Federation of Automobile Dealers Associations | fada.in | Estb: 1964 October 2020 | Vol. 20 | Issue: VII | Pages : 60 | Rs. 50
f a d a 4, President’sMessage
Auto Dealer Workshops are now under the
ambit of MSME!
8, India Economics
Journal Inflation Remains Sticky but Growth Picks
Momentum | IIP Moves to a Growth Trajectory |
Trade Deficit Starts to Widen
Insights from the Automobile Retail Industry 16, Demystifying GST
Recent Changes in GST
40, Insight 19, FADA News
Reimagining the Auto Industry’s Automobile Dealers of Noida Felicitated FADA President
Future: It’s Now or Never - Mr Vinkesh Gulati
28, Dealership Ops & Leadership 30, Enterprise
Finish Strong: Your 2020 Radico Khaitan: In High Spirits
End-of-Year Strategy
Passion for the liquor trade has made Abhishek Khaitan, MD of the branded
spirits manufacturer, build top-selling premium brands by targeting niches.
Federation of Automobile
Dealers Associations (F A D A)
is the apex body of Automobile Retail Industry in
India.
F A D A has been representing over 15,000
automobile dealers having over 26,500 dealerships
including 16 associations of Automobile Dealers at
the Regional, State and City levels accounting for
90% of market share in India since 1964. Together,
we employ over ~5 million people in the country
(including Direct and Indirect employment) at
dealerships and service centres.
contents Printed and Published by Saharsh Damani on behalf of Federa on of
Automobile Dealers Associa ons, 805, Surya Kiran, 19, K G Marg, New
October 2020 | Vol. 20 | Issue: VII Delhi-110 001.
4 President’s Message Printed at Sita Fine Arts P Ltd, A-16, Naraina Indl Area - II, New Delhi
Auto Dealer Workshops are now under the ambit of MSME! Editor: Saharsh Damani
8 India Economics Advertisers’ Index 59
33
Infla on Remains S cky but Growth Picks Momentum| IIP Moves to a Growth Trajectory | Kuttukaran Group 49
Trade Deficit Starts to Widen Provincial Group 07
Shriram Transport Finance 60
10 Auto Retail Registration United Group of Institutions
Wings Infotech
FADA Releases October’20 Vehicle Registra on Data
Editor, F A D A Journal and CEO, F A D A
14 FADA Research
Mr Saharsh Damani
Tractor Registra on in India - Trend Analysis T +91-11-6630 4852, 2332 0093, 2332 0095
E [email protected]
16 Demystifying GST
Of ice Bearers Vice President
Recent Changes in GST Mr Manish Raj Singhania
President E [email protected]
19 FADA News Mr Vinkesh Gulati
E [email protected] Treasurer
- Automobile Dealers of Noida Felicitated FADA President - Mr Vinkesh Gula Mr Sai Giridhar
- Deepawali Puja at FADA Office Secretary E [email protected]
Mr C S Vigneshwar
21 NADA Show 2021 E [email protected]
22 Surveys & Studies
Electric Two-Wheeler: India Market Outlook
28 Dealership Ops & Leadership
Finish Strong: Your 2020 End-of-Year Strategy
30 Enterprise
Radico Khaitan: In High Spirits
34 Perspective
COVID-19 Impact - Will India Evolve As The Regional Procurement Hub
37 Chart of the Month
38 Opinion
Five Factors That Will Impact November 2020 Commercial Vehicle (CV) Sales
40 Insight
Reimagining the Auto Industry’s Future: It’s Now or Never
44 Membership
48 Competition Law Updates
50 Consumer Case Studies
53 Industry Track
Auto Retail Con nued To Head South
56 Statistics
Vehicle Sales, Y-o-Y Growth & Market Share - October 2020
President’s Message
Auto Dealer Workshops are now under the ambit of MSME!
FADA holds its 299th Governing Council Meeting
vinkesh Gulati, president - FADA Dear Friends,
4 F A D A Journal October 2020 | fada.in I hope that all of you had a Safe and Great Diwali! While Auto
Sales had tanked during Covid Lockdown, I am sure that most of
us have finally seen good retails during the current fes vi es.
It gives me great sa sfac on to announce that a er FADA's
con nuous follow-up since last 2 years, Auto Dealer will now
finally come under the ambit of MSME! Udyam (MSME)
Registra on for Auto Dealers (NIC Code: 45) has now been
enabled and shows wholesale and retail trade and repair of
motor vehicles and motorcycles. Dealers who have not
registered as MSME should use this opportunity and register
themselves to get all the MSME benefits.
This was truly a great Diwali Gi which our Na on’s most
Dynamic & Progressive Minister, Shri Ni n Gadkari ji gave to us.
Thank you Gadkari ji! I will also like to thank Shri Rajgopal
Sharma, PS to the Minister who helped us see light of the day.
I will like to put on record the hard work of our Immediate Past
President, Mr Ashish Harsharaj Kale, under whom we took this
ini a ve. FADA Secretariat played a vital role and con nued its
push to get this status for all of us.
By the me this issue of FADA Journal reaches you, you would
have a ended the special webinar organised by your
Federa on with Shri Gadkari ji who will address the concerns
on MSME and MoRTH through Q&A session on 28th November
2020. This again is happening for the first me in FADA’s history
that a Minister is addressing the industry to understand the
concerns directly. This shows the importance which Auto Retail
industry is gaining in the eyes of the Government.
Government of India has announced Produc on Linked
Incen ve (PLI) Scheme and has made Indian Automobile
Industry the biggest beneficiary by awarding Rs. 55,042 crores
outlay over the next five-year period. Department of Heavy
Industries is currently working on the modali es of the scheme
for Auto Industry.
The Automobile Industry is a major economic contributor in
India and the PLI Scheme will make the Indian Automo ve
Industry more compe ve and will enhance globaliza on of
the Industry. This will also improve export and will make the
produc on be er in terms of economies of scale.
President’s Message
With increasing Auto Produc on and the Government registra on of vehicles at the dealership point seamlessly
giving incen ves, I am sure that our Principals will trickle for many years now. I am happy to share that under the
down the benefits to the end customers. This will leadership of FADA Treasurer - Mr Sai Giridhar, the
therefore help in demand genera on and help us in Secretariat had mee ngs with all State Chairpersons
reviving the economy thus making us reach our Prime where they were encouraged to follow-up with their
Minister's vision of US$ 5 Trillion economy. respec ve State Transport Departments and replicate the
Rajasthan Model. Mr Sanskar Gupta, State Chairperson
You are very well aware that Authorised Automobile FADA U ar Pradesh and Mr Pradeep Agarwal, State
Dealerships fall under the category of Orange Zone which Chairperson FADA Odisha have been successful in ge ng
means that each unit needs to go thru the process of the same implemented in their States. Kudos to both of
taking permissions from the local pollu on department them! I encourage all the other State Chairpersons to
for consent to establish and consent to operate. Both replicate this process in your States as this will act as a huge
these procedures are lengthy and me consuming, due to relief to the en re Dealer Community in day to day
which establishing a new authorised service centre takes working with RTO’s.
lot of me and effort. The norms which are laid down for
the pollu on department for the service centres are As I had men oned earlier, it will be my endeavour to work
followed to the core at all authorised service centres may earnestly for the implementa on of the Franchisee
it be Effluent Treatment Plant (ETP), Water re-cycling plant Protec on Act to protect the interest of the dealer
or Norms for disposal of old ba eries and scrap. community and customers, who put their confidence in
the brand and the Franchisee. This will also help in job
Since our units have been placed under Orange Zone security amongst people employed with the retail
category, Dealers face lot of harassment at the hands of industry. You will be happy to know that finally, work on
local authori es and shi ing to Green Zone will save all this direc on has begun from our end. I will keep upda ng
the hardships which we are currently facing. You will be you from me to me whenever an important milestone is
happy to note that FADA is star ng to work on ge ng achieved.
Auto Workshops & Service centres shi ed from Orange
Zone to Green Zone. If successful, this will act as a real Since, promulga ng a law takes me to provide immediate
‘Ease Of Business’ for all of us! relief, we are working parallelly to get the Model Dealer
Agreement dra ed which dealer friends may use as a base
Reitera ng to FADA ac vi es, on October 29th 2020, document while entering into an agreement with OEMs
FADA held its 299th Governing Council Mee ng virtually going forward or at the me of renewal of the exis ng
where in around 40 Governing Council Members from all contract. We will share the dra as and when it is ready
across the country a ended. In the first of its kind, Mr with all of you.
