their
customers’ unique requirements in
the most timely and cost-efficient
way.”

The study also finds that satisfaction
with service increases when tractor
owners receive proactive reminders
from their dealers about routine
maintenance appointments,
compared to when customers have
to visit the dealer for arranging their
service or repair work (827 vs. 807,

40 F A D A Journal September 2018 | fada.in

Surveys & Studies

the highest percentage of customers saying their service second and John Deere (822) ranks third among the eight
engineer was courteous and attentive to their brands included in the study.
requirements.
The 2018 India Tractor Customer Service Index (CSI) Study
• Wait time for parts impacts service satisfaction: is based on responses from 3,835 tractor owners across 14
Customer satisfaction is 73 points higher when the states. The study was fielded from January 2018 to May
dealer supplies parts on the same day or immediately 2018 and includes owners who purchased a new tractor
when ordered, compared to when dealers take three or between January 2016 and May 2017 from an authorised
more days (838 vs. 765, respectively). dealership.

• Dealer loyalty is up: Overall dealer loyalty and advocacy The study, now in its fourth year, examines satisfaction
rates increase in 2018, as 62% of tractor owners say among tractor owners who visited an authorised service
they “definitely would” revisit their authorised dealer centre for maintenance or repair work in the last 12 months.
for maintenance or repair work, compared with 53% in Overall customer satisfaction is based on a combined score
2017. Furthermore, 64% say they “definitely would” of the service satisfaction and parts operation indices. The
recommend their authorised dealer to a colleague or service satisfaction index measures overall satisfaction
friend, compared with 54% last year. across four factors (listed in order of importance): service
quality; service engineer; service initiation; and service
Study Rankings handover. The parts operation index captures satisfaction
across five attributes: availability of parts; speed of parts
Mahindra ranks highest in satisfaction with the after-sales delivery; parts value for money; quality of parts; and correct
service experience with a score of 831, a 30-point identification of parts required.
improvement from 2017. Mahindra Swaraj (825) ranks

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]

fada.in | September 2018 F A D A Journal 41

Competition Law Updates

US Court allows antitrust claims against Hyundai Motor and the matter, last listed on July 18, 2018, will now be
Company (Hyundai) in a trademark infringement suit taken up on November 01, 2018.

In an ongoing suit Philippines competition authority approves Uber-Grab
regarding trademark merger
infringement filed by The Philippines Competition Commission (PCC) has
Hyundai against Direct approved Grab’s takeover of Uber’s south east Asian
Te c h n o l o g i e s business following a thorough competition assessment
International Inc. (DTI), of the merger. The approval is subject to the condition
which is an auto parts that Grab commits to maintain adequate competitive
seller in North Carolina, restraint despite being a virtual monopolist, as noted
USA, a US Federal Judge in the assessment. Grab’s commitments include
has allowed DTI’s restoring its cancellation rates to the pre-merger levels,
counterclaims of improving response time to complaints, providing a
antitrust violations thorough breakdown on trip receipts and not requiring
against the auto exclusivity from its driver pool. Additionally, the PCC
manufacturer to stand. has noted that if competition concerns continue to
remain, the merger would have to be unwound.
G R Bhatia, Partner & Head, Litigation initiated by US auto dealers against German
car manufacturers may end in settlement
Competition Law Practice Group, Th e su it in s t it u t e d b y The litigation initiated by US auto dealers and
Luthra & Luthra Law Office Hyundai pertained to a consumers against Audi, Volkswagen, Mercedes-Benz,
trademark infringement BMW and Porsche, alleging an antitrust conspiracy on
against DTI for import and sale of counterfeit Hyundai car technology, costs and emissions equipment is likely
parts. However, DTI has raised counterclaims of illegal to end in a settlement by the end of this year. The dealers
restraint of trade, illegal monopoly, exclusive dealing had alleged that there was collective overpricing of
arrangements, false advertising and unfair competition auto-parts and cars with such pre-fixed parts. In an
by Hyundai. interim order last month, the Court had observed that
the car manufacturers cannot dodge Multi-District
The Court observed that DTI had clearly identified the Litigation (MDL), which aims to speed the legal process
relevant market to be “the replacement part market for in certain complicated cases. However, recent reports
Hyundai automobiles”. It was further observed that the have assessed a likelihood of a settlement between the
alleged tying relationship was with respect to Hyundai’s dealers and the car manufacturers by the end of
vehicle warranties being purportedly tied to the use of November.
Hyundai-brand replacement parts, which are deemed US District Judge approves settlement between auto
as ‘genuine’, for its cars. The Court also allowed DTI’s part supplier and Japanese auto parts manufacturer
submission that Hyundai has coerced its dealers into A US District Judge has approved a $3 Million settlement
entering such agreements in restraint of trade, that between All European Auto Supply Inc. (AEAS), a US auto
Hyundai uses its agreements to acquire a monopoly in parts supplier and Japanese auto parts manufacturer,
the market and restrict the entry of other spare part Mitsuba Corp (Mitsuba).
dealers. The allegations against Mitsuba entail the fixing of
prices of power window motors, spark plugs and oxygen
Supreme Court stays Competition Appellate Tribunal’s sensors. AEAS is one of the many plaintiffs pursuing
(COMPAT) order that imposed penalty on 3 car claims over various automotive parts in a series of
companies litigations that have so far yielded settlements which
have amounted to nearly $1 billion
The COMPAT by its order dated December 09, 2016
concurred with the findings of the CCI and directed Ford,
Toyota and Nissan, to remove all restrictions imposed
through agreements on auto parts suppliers so as to
open up market for spare parts and remove all
restrictions on supply by original equipment suppliers
to authorized dealers. On appeal, the Hon’ble Supreme
Court has stayed the operation of the COMPAT’s order