Priyank Bhar , Joint Secretary, MoRTH graced the
mee ng and had a Q&A Session with Council Members. The learning from the sudden exits made by various OEM’s
Many concerns on Type Approval issue, Automa c is that it is in our own interest that we get both Franchisee
renewal of Trade Plates, Pending refund claims and many Law & Model Dealer Agreement in place without further
other state specific issues were raised. delay. I therefore, request you to come forward in case you
have close proximi es with influencers or if you yourself
Mr Bhar informed that probably by first week of January are in such a posi on which will prove beneficial in ge ng
2021, the CMVR rules will be no fied for amended CMVR the Franchisee Law framed. You may reach out to me
Act and this will automa cally take care of most issues directly at [email protected] with your inputs and
that were being raised. He added that efforts were on for sugges ons.
making the en re procedure for vehicle registra on IT
enabled thus promo ng faceless & paperless interac on While on this subject, I will like to men on that FADA is
with RTO’s. Post the mee ng FADA shared with Mr Bhar a working closely with Harley Davidson (HD) dealers and
representa on on concerns which he said would be has already organised a press conference highligh ng
working on. their concerns. HD Dealers were unaware of this sudden
exit as they came to know through Media, when HD filed
Rajasthan has been following faceless and paperless
fada.in | October 2020 F A D A Journal 5
President’s Message
SEC filing in US Stock Exchange. Dealers expressed that turmoil, despite the six-month moratorium on loan
not only have they been le in lurch by Harley Davison’s repayment. According to the latest data on auto debit
decision to restructure its India business with a transac ons on the Na onal Automated Clearing
distribu on e up with Hero MotoCorp Ltd but the House (NACH) pla orm, as much as 40.1% of auto debit
compensa on offered will not even help to pay a transac ons by volume in October have failed largely
month’s rent. The decision of the Company to due to insufficient funds worsening from a bounce rate
discon nue with its popular models like the Street 750 of 31.5% in February this year. This clearly shows the
had pushed their businesses into deep losses. Further, amount of stress in disposable income. With the
the Company had stopped suppor ng the dealers with fes vi es now over, Dealer friends are requested to
providing spares and due to which they were unable to keep any eye on their inventory levels so that there is
service their exis ng customers. FADA will be doing its no stress on their Balance Sheets.
best possible in finding an amicable resolu on in HD
dealer members ma er. There is a lot that we as an industry have to achieve and in
this I request for your whole-hearted support and
As you are aware, many dealers have received Service tax coopera on by way of giving your valuable me by
no ces on discounts and incen ve issues. To handhold partaking in FADA’s ini a ves, be it Monthly Retail
and educate dealers on this issue, FADA has begun Survey’s that we conduct to understand the ground
conduc ng webinars across the country. Webinar for the reali es or the Webinars we conduct to educate to brace
states of J&K, Ladakh, HP, PB, RJ, UK, UP, DL and GJ have with the changing norms. Do engage with your Federa on
already been concluded. The webinar is being organised and also encourage your co-dealers to do the needful. As a
in partnership with Nitya Tax Associates. Around 175 first step, let’s ask all our co-dealers to take FADA’s life
Dealer Principals have already par cipated and gained membership if they have not already!
from the Q&A they had with him. FADA members who
approach Nitya Associates for handling their concerns will Please keep sharing your valuable feedback and
get special concessions. In case any dealer friend needs to sugges ons which you want FADA to work upon.
get in touch with him, they can get in touch with the
Secretariat at [email protected] Happy Selling!
India’s retail borrowers are s ll to find their feet as Warm Regards,
seen from the failure of a large number of auto-debit
transac ons in October, underscoring growing stress in Vinkesh Gula
the banking system from the pandemic-induced President FADA
6 F A D A Journal October 2020 | fada.in
India Economics
Inflation Remains Sticky but Growth Picks Momentum|
IIP Moves to a Growth Trajectory| Trade Deficit Starts to Widen
Infla on Con nues To Be fare, the la er too has seen an Pharmaceu cals and Products There has been a broad-based
S cky up ck given the social 7% YoY, Electrical equipment improvement in imports but
distancing measures and 10% YoY and Other Transport Gold and Silver imports have
CPI infla on has soared sani za on costs reflec ng in Equipment 7.7% YoY showing shot up to US$ 2.5 Bn from US$
upwards to 7.6% Y-o-Y vs 7.3% cost of services to the consumer. good growth numbers. Clearly, 0.6 Bn in the previous month,
for September, the highest the increased Auto Produc on reflec ng the fes ve demand
number since 2014. The IIP Moves To A Growth has found its reflec on in the and the onset of wedding
sequen al up ck is driven by Trajectory current IIP release. Consumer season. Non-Oil and Non Gold
Food and Beverages, while durables at 2.8% vs -9.6% in imports which are a domes c
most other categories have IIP has moved to growth Aug and Consumer Non- demand indicator have
remained s cky, keeping the trajectory clocking a growth of Durables at 4.1% vs -2.3% in contracted by 4.6% YoY, at a
core infla on high at 5.8% vs 0.2% in September vs the Aug shows the increased pent slowest pace since the onset of
5.7% in September 2020. previous month at -7.4% YoY. up and fes ve demand in the the pandemic, reflec ng the
Though the early signs were system. Overall, there is a demand recovery, sustenance
Food infla on has inched up seen in PMI manufacturing broad based improvement in of which remains a ques on
further to 10.2% YoY vs 9.8% moving to 56.8 in September IIP numbers, but sustenance is mark. Exports at US$ 24.89 Bn
YoY in September. The second and eight core data contrac ng the key to watch out for. showed a sequen al decline
most weighted category of by 80 bps, the bea ng of from US$ 27.57 Bn in
Miscellaneous Items has consensus expecta ons is Trade Deficit Starts To Widen September, moving back to
remained s cky at 6.95 YoY likely to reflect posi vely for contrac onary phase, a er a
with Transport & Communi- the economic sen ment. India’s October trade deficit transient growth in the past
ca on at 11.2% YoY and Manufacturing contracted by widened to US$ 8.7 Bn as month. Currently, exports are
Personal Care and Effects at 60bps vs -8% in Aug and 10 of compared to US$ 2.7 Bn in the 95% of pre-covid levels
12.1% YoY. While the former is the 23 manufacturing groups previous month, led by both whereas imports are at 88% of
being driven by revised cost of moved to expansion, with sequen al pickup in imports pre-covid levels.
public transporta on and air C h e m i c a l s 5 % Yo Y, and contrac on in exports.
Infla on Inches Up Further
Source: CEIC & FADA Research
8 F A D A Journal October 2020 | fada.in
India Economics
Trends In IIP and Its Components
Source: CEIC & FADA Research
Trade Data Summary (in US$ Bn)
Source: Ministry of Commerce & FADA Research
fada.in | October 2020 F A D A Journal 9
Auto Retail Registration
FADA Releases October’20 Vehicle Registration Data
• While Vehicle Registra ons in October grows by 5.11% MoM, it con nues to fall by -24% YoY.
• On YoY, 2-Wheeler degrows by -26.82%, 3-Wheeler by -64.50%, CV by -30.32% and PV by -8.80%. Only Tractor
registra on con nues its posi ve momentum and grows by 55.53%.
• With only Navratri in October as compared to both Navratri and Diwali in October last year, October
registra ons did not show posi ve growth.
• As India enters the last leg of fes vi es, even though customer walk-in’s have improved, healthy conversions
are yet to see light of the day.
• Dealer Inventory for both 2W and PV are at its newest highs in this Financial Year. FADA requests all OEMs with
a special request to 2W OEMs to assess the on-ground inventory level and curb produc on accordingly.
All-India Vehicle Registra on Data for October’20 with YoY Comparison
PASSENGER Commercial
VEHICLE Vehicle
Oct’20 Oct’19 Oct’20 Oct’19
2,49,860 2,73,980 44,480 63,837
- 8.80% - 30.32%
Two TRACTOR Three
Wheeler Wheeler
Oct’20 Oct’19
Oct’20 Oct’19 55,146 35,456 Oct’20 Oct’19
10,41,682 14,23,394 22,381 63,042
55.53%
- 26.82% - 64.50%
Source: FADA Research
Disclaimer:
1. The above numbers do not have figures from AP, MP, LD & TS as all these States/UT’s are not yet on Vahan 4.
2. Vehicle Registra on Data has been collated as on 08.11.20 and in collabora on with Ministry of Road Transport & Highways, Government of India and has
been gathered from 1,257 out of 1,464 RTOs.
10 F A D A Journal October 2020 | fada.in
Auto Retail Registration
OEM wise Market Share Data for the Month of October’20 with YoY comparison
Passenger Vehicle (PV)
OEM Name Oct'20 Market Share Oct'19 Market Share
(%), Oct'20 (%), Oct’20
1,35,752 49.55%
MARUTI SUZUKI INDIA LTD 1,24,261 49.73% 47,711 17.41%
12,972 4.73%
HYUNDAI MOTOR INDIA LTD 42,757 17.11% 8,859 3.23%
17,017 6.21%
TATA MOTORS LTD 18,340 7.34% 11,899 4.34%
8,433 3.08%
KIA MOTORS INDIA PVT LTD 16,096 6.44% 11,023 4.02%
6,686 2.44%
MAHINDRA & MAHINDRA LTD 12,414 4.97% 0 0.00%
2,585 0.94%
HONDA CARS INDIA LTD 7,995 3.20% 1,185 0.43%
1,653 0.60%
RENAULT INDIA PVT LTD 7,319 2.93% 857 0.31%
803 0.29%
TOYOTA KIRLOSKAR MOTOR PVT LTD 6,888 2.76% 1,247 0.46%
2,618 0.96%
FORD INDIA PVT LTD 4,663 1.87% 351 0.13%
178 0.06%
SKODA AUTO VOLKSWAGEN INDIA PVT LTD 2,467 0.99% 520 0.19%
0 0.00%
MG MOTOR INDIA PVT LTD 2,370 0.95% 31 0.01%
326 0.12%
MERCEDES-BENZ INDIA PVT LTD 822 0.33% 2 0.00%
4 0.00%
NISSAN MOTOR INDIA PVT LTD 649 0.26% 2 0.00%
0 0.00%
BMW INDIA PVT LTD 573 0.23% 1,266 0.46%
FIAT INDIA AUTOMOBILES PVT LTD 558 0.22%
SKODA AUTO INDIA/AS PVT LTD 254 0.10%
VOLKSWAGEN AG/INDIA PVT LTD 251 0.10%
JAGUAR LAND ROVER INDIA LTD 151 0.06%
VOLVO AUTO INDIA PVT LTD 137 0.05%
FORCE MOTORS LIMITED, A FIRODIA ENTERPRISE 116 0.05%
MERCEDES-BENZ AG 19 0.01%
PORSCHE AG GERMANY 19 0.01%
AUDI AG 6 0.00%
BENTLEY MOTORS LTD 2 0.00%
ROLLS ROYCE 1 0.00%
FERRARI INDIA PRIVATE LTD 1 0.00%
AUTOMOBILI LAMBORGHINI S.P.A 1 0.00%
Others 730 0.29%
Total 2,49,860 100.00% 2,73,980 100.00%
fada.in | October 2020 F A D A Journal 11
Auto Retail Registration
OEM wise Market Share Data for the Month of October’20 with YoY comparison
OEM Name Two Wheeler (2W) Market Share Oct'19 Market Share
(%), Oct'20 (%), Oct'20
Oct'20 4,87,701 34.26%
3,96,996 27.89%
HERO MOTOCORP LTD 3,33,563 32.02% 1,90,991 13.42%
HONDA MOTORCYCLE AND SCOOTER INDIA (P) LTD 2,92,267 28.06% 1,75,022 12.30%
4.16%
TVS MOTOR COMPANY LTD 1,56,063 14.98% 59,242 3.81%
54,280 3.31%
BAJAJ AUTO LTD 1,18,486 11.37% 47,174 0.43%
ROYAL-ENFIELD (UNIT OF EICHER LTD) 46,593 4.47% 0.20%
6,090 0.01%
SUZUKI MOTORCYCLE INDIA PVT LTD 43,361 4.16% 2,806 0.01%
INDIA YAMAHA MOTOR PVT LTD 41,961 4.03% 0.02%
98 0.02%
PIAGGIO VEHICLES PVT LTD 3,643 0.35% 178 0.01%
281 0.00%
CLASSIC LEGENDS PVT LTD 2,516 0.24% 218 0.00%
ADISHWAR AUTO RIDE INDIA PVT LTD 199 0.02% 0.16%
77
H-D MOTOR COMPANY INDIA PVT LTD 120 0.01% 10 100.00%
INDIA KAWASAKI MOTORS PVT LTD 112 0.01% 8 Market Share
BMW INDIA PVT LTD 104 0.01% 2,222 (%), Oct'20
14,23,394
TRIUMPH MOTORCYCLES (INDIA) PVT LTD 72 0.01%
DUCATI INDIA PVT LTD 9 0.00% Oct'19
DUCATI MOTOR HOLDING S.P.A 0 0.00%
Others including EV 2,613 0.25%
Total 10,41,682 100.00%
Commercial Vehicle (CV)
OEM Name Oct'20 Market Share
(%), Oct'20
TATA MOTORS LTD 15,316 34.43% 26,090 40.87%
MAHINDRA & MAHINDRA LTD 14,982 33.68% 17,457 27.35%
ASHOK LEYLAND LTD 11.82% 15.12%
MARUTI SUZUKI INDIA LTD 5,259 9,649
VE COMMERCIAL VEHICLES LTD 2,286 5.14% 2,291 3.59%
DAIMLER INDIA COMMERCIAL VEHICLES PVT LTD 2,176 4.89% 3,153 4.94%
FORCE MOTORS LIMITED, A FIRODIA ENTERPRISE 1.90% 1.53%
SML ISUZU LTD 847 0.99% 977 1.30%
Others 439 0.78% 827 0.85%
346 6.36% 541 4.47%
Total 2,829 2,852
100.00% 100.00%
44,480 63,837
12 F A D A Journal October 2020 | fada.in
Auto Retail Registration
OEM wise Market Share Data for the Month of October’20 with YoY comparison
Three-Wheeler (3W)
OEM Name Oct'20 Market Share Oct'19 Market Share
(%), Oct'20 (%), Oct'20
BAJAJ AUTO LTD 29,263 46.42%
PIAGGIO VEHICLES PVT LTD 8,339 37.26% 10,842 17.20%
ATUL AUTO LTD 4,395 19.64% 5.42%
TVS MOTOR COMPANY LTD 3,415 1.58%
MAHINDRA & MAHINDRA LTD 876 3.91% 996 6.58%
Others including EV 728 3.25% 22.81%
Total 524 2.34% 4,147 100.00%
7,519 33.60% 14,379
OEM Name 22,381 100.00% 63,042 Market Share
(%), Oct'20
Tractor Market Share Sep'19
(%), Oct'20
Oct'20
MAHINDRA & MAHINDRA LTD (TRACTOR) 15,597 22.75% 8,834 23.24%
MAHINDRA & MAHINDRA LTD (SWARAJ DIVISION) 11,466 16.72% 6,116 16.09%
INTERNATIONAL TRACTORS LTD 12.80% 4,714 12.40%
TAFE LIMITED 8,778 11.30% 4,160 10.95%
ESCORTS LIMITED (AGRI MACHINERY GROUP) 7,749 10.76% 4,168 10.97%
JOHN DEERE INDIA PVT LTD (TRACTOR DEVISION) 7,377 3,033
EICHER TRACTORS 5,065 7.39% 2,431 7.98%
CNH INDUSTRIAL (INDIA) PVT LTD 4,219 6.15% 1,671 6.40%
KUBOTA AGRICULTURAL MACHINERY INDIA PVT LTD 2,887 4.21% 4.40%
VST TILLERS TRACTORS LTD 1,550 2.26% 528 1.39%
FORCE MOTORS LTD, A FIRODIA ENTERPRISE 1.24% 421 1.11%
INDO FARM EQUIPMENT LTD 848 0.75% 210 0.55%
CAPTAIN TRACTORS PVT LTD 513 0.22% 159 0.42%
OTHERS 154 0.15% 121 0.32%
TOTAL TRACTORS 104 3.29% 1,442 3.79%
2,257 100.00% 38,008 100.00%
68,564
Source: FADA Research
Disclaimer:
1. The above numbers do not have figures from AP, MP, LD & TS as all these States/UT’s are not yet on Vahan 4.
2. Vehicle Registra on Data has been collated as on 08.11.20 and in collabora on with Ministry of Road Transport & Highways, Government of India and has
been gathered from 1,257 out of 1,464 RTOs.
fada.in | October 2020 F A D A Journal 13
FADA Research
Tractor Registration in India - Trend Analysis
INTRODUCTION 27.94% and 6.72%. This The major reason for the registra ons has been
resulted in overall nega ve growth in terms of tractor recorded in the state of U ar
Indian tractor industry growth in the market in registra on in India Post Pradesh 10,373 in Oct’20 and
witnessed double-digit terms of tractor registra on COVID-19 was majorly due to 14,017 Sep’20. Rajasthan
growth in terms of vehicle by 1.28% in FY’20. be er farm incomes aided by accounted second highest
registra on during FY’2018 healthy rabi inflows, 7,857 in Oct’20 and third
and FY’2019. GROWTH IN REGISTRATION expecta ons of stable highest 8,421 in Sep’20,
– POST COVID-19 monsoon, very good whereas Maharashtra
In FY'19 tractor registra on reservoir levels, and recorded second highest
grew by 13.18% at 5,62,416 Post Covid-19, tractor rela vely less impact of the registra on of tractor 11,655
units as compared to 16.35% registra on was lowest in disease outbreak in the rural in Sep’20 and third highest
and 6.30% in FY'18 and FY'17 Apr’20 which was 5,684. ecosystem. Moreover, the 6,659 in Oct’20. On the Other
respec vely. On a yearly However, at later stage government ’s support for hand, Chandigarh, Ladakh,
basis, the growth rate more tractor registra on numbers agriculture opera ons and Delhi, Meghalaya, and
than doubled in FY'18 and showcased a rapid posi ve availability of financing has Nagaland recorded the least
FY’19 over FY'17. growth during the month led to posi ve growth on tractor registra on in India
from Jun’20 – Sep’20, and monthly basis. during Oct’20.