42 F A D A Journal September 2018 | fada.in

Chart of the Month

fada.in | September 2018 F A D A Journal 43

Member in News

Bhopal Automobile Dealer Association Undertakes CSR Activity

Bhopal Automobile Dealer Association (BADA), an Association appreciated efforts put in by BADA and appealed to all
Member of Federation of Automobile Dealers Associations, associations and citizens to conserve environment by
organised Tree plantation activity on 15th September at Kerwa, protecting our valuable heritage in the form of trees.
opposite Bull Mother Farm in the presence of IG of Bhopal – Mr Ashish Pande, President, BADA, conveyed that BADA
Mr Jaideep Prasad, who was the Chief Guest on the occasion. regularly takes up CSR activities. He emphasised on the need

More than 25 members of the association were present on to plant more trees as depletion of tree cover had caused
the occasion and planted 100 trees. The dealers were increase of Green House gases and led to Global warming.
enthusiastic to be a part of this activity and wanted Mr Rakesh Malik, erstwhile member of the association said
environment conservation and more awareness on the that conservation of environment is the duty of all citizens
subject, be created so that is is understood and practiced and BADA drive was in that direction.
not only by other associations but by all. All members of the association thanked Mr Tehseen Khan,
Speaking about this CSR activity, Mr Jaideep Prasad General Secretary of BADA to have taken up the initiative.