On the other hand, growth YoY growth achieved a mark
was marred due to weak of 82.53% in Sep’20 and the Top 3 States Accoun ng OEM WISE MARKET SHARE
sen ment during September highest number of tractor Highest Number of Tractor
and October of the year 2019 registra on was recorded in Registra ons: In India, the Mahindra & Mahindra (Tractor
as tractor registra ons Jul’20 which was 77,242. highest number of tractor and Swaraj Division) together
slipped into nega ve by accounted for 39.84% market
share in terms of tractor
Figure 1: Tractor Registra on in India on the Basis of Numbers and Growth Rate in Percentage registra on in India during
(%), FY’17 – FY’21 (Apr’20 – Oct’20) FY’21 (Apr’20 – Oct’20). TAFE
accounted for the second-
16.35% 13.18% highest market share
accoun ng 12.57%, followed
6.30% by Interna onal tractors
(12.0%), Escorts Limited Agri
-1.28% Machinery Group (10.89%),
John Deere India Tractor
-40.24% Division (7.31%), and Eicher
Tractors (6.33%) respec vely
4,27,085 4,96,920 5,62,416 5,55,211 3,31,768 during FY’21 (Apr’20 – Oct’20).
FY'17 FY'18 FY'19 FY'20 FY'21 (APR'20 - Escorts Ltd has increased its
OCT'20) market penetra on from
0.52% in FY’17 to 10.89% in
Tractor Registra on YoY Growth (%) FY’21. Similarly, Mahindra &
Mahindra Swaraj Division
Source: FADA Research and John Deere India have
Note: The above numbers do not have figures from AP, MP, LD & TS (as of 21st November 2020) increased their market share
penetra on from 2.35% and
4.70% in FY’17 to 16.18% and
7.31% in FY’21 (Apr’20 –
Oct’20).
14 F A D A Journal October 2020 | fada.in
FADA Research
Figure 2: Tractor Registra on in India on the Basis of Numbers and Growth Rate in Percentage (%), April–October (2019 & 2020)
82.53%
56.83%
39.11% 28.82%
11.72%
36,969 39,409 40,923 55,526 52,753 38,012 35,457
-84.62% -74.17% 69,383 55,606
5,684 10,179 45,718 77,242 67,956
JUN JUL AUG SEP OCT
APR MAY
Tractor Registra ons (2020) Tractor Registra ons (2019) YoY Growth (%)
Figure 3: OEM Wise Market Share of Tractor in India on the Basis of Registra on in Numbers, FY’17 – FY’21 (Apr’20–Oct’20)
160 155
146
140 127 131
120 117
Thousands 100 97 84 89
70
80 61 79 79
56 61 65
61 63 67 63 62
60 43
30 33 54
43
40 22 39 38 43 38 42 40 36 37
28 24 21
20
20 10 FY'18 FY'19 FY'20 FY'21 (Apr'20 - Oct'20)
2
-
FY'17
MAHINDRA & MAHINDRA LIMITED (TRACTOR) EICHER TRACTORS MAHINDRA & MAHINDRA LIMITED (SWARAJ DIVISION)
ESCORTS LIMITED (AGRI MACHINERY GROUP) TAFE LIMITED INTERNATIONAL TRACTORS LIMITED
JOHN DEERE INDIA PVT LTD(TRACTOR DEVISION) Others
Source: FADA Research
Note: The above numbers do not have figures from AP, MP, LD & TS (as of 21st November 2020)
fada.in | October 2020 F A D A Journal 15
Demystifying GST
Recent Changes in GST
DR SANJIV AGARWAL There have been various Invoice Furnishing Facility (Source: No fica on No. 83/2020-
Chartered Accountant important amendments in GST (IFF) on or before 13th of Central Tax dated 10.11.2020)
M/s Agarwal Sanjiv & procedure and compliances in 1st month in next quarter
Company first fortnight of November, Ÿ Total value for such B2B Class of persons for QRMP
2020 which members of FADA invoices is capped to 50 Scheme
MS NEHA SOMANI ought to know for compliances. lakhs per month Ÿ A registered person whose
Chartered Accountant Ÿ No need to report invoices
M/s Agarwal Sanjiv & CBIC has extended the last again in GSTR-1 if already aggregate turnover crosses
Company date for filing IT and GST reported in IFF five crore rupees during a
returns. In GST, date for annual Ÿ Due date of GSTR-1 for quarter in a financial year
return and GST reconcilia on quarterly filers is 13th of shall not be eligible for
statements (Form 9 and 9C) 1st month in next quarter furnishing of return on
have been extended upto 31st Ÿ HSN/SAC codes shall be quarterly basis from the
December, 2020. men oned mandatorily in first month of the
GSTR-1 ( <5Cr- 4 digit, >5Cr- succeeding quarter.
31 October 2020 was the last 6 digit) Ÿ Taxpayers who have
date for filing various returns GSTR-2 related furnished the return for the
including annual return and tax period October 2020 on
GST audit reconcilia on. GSTR-3B related
Ÿ Rule 61(6) was inserted to or before 30th November
Some of the important 2020, it shall be deemed
changes are enumerated provide due date for filing that they have opted under
below. GSTR-3B for the months of sub-rule (1) of rule 61A of
October, 2020 to March, the said rules for the monthly
Effec ve date of amendments 2021 as 20th of next or quarterly, as follows:
in sec on 39 of CGST Act, 2017 month if TO > 5 Crores - Turnover upto 1.5 cr
Ÿ Quarterly return filers shall
The Central Government has deposit tax in electronic and GSTR-1 on
appointed the 10th day of cash ledger on or before Quarterly basis in
November, 2020, as the date 25th of next month for first CFY- Quarterly
from which amendments in and second months - Turnover upto 1.5 cr
the provisions of sec on 39 (1, and GSTR-1 on
2 and 7) made by Finance Act, (Source: No fica on No. 82/2020- Monthly basis in CFY-
2019 of Act shall come into Central Tax dated 10.11.2020) Monthly
force. These amendments - Turnover more than
relate to furnishing of returns Extension of due dates for 1.5 crore rupees and
under “Quarterly Return GSTR-1 up to 5 crore rupees
Monthly Payment” (QRMP) New due dates for filing form in the preceding FY-
Scheme. GSTR-1 have been no fied Monthly
w.e.f. 01st January, 2021
(Source: No fica on No. 81/2020-
Central Tax dated 10.11.2020)
Amendment in CGST Rules,
2017
Following amendments have
been made in CGST Rules,
2017 in rela on to returns
(Rule 59, 60, 61, 61A and 62)
GSTR-1 related
Ÿ Quarterly return filers can
file their “first and second
month B2B invoices” in
16 F A D A Journal October 2020 | fada.in
Demystifying GST
The registered person may Ÿ Registered person shall Crore in any of the last three various no fica ons on
change the default op on not be eligible for the said financial years, viz FY 2017-18, 10.11.2020 to implement the
electronically, on the common special procedure unless 2018-19 or 2019-20. Scheme of quarterly return
portal, during the period from he has furnished the filing along with monthly
the 5th day of December, 2020 return for a complete tax This will be applicable with payment of taxes (QRMP
to the 31st day of January, period preceding such effect from 1st January, 2021. Scheme/ Scheme) and issues
2021. month. related to no fica ons issued
(Source: No fica on No. 88/2020- to implement the QRMP
This is effec ve from Ÿ This is a effec ve from Central Tax dated 10.11.2020) Scheme have been examined
01.01.2021. 01.01.2021. in the circular and clarifica on
Tes ng for taxpayers with 100 issued on :
(Source: No fica on No. 84/2020- (Source: No fica on No. 85/2020- Cr. + Turnover:
Central Tax dated 10.11.2020) Central Tax dated 10.11.2020) Ÿ Eligibility of QRMP Scheme
Ÿ For all the no fied
Special procedure for making Rescission of No fica on No. taxpayers, API Ÿ Exercising of QRMP
payment under QRMP Scheme 76/2020 –CT dated 15.10.2020 sandbox/tes ng is enabled Scheme
since 29th October, 2020.
Ÿ Taxpayer who have opted No fica on No. 76/2020- Ÿ Furnishing of details of
to furnish a return for every Central Tax dated 15.10.2020 Ÿ The trial e-invoice portal outward supplies u/s 37 of
quarter, shall deposit 35% rela ng to GSTR-3B for (h ps://einvoice1- the CGST Act
of the tax liability paid by October, 2020 to March, 2021 trial.nic.in/) for tes ng the
debi ng the electronic has been rescinded w.e.f. upload of invoices by Ÿ Monthly payment of tax
cash ledger in the return for 10.11.2020. no fied taxpayers through
the preceding quarter offline u lity (bulk Ÿ Quarterly filing of Form
where the return is (Source: No fica on No. 86/2020- genera on tool) was GSTR-3B
furnished quarterly, or the Central Tax dated 10.11.2020) ac vated from 6th
tax liability paid by debi ng November 2020. Ÿ Applicability of interest
the electronic cash ledger Extension of due date for
in the return for the last Form ITC-04 (for job-works) Ÿ Taxpayers need to note Ÿ Applicability of late fee
month of the immediately that the e-invoices/IRNs
preceding quarter where The me limit for furnishing and e-way bills generated (Source: Circular No. 143/13/2020 -
the return is furnished the declara on in FORM GST on trial e-invoice portal GST dated 10.11.2020)
monthly. ITC-04, in respect of goods (h ps://einvoice1-
dispatched to a job worker or trial.nic.in/) are for tes ng Auto-populated Form GSTR
Ÿ However, no such amount received from a job worker, purpose only. 3B (PDF) from October 2020
may be required to be during the period from July, onwards
deposited- 2020 to September, 2020 has They don’t have any legal
been extended ll the 30th day validity and shall not be Ÿ GSTN has earlier
Ÿ (a) for the first month of the of November, 2020. used for regular supplies,
quarter, where the balance i.e. for actual movement of introduced Form GSTR-2B,
in the electronic cash The No fica on No. 87/2020- goods etc.
ledger or electronic credit Central Tax shall be deemed to a sta c statement with
ledger is adequate for the have come into force with (Source: GSTN dated 16.11.2020)
tax liability for the said effect from the 25th day of details of ITC available for a
month or where there is nil October, 2020. Clarifica ons on Quarterly
tax liability; Return Monthly Payment tax period, for the benefit
(Source: No fica on No. 87/2020- (QRMP) scheme
Ÿ (b) for the second month of Central Tax dated 10.11.2020) of taxpayers. GSTR-2B is an
the quarter, where the The GST Council in its 42nd
balance in the electronic Amendment in requirement mee ng held on 05.10.2020, auto-dra ed Input Tax
cash ledger or electronic of e-invoicing had recommended that
credit ledger is adequate registered person having Credit (ITC) statement
for the cumula ve tax Amendment has been made in aggregate turnover up to five
liability for the first and the No fica on No. 13/2020- (5) crore rupees may be generated for every
second month of the Central Tax dated 21.03.2020 allowed to furnish return on
quarter or where there is rela ng to GST e-invoicing vide quarterly basis along with recipient, on the basis of
nil tax liability: which the requirement of GST monthly payment of tax, with
e-invoicing has been extended effect from 01.01.2021. the informa on furnished
to tax payers having aggregate Government has issued
turnover exceeding Rs 100 by their suppliers, in their
respec ve Form GSTR-1 &
5 and Form GSTR-6 filed by
ISD. Click
h ps://www.gst.gov.in/ne
wsandupdates/read/396
for details.
Ÿ GSTN has also introduced a
facility to download pdf
statement to taxpayers,
fada.in | October 2020 F A D A Journal 17
Demystifying GST
who are filing monthly auto-dra ed ITC December, 2020 the status of returns filed in
GSTR-1 statement, with Statement from Form Form GSTR-3B or the
system computed values of GSTR-2B. Ÿ In terms of Rule 138E (a) statements filed in Form
Table 3 of Form GSTR-3B. and (b) of the CGST Rules, GST CMP-08, for the class
This PDF will be prepared Ÿ This facility is made 2017, the E-Way Bill (EWB) of taxpayers to whom it
on the basis of the values available in Form GSTR 3B genera on facility of a applies, and restrict the
reported by them, in their dashboard from October taxpayer is liable to be genera on of EWB in case
GSTR-1 statement, for the 2020 tax period onwards restricted, in case the of:
said tax period. Click and for taxpayers who are taxpayer fails to file their
h ps://www.gst.gov.in/ne registered as Normal FORM GSTR-3B returns / - Non filing of two or
wsandupdates/read/398 taxpayer, SEZ Developer, Statement in FORM GST more returns in Form
for details SEZ unit and casual CMP-08, for tax periods of GSTR-3B for the
taxpayer. two or more. months up to
Ÿ GSTN has now introduced October, 2020; and
auto-populated Form Ÿ The system generated PDF Ÿ W.e.f. 1st December, 2020
GSTR-3B in PDF format, for will be made available on and onwards, the blocking - Non filing of 02 or
benefit of the taxpayers. GSTR-3B dashboard. of EWB genera on facility more statements in
The auto-populated PDF of Taxpayers will be able to would be made applicable Form GST CMP-08 for
Form GSTR-3B will consist access their Form GSTR-3B to all the taxpayers the quarters up to
of:- (PDF) through: Login to GST (irrespec ve of their July to September,
Portal > Returns Dashboard Aggregate Annual Turnover 2020.
- Liabili es in Table 3.1 (a, > Select Return period > (AATO)) In terms of Rule
b, c and e) and Table 3.2 GSTR-3B> System 138 E (a) and (b) of the - Not applicable to
from Form GSTR-1 Generated 3B. CGST Rules, 2017, on the assessees not
EWB Portal. registered on the
- Liability in Table 3.1(d) [Source: GSTN dated 13.11.2020] EWB portal.
and Input Tax Credit Ÿ Thus, on 1st December
(ITC) in Table 4 from Blocking of E-Way Bill (EWB) 2020, the system will check [Source: GSTN dated
genera on facility, a er 1st 16.11.2020]
FADA Advisory - FADA request all the members / dealers to go through the same and ensure necessary implementa on /
compliances. In case of any clarifica on to be sought, they may refer to their respec ve consultants / FADA consultants.
Attention: Members
Engagement of GST Consultants
GST consultants – Ms Puloma Dalal and Dr Sanjiv Agarwal, based in Mumbai and Jaipur respec vely, have been
engaged by F A D A on retainership to help members deal with the complexi es of GST law and procedures. They
will, on reference made by F A D A, guide and give opinion on various issues rela ng to GST as applicable to
automobile dealers.
Federa on of Automobile Dealers Associa ons (F A D A) will forward the queries raised by members to them
for their opinion. While Ms Puloma Dalal and Dr Sanjiv Agarwal will, essen ally, give legal posi on and
clarifica on, supported by case law, on various GST issues raised by F A D A Members, those wan ng to engage
them as counsel, will have to pay separately as per terms that may be mutually agreed to.
Member seeking clarifica on or legal posi on related to GST as relevant to automobile dealer, may send their
queries to F A D A , 804-805-806, Surya Kiran, 19, K G Marg, New Delhi – 110 001. (E-mail Id: [email protected]).
18 F A D A Journal October 2020 | fada.in
FADA News
Automobile Dealers of Noida Felicitated
FADA President - Mr Vinkesh Gulati
fada.in | October 2020 F A D A Journal 19
FADA News
Deepawali Puja at FADA Office
20 F A D A Journal October 2020 | fada.in
One Nation | One Association Federation of Automobile Dealers Associations (FADA)
invites its members to participate in
Tuesday - thursday
February 9-11
The NADA Show Expo is the auto industry's premier marketplace of products, services and
technologies specically targeted to franchised new car dealerships. Join thousands of
dealers, dealership managers, exhibiting companies and the world’s leading auto industry
representatives virtually.
For three days, award-winning dealer What will you Gain
education, franchise meetings, industry
networking and, of course, NADA Expo, the ü 3 days of live content and general
virtual dealer marketplace, will deliver non- sessions
stop content to help you connect, learn and
build your business from the comfort of your ü 60+ Education Sessions and the Virtual
home or dealership. Exchange
A progressive dealer should not miss this ü Translated workshops
opportunity.
ü NADA Expo shopping, exhibitor
Registration appointments & product demos
Special Fee for Member : INR 18,000 + GST @ 18% ü NADA Welcome Reception
ü Women Dealers Retail Happy Hour
ü Downloadable resources
ü On-demand session recordings
Book Your Seat Immediately
For any further clarication, please contact: Ms Indira Menon at +91 99682 81214 or e-mail to [email protected].
Surveys & Studies
Research & Analytics INDIA MARKET
OUTLOOK
India is a massive market for consumers, the Government serious players entering the EV investments have been raised
two-wheelers which of India has taken some keys market. With the entry of by E2W companies in India.
accounts for 70% of the 200 steps in the last few years. significant two-wheeler
million total vehicles running Various incen ves and brands such as TVS, Bajaj, and The electric two-wheeler
across the length and breadth subsidies are provided under Hero in this segment (E2W) market in India has
of this huge na on. This FAME 1 and FAME 2 schemes compounded with the grown by a CAGR of 62% from
common man’s commute is by the government. Under the Government’s EV push, the FY2016 ll FY2020. The FY2020
also responsible for over 20% FAME-II scheme, the subsidy investors are much more sales of electric two-wheelers
of the total CO2 emissions, and outlay is increased to nearly confident and have shown an stood at 152,000 units, which
about 30% of the par culate ten mes that of FAME-I ac ve interest in the EV is a marginal increase of 20%
emissions in urban areas alloca ons. ecosystem. over that in the previous year.