44 F A D A Journal September 2018 | fada.in



Fuel Watch

Iran Tensions to Send Oil Price Past $150 - Again

Steve Austin of Oil-Price.net

After scaling a three-year high of $79 a barrel, oil prices fell and VP Dick Cheney, Trump is close to the Saudi Kingdom,
taking a nine percent drop on the back of better supplies, Iran's arch enemy. Saudi Arabia and Iran are at odds on
resumption of Libyan oil production and increased Saudi oil religious grounds. To explain: Saudi Arabia heads the Sunny
output. But the reversal began soon enough with the prices branch of Islam and Iran is the de-facto leader of the Shia
climbing back. Plenty of reasons? Let's say a single one - branch. As things stand, though of a single religion, both
sanctions on Iran. hate each other. This is the reason Saudi Arabia (Sunni)
Yes, you heard right. In fact, tensions with Iran will likely invaded Yemen (Shia) in a proxy war where the US backed
propel oil prices to above $150 a barrel if exacerbated. So, Saudi Arabia with material and personnel, while Iran backed
what's happening? Well, the Republican administration is Yemen in the same way. Given that Saudi Arabia recently
at odds with Iran - again. This May, Iranian oil export reached purchased $100 billion of US weaponry, the Trump
2.7 million barrels a day. Per our data, Iran's oil production administration was quick to accuse Iran of sponsoring
stood at 3.83 million barrels a day in April. The country hoped terrorism (never mind that fifteen of the 19 hijackers of 9/11
to increase export to 5 million barrels a day by 2021. Sure terror attack were Saudis). To be fair Iran does sponsor
enough, we know that's not going to happen with all the terrorist organizations, but nowhere near as prominently as
western sanctions. Still, the loss of 2.7 million barrels a day the other Gulf state. Is it then unfair to single-out Iran under
from Iran is a gaping hole for global oil supplies. As the the guise of poorly concealed financial motives? I don't judge.
cascading effect of sanctions make their presence felt, Rather, let's take a look at what Iran can't or can do, before
Iranian oil exports will lag leading to increased oil prices. history repeats itself. As it will.
Since (even before) his election, Trump has been at odds with Iran and its Strait of Hormuz
Iran the way Bush riled on Iraq. With gusto he has quickly Iran has a crucial trump card, the Strait of Hormuz.
undone Obama's vision towards a non-nuclear Iran. In the A narrow waterway lying between Iran and Oman, the Strait
deal of 2015, earlier restrictions were removed on the promise of Hormuz is a major shipping route and only passage from
that Iran would stop pursuing nuclear capabilities. Under the Persian Gulf to the wider ocean. In other words, 90
this new administration, the US withdrew from the 2015 Iran percent of oil from the Persian Gulf, which boasts of major
nuclear deal unilaterally and reimposed sanctions on the oil producers like Iran, Kuwait, Qatar, Saudi Arabia and the
Middle-Eastern nation. Further, hammering away more woes,
the US has asked all
countries across the
board to end Iranian oil
imports by this November.
With the US withdrawal
and an embargo back in
full force on Iran's oil, we
are again in a similar
situation to 2008. That
year, Iran threatened to
close the straight of
Hormuz, sending oil
spiraling to $160 a barrel
in a matter of months.
Sounds familiar?

It's about influence

Like his Republican White Hormuz is the world's largest crude oil transit point by volume. A full 1/5 of the world's oil supply transits
House predecessors through Hormuz.
President George Bush

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

Fuel Watch

United Arab Emirates, passes through this route to reach the stopped, it will not allow any oil shipment to pass through
rest of the world. The heavily guarded route is also the only the Strait of Hormuz. It's an 'all for Iran' or 'none for all',
route for LNG shipments from the world's largest natural gas approach. As things stand, there's lot to be gained if Iran is
exporter, Qatar. able to export oil freely. For starters, more oil in the market
If this strait is (threatened to be) blocked by Iran for a month and thus low prices. The Strait of Hormuz will also heave a
or so, there'd be panic buying among investors leading to sigh letting pass a fifth of global oil consumed every day.
escalation in oil prices. We are confident that oil price will Who else will gain? China is the largest importer of Iranian
soar past $150 in no time. oil, while Iran is the third largest oil supplier to India. Both
Why is Iran using the Strait of Hormuz as a bargaining chip? the Asian countries are in dire need of Iranian oil. Turkey
Because Iran is well aware of the Strait's role in global oil who shares a border with Iran also signaled its intentions to
trade, and it worked last time. The nominal capacity of the keep importing Iranian oil no matter what. Hence a zero export
strait is fourteen oil tankers, which is about seventeen million goal of President Trump will likely never materialize.
barrels of oil per day. In 2016, exceeding the nominal capacity, By this November, the comprehensive sanction against Iran
18.5 million barrels of oil per day were transported, or about including Iranian oil exports would be locked in place.
half of world's daily crude oil exports. Taking into account Theoretically as soon as Iran blocks the Strait of Hormuz, the
transport of seaborne crude and other liquids, about 30 US Navy, along with Saudi Arabia and UAE's, will jump in to
percent of the world's tankers are centered here, making it resume navigation. A conflict will breakout, and we'll have a
the busiest oil transit point. major war in our hands. In another potential scenario, any
History repeats itself military intervention near the Strait of Hormuz, accidental or
What we are seeing now is a repeat of the familiar picture of intentional, can have massive repercussions leading to
2008. Back then, the economy was doing great. We had a higher oil prices.
Republican President enjoying a chummy relationship with Who will benefit from oil above $150 a barrel?
Saudi Arabia. Still, OPEC did cut production as it did recently. Ultimately, Russia and Saudi Arabia, two of the largest
On the sidelines, tensions with Iran rose. Naturally, oil prices exporters of petroleum, key influencers of the Trump
surged and strained past $100/barrel for months. Gas was administration will benefit immensely from a surge in oil
close to $5/gal in the US. The 2008 global financial collapse, prices. So will Iran, to a lower extent because of the embargo.
in reality, blamed almost exclusively on lack of oversight on Already, Saudi Arabia and Russia have hinted that OPEC could
the banking system was in reality triggered by cascading scale up production to exceed 1 million barrels a day if the
bankruptcies caused by increasing cost of operations due to oil market needs it. Saudi Arabia has reassured the US that if
record oil prices. necessary, it'll add 2 million barrels a day from the spare
Now, more than the nuclear power, President Trump is keen capacity. What about the shale oil, you ask? Oil production
on a regime change in Iran and as a result, is pushing for in the US has increased however, infrastructure issues
another revolution in Iran. Is that prudent? For, forty years pipeline trouble persists. Of course, Libyan oil production
ago, the revolution in Iran doubled global oil prices. has increased too. However, just imagine the situation if they
In fact, oil prices fell only after production was restored in pull out all this oil on a single day? Wow, what a price rise
Iran after two years. If a revolution does take place, oil prices it'd be.
driven by speculation will only go higher. An ill-timed move, Renewables too are likely to benefit. Although it is unlikely
thus. this administration will promote solar through tax incentives,
Some analysts argue that Iran will never shut down the Strait renewables have become cost effective on their own merit
of Hormuz. Indeed, starting from 2008 Iran has, on many and have are now mature contenders in energy markets, with
occasions, threatened to choke the Strait following US and public opinion on their side. Tesla model 3s, which have
European sanctions. That's why many are unconcerned about outsold BMW 3 series since their introduction will be flying
the developments in Iran. With this apparent lack of interest off the lots.
and opposition, the Trump administration has switched from All US oil producers, especially frackers and shale producers
a lenient to hardcore stance on sanctions. The US wants to with break even costs around $60/barrel will benefit
cut off all Iranian supplies, come what may. 'Zero oil exports' immensely. The North Fakota Shale boom will resume in full
from Iran is the new-found goal. force. Got property in North Dakota? Time to hold on to it!
For its part, Iran has reminded that if the oil exports are Had roughneck experience circa 2008? Brush up your resume',
the oil boom is returning to North Dakota and Texas!