(PM2.5). Since this segment is E2W space is an cipated to
bound to grow further, there is India has shown considerable In the last two years, more witness significant disrup on
an urgent need to switch to progress in the E2W space with than $600 million of a er 2024 when the ba ery
cleaner mode, mainly in the
urban areas, as 7 of the 10 Policy Roadmap for EVs in India
most polluted ci es across the
world are in India.
The growth engine of the
electric two-wheeler (E2W)
market would be fuelled by
various drivers, of which
strong governmental push and
affordability would play key
roles. NITI Aayog is targe ng
30% EV penetra on in India by
2030.
To make EV adop on easier for Source: JMK Research
manufacturers and
22 F A D A Journal October 2020 | fada.in
Surveys & Studies
Fund allocation under Phase I and Phase II of the Scheme, INR Crore the world have been taking
measures towards reducing
vehicular pollu on and GHG
emissions by suppor ng EVs
and providing infrastructure
wherever necessary.
Extremely low emissions by
electric vehicles are the best
bet to tackle the hazardous air
pollu on levels in choked ci es
in India. As per the WHO
report, 14 out of 20 most
polluted ci es in the world are
in India. Many of these ci es
exceed the WHO outdoor
USD 1,160/kWh to USD 156/ pollu on limits by 5–15 mes.
kWh. The increasing scale Vehicular emissions from
economics are expected to passenger and goods road
push the prices further down transporta on contribute a
to US$75 over the next 4-5 majority share of this. EVs can
Source: MoHI&PE, GoI 2030. Various incen ves years. improve this scenario by
prices fall below $100/ kWh. reducing local concentra ons
In addi on to reduc on in of pollutants in ci es.
prices, the advancements in
This price is seen as the point and subsidies are provided ba ery design have improved New ba ery manufacturing
around which EVs would reach under the FAME schemes their performance in terms of units to be set up in India
at price parity with the Internal by the Government. Under lower charging me and power As India is ge ng ready with its
Combus on Engine (ICE) FAME-II scheme, the to density ra o (trimmed size roadmap for transi on to
vehicles. subsidy outlay is increased and weight of ba eries), etc. electric mobility, leading
by nearly ten mes as global manufacturers of
As per JMK Research compared to FAME-I Air pollu on and GHG lithium-ion ba eries have
es mates, this market is likely alloca ons. emissions started exploring the
to grow from 1.52 lakh units in opportuni es to ini ally build
FY2020 to about 34.5 lakh Ÿ GST rates on EVs are EVs emit 50% less greenhouse ba ery pack assembly units,
units by FY2025 (CAGR of lowered from 12% to 5%, gas (GHG) than petrol or diesel
87%). which is much lower than vehicles. The top economies of
Key Market Drivers the 28% GST on ICE Average volume-weighted li-ion battery pack price
vehicles, making EVs much
India has shown considerable more a rac ve to the
progress in the E2W space with buyers.
serious players entering the EV
market. Some of the key Ÿ Registra on fees of EV’s are
drivers that are driving the waived off across most
growth in this segment are: states.
Strong Government push Ÿ The Government provides Source: Bloomberg New Energy Finance
various state level
To make EV adop on easier for incen ves
OEMs and consumers, the
Government of India has taken Falling ba ery prices
some keys steps in the last few
years. Ba ery cons tutes to about
40-50% of the total EV cost.
Ÿ NITI Aayog is targe ng 30% From 2010 to 2019, the ba ery
EV penetra on in India by prices saw a massive drop from
fada.in | October 2020 F A D A Journal 23
Surveys & Studies
and eventually transi on to Looking at the scale of the high range ba ery models As per JMK Research
large scale lithiumion cell investments planned to set up with 50% localiza on are es mates, the next year’s sales
manufacturing in the country. ba ery manufacturing in India, eligible for the subsidy, making growth figures of E2W are
Raasi Solar is the first company it is assured that ba eries ineligible almost 90% of the expected to be same as those
to start domes c produc on of would become more exis ng operators for the of FY2020 i.e., about 25% only.
lithium ba eries in India in affordable, and so would be incen ves/subsidies offered Global pandemic situa on due
2019 in Tamil Nadu. Exicom, the products running on these under FAME II even though the to COVID-19, which lead to
Amaron, Greenfuel Energy ba eries. budget outlay was way higher lock down first in China and
Solu ons, Trontek, Coslight than the FAME I scheme. The then in India (Jan 2020- May
India, Electric Two Wheelers market policy shi was introduced to 2020), would be the crucial
size: India promote ‘Make in India’ factor behind low sales. This
Napino Auto & Electronics, ini a ve and eventually make has led to complete supply
Trinity Energy Systems, and Since FY2016, the Indian Indian economy self-sufficient. chain disrup on and brought
Versa le Auto Components electric two-wheeler market an extended halt to the
are some of the players that has grown at a CAGR of 62%. The high range models with manufacturing in India for
have announced their plans to The FY2020 sales of electric speed >25 kmph took around three months. The industry
manufacture lithium-ion two-wheelers stood at 18% of the total E2W market would take a few months to be
ba eries locally. Other key 152,000 units, which is a share whereas the economical back on track a er the start of
announcements include: marginal increase of 20% over & affordable low-speed full-scale opera ons, with
the previous year. This YOY models with top speed lesser sales ge ng back to normal,
Ÿ Panasonic Corpora on is growth for FY2020 is quite low than 25kmph comprised 80% not before late 2020.
looking forward to se ng when compared to the last two of total E2W sales in FY2020.
up a facility for assembling years annual growth rates, These models are exempted Assuming there is no change in
lithium-ion (li-ion) ba ery which were more than 100%. from RTO registra on, and the current policy scenario, the
modules in India. Such sudden de-growth of a their riders don’t require future adop on of Electric
sector that carries huge driving license or helmets. two-wheelers will mainly be
Ÿ Suzuki Motor Corpora on expecta ons is a ributed to a These factors, along with driven by ba ery prices, which
has ed up with Toshiba policy update by the affordability, makes low- cons tute over 50% of total
and Denso to set up the Government under FAME II, speed E2Ws highly a rac ve E2W cost.
country’s biggest lithium- which caught the EV sector off- to buyers.
ion ba ery manufacturing guard. Under this update, only A er 2024, significant
facility in Gujarat with an
investment of INR 11.5 E2W Market Size in India
billion.
Ÿ Exide Industries Ltd and
Amara Raja Ba eries Ltd
have formed joint ventures
with foreign companies to
start assembling ba eries.
Ÿ South Korea’s LG Chem Ltd
and Japan’s Toshiba have
formed collabora ons for
assembling ba ery packs
with Mahindra and
Mahindra (M&M) Ltd.
Ÿ Indian Oil Corpora on Ltd
announced its plans to
partner with a foreign
startup to set up a 1 GW
ba ery manufacturing
plant in India. Source: FY2016- FY2020 data taken from SMEV, projection analysis by JMK Research
Note: Total 2 wheeler sales in India from FY2021 to FY2025 are assumed to grow at a CAGR of 4%.
fada.in | October 2020 F A D A Journal 25
Surveys & Studies
disrup on in E2W space is 13% (FY2025) in the next five segment compounded with Comparing the investments, it
an cipated, with the fall of years. Thus, clocking about 34 the Government’s EV push, the can be inferred that the
ba ery prices below $100/ lakh units of E2W annual sales investors are much more investments are more towards
kWh. This price is seen as the in FY2025. As per these confident and have shown an shared services than private
point around which EVs will es ma ons, the CAGR of E2W ac ve interest in the EV vehicles, as cost economics are
start to reach price parity with sales from FY2020 to FY2025 is ecosystem. working well in the shared
the Internal Combus on expected to be about 87%. mobility segment.
Engine (ICE) vehicles. In the last two years, more
Key investments in the E2W than $600 million of New Product Launches
As per JMK Research space investments have been raised
es mates, from FY2022 by E2W companies in India. In the last two years, about 14
onwards, with every 7-8% fall Ini ally, for the lack of These investments helped new models with speed under
in YOY ba ery prices, the share consumer awareness, policy manufacturers not only with 25 kmph and 20 models with
of E2W’s in total two-wheeler clarity, and market visibility, a high upfront capital required in top speed in range of 40- 147
sales is projected to double. lot of product-led E2W the ini al stages of assembly kmph were launched.
The percentage of E2W in startups faced difficulty in and supply chain setup but However, the market didn’t
overall two-wheeler sales in ge ng investors on-board. also in keeping the cost of E2W see any new entry with speed
India is predicted to increase However, with the entry of low while boos ng the quality limits of 25-40 kmph.
from 0.6% (FY2020) to about significant 2W brands such as of the products.
TVS, Bajaj, and Hero in this As per FAME 2 guidelines, only
Pan India Network of Leading Players
as of March 31, 2020
Source: Company websites, JMK Research
26 F A D A Journal October 2020 | fada.in
Surveys & Studies
the E2Ws with speed higher una rac ve. The price of some swapping can be a ributed to prices supported by
than 40 kmph are eligible for popular e2W available in the the huge cost associated with economies of scale, un l
incen ves. This could be the Indian market is about 60% maintaining a sizeable number the annual volumes in
reason why majority of players higher than that of ICE 2- of long-life & reliable ba eries domes c E2W market
are focussed on E2Ws with wheelers with similar features. (includes ba ery replacement reach 1 million units. This
speed higher than 40kmph. cost), and the lack of ba ery hinders the localiza on of
High ba ery replacement cost: pack design standardiza on the supply chain, which in
Market share of High speed across different OEMs and many cases, is below 50%.
E2Ws in India High ba ery replacement cost vehicle types.
is another factor behind the Ÿ The current incen ves in
In FY2020, in high speed (>25 subdued interest of a buyer Others: FAME II are based on their
kmph speed) E2W market, towards e2W. The ba ery ba ery size, which has
Okinawa is the biggest player replacement cost associated Ÿ Poor service network for made low-powered e2W
selling more than 10,000 units with, specifically, high range E2W also poses an costlier by a range of INR
with 36% market share, E2W models a er four years of impediment towards the 10,000- 12,000.
followed by Hero Electric with use is expected to be INR rise in demand for these
about 27% share (7.400 units 40,000 – 45,000. This is beyond vehicles. Barriers in road to E2W
sold) and Ather with 10% share the other wear & tear costs. industry success
(>2,900 units sold). Together Ÿ Low resale value is another
these 3 players contributed Range anxiety: percep on that makes Ÿ High dependence on
more than 70% sales of high Indian customers reluctant Imports: The key
speed E2W market. Ampere EVs can only be driven for a to buy an expensive 2W. components of E2W such
which is the oldest player in limited distance on a single as the ba ery, motor,
this segment has sold about charge as compared to the Ÿ Low pickup and top speed controllers, etc. along with
2,500 units of high range E2W distance a petrol/diesel are also deterrents for two- ba ery components such
in FY2020. While a completely vehicle covers with a single wheeler enthusiasts. as Lithium, permanent
new entrant Revolt is able to filling. The average riding magnets, cobalt are being
clock sales of more than 1,000 range of EVs with a single Policy-related speed bumps on imported to India. The
units in just six months of its charge is about 50-80 km, the road to the E2W revolu on industry fears that there
product launch. Other players whereas that of petrol- will be a huge disrup on in
which are ac ve in this space powered scooters is about 300 Ÿ The FAME-II, had the most the whole automo ve
are Avon Cycles, NDS Eco km (assuming the fuel tank unfavourable impact on supply chain. Hence, there
Motors, Avan Motors and capacity is 5 litres and the E2W, leading to a huge is a concern rela ng to the
Electrotherm (Yobikes). mileage of 60 km/ltr). decline of 34% in YOY sales import dependence for
of electric scooters in 2019 ba eries & the possibility
Challenges Inadequate public charging to 32,400 units. As per that ba ery imports may
infrastructure: FAME II, only the E2Ws with just replace oil imports.
The challenges faced by the a minimum top speed of 40
nascent EV market can broadly As of 31st Dec’19, only 1,332 kmph and a range of 80 km Ÿ Fear of undercu ng
be categorized into three public charging sta ons were per charge would qualify current ICE 2W sales: Many
groups of consumer installed across India. If we for subsidy incen ves. leading players in the ICE
percep ons, policy concerns, have to match the sales of ICE 2 When this criterion came 2W manufacturing
and supply chain network. wheelers, the charging into effect in April 2019, it business are hesitant to
sta ons have to grow at an rendered 90% of the E2W foray in the E2W market
Challenges faced by end exponen al rate, covering being produced then, primarily because of the
consumer both urban and rural India. ineligible for subsidy. fear of undercu ng their
current sales of ICE 2W;
High upfront cost: Issues with ba ery swapping Ÿ The FAME-II scheme even though these players
sta ons: requires the EV OEMs to are heavily invested in R&D
Indian customers, being very have a minimum of 50% of new and innova ve
pricesensi ve, are, generally, At present, BSS (Ba ery localiza on in their technologies which
reluctant to buy an expensive Swapping Sta ons) are products in order to be includes E2W, awai ng the
e l e c t r i c 2 - w h e e l e r. Fo r considerably costlier than eligible for incen ves. Most opportune moment to
personal use, high upfront cost home charging and Public local suppliers are not launch them commercially.
and ba ery replacement cost Charging Sta ons (PCS) in willing to sell their
make the e2W financially India. The high cost of ba ery products, at compe ve
fada.in | October 2020 F A D A Journal 27
Dealership Ops & Leadership
Finish Strong: Your 2020 End-of-Year Strategy
- Digital Dealer
2020 has been an unexpect- on the back burner. Many channel marke ng to educate buying process. Marry an
edly challenging year for dealers have scaled back customers about how their alterna ve shopping
dealers. The coronavirus marke ng budgets to as li le safety is top of mind at your experience with the tradi onal
con nues to affect nearly as 15 percent of normal spend. dealership. Explain the buying route and you have a
every facet of our business. This all equates to a very cleaning procedures at your new hybrid sales model that is
profitable semester. store and elaborate on your likely here to stay.
But whatever the meframe, touchless sales and service
at some point we will return to H owever, stores are not op ons. So, how do you establish a
a sense of normalcy. Finishing bulletproof and the de rises hybrid sales model? First,
the year strong is key to all boats. Coronavirus factors Talk about safety, but s ll iden fy the need. Are your
ensuring your dealership will will eventually fade away and encourage customers to come customers demonstra ng that
be able to hit the ground complacent dealers will have a in. Messaging example: they want a hybrid approach?
running, no ma er what 2021 rude awakening. To stay ahead Second, iden fy what you are
brings. of the curve, remain alert to Don’t put your family, your currently doing to support this
changing market condi ons. vehicle or your re-sale value at need. Third, assess if you have
The following strategies will Create prac cal con ngency risk. We have taken all the the right people with the right
help you navigate changing plans so you can act quickly necessary steps, including training and the right tools to
market condi ons and set your when used vehicle supply, new touchless op ons, to keep you meet this need. If not, hire the
dealership up for success, not vehicle alloca ons and safe while s ll ge ng the people and invest in the tools.
just in the immediate future compe ve marke ng factors quality vehicle service you Finally, determine what you
but for years to come. return to pre-pandemic levels. need and deserve. need to do to ensure your
customers know that you offer
Remain alert and nimble. The Re-think holiday promo ons. Develop a hybrid sales model. this hybrid approach.
irony of the pandemic is that Tradi onally, now is the me to During the pandemic we’ve
it’s actually been good for most create and push out tried and seen consumers use digital Tradi onally, dealers want to
stores from a profitability true holiday promo ons. This retailing tools at have one process that is
standpoint. year is a bit different. unprecedented levels. What’s followed by every sales
Customers are primarily interes ng is that online associate every me. The truth
High vehicle demand and low concerned about health and closing rates don’t correspond is, the future must be more
inventory puts dealers in a safety. to lead volume. flexible than that. Create a fully
power posi on. In this market, digital process, an in-store
the window s cker is king and Focus on value branding Turns out, the majority of experience and a hybrid
profit margins are strong. To messaging, not a hard sell of customers s ll want to come approach. Communicate that
add to that, marke ng is also service. Make use of mul - into the dealership to finish the
28 F A D A Journal October 2020 | fada.in
Dealership Ops & Leadership
you have op ons and
customers will be more
recep ve to doing business
with you.
Be open to new employee
roles. Consumers who
research vehicles online
don’t want a hard sell when
they eventually reach out to
your dealership. They just
want their ques ons
answered by an expert. This
change in customer
shopping behaviour is
beginning to be reflected in
the dealership.
We’re seeing new employee struggles with change. To implemen ng what they support different processes
roles like sales consultants, move your dealership learn. Another training p is (digital, touchless, in-store
product specialists and forward, you have to have the that the success of the and hybrid), integrate with
customer experience right team. training is far greater when the your systems seamlessly and
consultants. These managers take the training automa cally arrange
employees engage with Training is a proven with the salespeople. It’s customers into an
customers throughout the investment that will everyone’s job in the appropriate status. This
process in the way the strengthen your business. dealership to be professionals! ensures any employee who
customer prefers, whether However, some dealers interacts with the customer
that’s online, on the phone, complain about spending Invest in the right tools. can see the full customer
in person or some money on training only to Digital retailing is a hot topic journey, history and
combina on of the three. have employees leave a few that’s here to stay. It’s smart preferences so they can
months later. This is an to invest now in your digital interact with them in a
It’s a controversial topic, but excellent opportunity to showroom. Other touchless personal, customized way.
the model of one employee honestly assess if you’re technologies may also
handling a deal from ini al offering an excep onal work persist long term. One the 2020 con nues to be a wild
contact through the F&I environment along with service side, it’s worth your and crazy ride and new ways
paperwork is picking up compe ve pay. of selling and servicing
speed in dealerships. This me to inves gate solu ons vehicles are likely here to
may be the wave of the Make sure you ask your that keep customers safe and stay. The above ps will help
future as customers prefer vendors if they offer free speed up the process, like you finish the year strong
working with only one digital or on-site training. online appointment with sales strategies,
person vs. being handed off Most do, and it would scheduling and payments via technology, and training,
between employees and benefit you to take text. that will set you up for a
dealerships can scale down advantage of it. The key is to prosperous 2021 and
staff to cut costs. hold your staff accountable A robust CRM is integral to beyond.
to a ending and the success of varied sales
Priori ze employee training. models. It must be able to
You can never spend too
much on training, especially
as staff take on new roles.