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



New Unveils

Mahindra Launches Marazzo

Mahindra & Mahindra Ltd (M&M) launched the Marazzo on The first-in-class Electric Power Steering improves real world
September 3 at an attractive price of Rs. 9.99 lakh (Ex- fuel economy, steering feel and manoeuvrability. The Marazzo
Showroom) for the M2 variant. delivers an excellent turning radius of 5.25m.
Anand Mahindra, Executive Chairman, Mahindra and Marazzo's design maximizes cabin space in all 3 rows and
Mahindra Ltd, said, "The launch of Marazzo is a defining seats up to 8 people comfortably including luxurious legroom.
moment in the automotive journey of Mahindra not only Powered by a 1.5 litre, 4- cylinder D15 Diesel engine designed
within India but globally as well. Being the first joint product for low noise, vibration and harshness, Marazzo's refined
development effort between Mahindra Automotive North 1.5 litre 4-cylinder in placed in a transverse (east-west)
America (MANA) & Mahindra Research Valley (MRV), the layout, opening up a lot of space for the cabin. The engine
Marazzo aptly represents our 'Rise' philosophy in action. produces 90.2kW (121 BHP) power and 300 Nm torque.
Our development teams have used alternative thinking and Marazzo offers a unique package of the following safety
challenged the limits to deliver a vehicle that is poised to be features across all variants — Dual front airbags; Disc brakes
nothing less than a game changer for us. We are entering a on all 4 wheels; ISOFIX child seat mounts; side-impact beams;
new orbit and hope to deliver yet another iconic offering." Impact-sensitive door locks; and Anti-lock Braking System.
Speaking at the launch, Dr. Pawan Goenka, Managing Director, M6 and M8 variants include Rear Parking Camera and
Mahindra & Mahindra Ltd said, "The Marazzo embodies Sensors, first-in-class Emergency Call and Cornering Lamps
Mahindra's new, increasingly global approach to product Marazzo is equipped with technology features: 18 cm (7")
development, having been engineered in Detroit for excellence, Colour Touch Screen Infotainment system; iPod connectivity,
designed by our in-house team in collaboration with picture viewer, USB audio/video, Bluetooth Audio; Turn by
Pininfarina, Italy, with the entire package coming together at Turn Navigation Indicator in Cluster with on-board
MRV, our state of the art R&D centre near Chennai. Marazzo Navigation; Connectivity suite includes Android Auto,
also represents a bold new direction for our automotive Mahindra BLUE SENSE App with Emergency Call; Voice
products, one that offers our customers an unmatched quality activated controls for music system & Voice assist features
and a truly refined user experience." such as voice recognition for infotainment and SMS read
Marazzo's style-quotient is enhanced with projector out; and Steering-mounted audio and phone controls.
headlamps, fog lamps with Daytime Running Lamps, elegant The other features includes: Power-foldable ORVMs with Side
chrome finishes on exteriors, twin-spoke 17" machined alloy Turn Indicators and Entry Assist Lamp, Follow-me-home &
wheels. Lead-me-to-vehicle headlamps, Service Reminder, Cooled
The rear suspension of the Marazzo has a lightweight "twist glove box, Sunglass holder, Conversation mirror, Cup-holders
beam" construction, which provides excellent ride and in every row & bottle-holders on all 4 doors, Multiple
handling with the highest suspension travel of 245mm in the charging and media outlets.
segment.

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

News Basket

Volvo Cars Inaugurates New Showroom in Delhi-NCR

Volvo Cars strengthens its network by opening a new was inaugurated by Charles Frump, Managing Director,
boutique showroom in Noida under the ownership of Volvo Car India.
Scandia Motorcars. It is the 4th showroom in Delhi-NCR and Scandia Motorcars is a crucial touchpoint that will drive
underlines the significance of the largest luxury car market brand engagement with the elite in Noida. Servicing of cars
in India. With Noida added, Volvo Cars now has 24 continues at the flagship facility of Scandia Motorcars on
Showrooms in 22 cities across India. The Noida facility Mathura road. Volvo Cars believes in providing best-in-class
experience to its esteemed customers and ensures a top-notch
customer experience throughout the customer journey.
While inaugurating the dealership, Charles Frump, said,
“Noida is a growing area within Delhi-NCR and our showroom
here will cater to this affluent class of customers. As a proven
partner, we have selected Scandia Motorcars to open a
second showroom in Delhi-NCR. We look forward to
successful result here and are confident this will boost our
brand visibility in this critical market.”
Shubham Gupta, Dealer Principal, Scandia Motorcars, said,
“It is a matter of pride for us to be associated with Volvo Cars
and take the relationship forward. We are absolutely
delighted to announce the opening of our 2nd showroom in
Delhi-NCR today. We are committed to providing our
customers with best-in-class services and contributing to
Volvo cars success in India.”

Bengal Motorrad Debuts as BMW Motorrad Partner in Kolkata

BMW Motorrad appointed Bengal Motorrad as its BMW Motorrad officially started its operations as a part
authorised dealer partner in Kolkata on September 10. The of the Indian subsidiary of BMW Group in 2017. Presently,
dealership is headed by Adarsh Tulshan, Dealer Partner, BMW Motorrad is in the process of setting up the team
Bengal Motorrad. and dealer network in India. Till date, BMW Motorrad India
The new showroom is located at 41A, A J C Bose Road, Kolkata has set up eight sales outlets in India.
and the aftersales facility is located at 151, Arupota Village,
PGS Kolkata. Spread across approximately 2,400 sq.ft., the
showroom showcases 10 motorcycles, a customer lounge
and a wide array of BMW Motorrad accessories and lifestyle
merchandise. The 3,600 sq.ft. aftersales facility has 4
mechanical bays for complete service. Bengal Motorrad will
deliver international standards of sales, service, spare-
parts and business systems in all processes to ensure that
customers receive best-in-class pre and post sales
ownership experience.
Adarsh Tulshan, Dealer Partner, Bengal Motorrad said, “We
are thrilled to see the ‘ultimate riding machine’ in Kolkata
and as a dealer partner for BMW Motorrad, we are excited
about the great potential BMW Motorrad has in
contribution to our business success. We are looking
forward to embark with BMW Motorrad on a breakthrough
journey in the premium motorcycle segment in India.”

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


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