Use training as a way to
evaluate your team in light
of the changing market.
Assess who can adapt to
new processes and who
fada.in | October 2020 F A D A Journal 29
Enterprise
Radico Khaitan: In High Spirits
Passion for the liquor trade has made Abhishek Khaitan, MD of the branded spirits manufacturer,
build top-selling premium brands by targe ng niches.
TWO WORDS. UTTAR smuggling syndicates; Radico, the upside is simple: there,” says Sanjay Jain, a
PRADESH (U.P.). They’re streamlining of the wholesale The policy has weeded out financial adviser to the Indian
enough to break Abhishek trade by striking down special oligarchs from controlling the spirits industry.
Khaitan into a smile. A new excise zone rules that liquor trade. That means
excise policy has made India’s benefi ed certain higher spirits in U.P., always a “This was a home run for
largest and most populous wholesalers; and in January posi ve market for alcobev Radico and they didn’t let go of
state the backdrop to a happy this year, allowing hotels to (alcoholic beverage) players in their advantage.” A home run
new business reality for the serve liquor ll 4 a.m. from the India. also because Radico has its
managing director of Radico earlier deadline of 12 a.m. largest dis llery in Rampur,
Khaitan Ltd (Radico), the Radico, which holds 56% of U.P., which can produce over
maker of Magic Moments This has boosted revenue the vodka market in the 100 million litres of spirit per
vodka. collec on from the sale of country, has taken full annum. Not surprisingly, its
alcohol in U.P., slated to touch advantage of these changes. gross sales surged from Rs.
The new rules have been a win- ₹30,000 crore by March this “Amongst all the states today, 4,867.96 crore in FY17 to Rs.
win for the private sector and year, according to trade U.P. is seen as more reformist 8,058 crore in FY19; also, the
for the government. They analysts. It had already gone as far as alcohol laws are company reported a 16%
include an open bidding up by 71% to Rs. 24,000 crore concerned. It has actually revenue and 52.3% profit
process for dealers and in FY19 from Rs. 14,000 crore allowed branded players to growth in FY19 over the
retailers in a bid to weed out in FY17. For businesses like increase their presence out previous year.
30 F A D A Journal October 2020 | fada.in
Enterprise
“U.P. is our largest domes c IT HELPS THAT KHAITAN was he put in `16 lakh to acquire Abhishek met me when the
market where we have 30% “infatuated” with the family the company from Sanjay Shaw Wallace contract was
share of the IMFL (Indian- business from an early age. Dalmia, chairman of the withdrawn. They were keen to
made foreign liquor or “From class 9 onwards, I was Dalmia Group of Companies. see if McDowell would be
branded spirits) market. We very clear that I wanted to be in interested, but we could not
make a significant contribu on the liquor trade,” says Khaitan, It was a purely commodity come to their assistance,”
to the state’s revenues to the who joined the company in business then, supplying extra recalls Vijay Rekhi, the former
tune of ₹5,000 crore in the 1995-96, a er an engineering neutral alcohol—the primary managing director and
form of du es and taxes,” an degree in industrial produc on raw material in making various president of United Spirits.
upbeat Khaitan, 46, tells from BMS College of spirits—to branded players. Khaitan believes that was
Fortune India at his Mathura Engineering, Bengaluru. Contessa Rum was the sole because Vijay Mallya, the
Road office in New Delhi. “[Then] our market brand, which was sold to the owner of McDowell, wanted a
capitalisa on was about ₹5 armed forces; it also made stake in the company, which
The 17%-18% sales upswing in crore. Today, it’s over ₹5,000 country liquor. Lalit Khaitan they weren’t keen on giving.
U.P. con nued into the third crore,” he says. Of course, he added a bo ling business too
quarter of FY20; add to this, wouldn’t have been in this and became a leading third- The choice was simple, he says.
states such as U aranchal, trade had his father, Lalit party bo ler to top spirit “Either go bankrupt or create
Maharashtra, Telangana, Khaitan, not bought Rampur makers of the me, such as our own brands. That is when I
Andhra Pradesh, and Assam Dis llery and Chemical Shaw Wallace. took the call to start our own
delivered double digit growth, Company in 1973 with the brand,” recalls the younger
too. “Radico posted an main mo ve of “ge ng out of But by 1994-95, the Khaitan, just 23 at the me but
impressive performance (in Calcu a [now Kolkata]”. commodity play in the spirits riding on the confidence of
Q3FY20), with overall volumes business had run its course. topping his university.
growing 14% to 6.5 million A teetotaller at the me, he Lalit Khaitan had his back to Hundred freshers were hired,
cases (of 9 litres each) against belonged to a tradi onal the wall. The company had plans were drawn out, and the
the industry’s growth of just Marwari family (whose losses of around ₹10 crore and mothership was given a
1.5%. Radico’s performance has businesses included a general loan repayments of Rs. 35 modern name, Radico Khaitan.
been strong, indica ng market store, restaurant, and a steel- crore. Besides, the contract And, on August 8, 1998, 8PM
share gains and scale-up of new furniture manufacturing unit, with Shaw Wallace had ended whisky, a mass-market brand
launches,” a research report by among others). He had no idea and there was a dire need for catering to the largest spirits
brokerage firm Emkay Global of the dis llery business when newer e-ups. “I remember segment in India, was
said. (Radico also has a both Lalit Khaitan and launched.
significant presence in the
country liquor segment in U.P.)
Magic Moments accounts for
32% of the company’s revenue
while 8PM whisky, Old Admiral
brandy, and Contessa Rum are
millionaire brands, defined as
those selling over a million
cases annually. Radico is
recognised for having
organically grown these
brands, in the process
transforming itself from a
supplier of bulk spirits to a
branded spirits manufacturer.
“What differen ates Radico is
that it is one of the very few
companies that has built
brands from bo om up,” Jain
points out.
fada.in | October 2020 F A D A Journal 31
Enterprise
“They ran a very innova ve TV (of 9 litres each) of alcohol per A slew of premium and super Over the last five years,
commercial for 8PM [showing annum,” says Khaitan. premium brands followed, Khaitan has also focussed on
that India and Pakistan’s army However, he needed to do including Morpheus brandy, lowering the company’s debt
generals shared a drink at 8 more as compe on—in this A er Dark whisky, level, which currently stands at
pm] that caught the case, United Spirits—had set 1965—Spirit of Victory rum, about Rs. 300 crore, down
imagina on of consumers. As its sights on sales of 100 million 8PM Premium Black whisky, from Rs. 980 crore in 2015.
they say in Hindi, it was a hatke cases per annum. Moreover, as Jaisalmer, a luxury cra gin,
[off-the-beaten-path] Rekhi points out, 8PM had and Rampur, an Indian single Higher profit margins from
campaign,” says Rekhi, who started to plateau. malt whisky. “Four months premium products, exi ng from
now runs his own advisory firm back, we launched a limited unprofitable markets, and
Vizanar Alcobev & FMCG ON A HUNCH, Khaitan decided edi on of Rampur priced at ₹1 more incen ves to its sales
Advisors. 8PM went on to to enter the vodka market. It lakh a bo le,” says Khaitan. force has helped improve
became a millionaire brand had an insignificant presence in The 450 bo les produced have bo om line as well as repay
within the first year of its India then and, even today, its sold out, he claims. Besides, debt. The target is to make
launch. Last year, it ranked share is about 3% of the the company now exports its Radico a zerodebt company in
11th in the IWSR Drinks Market country’s overall spirits brands to 70 countries. In the next two years while
Analysis Global Database of industry. But he was convinced FY19, it sold 21.61 million Khaitan’s passion con nues to
the top 100 fastest growing vodka would work. “I invested a cases (of 9 litres each) of be crea ng and building
spirit brands in the world. lot of money into the prin ng alcohol. United Spirits alcobev brands. There are three
Buoyed by the success of 8PM, and packaging of Magic reported sales of 81.6 million whiskies in the pipeline, for
Khaitan rolled out other mass Moments,” says Khaitan. He cases in the same period. This instance. This is made easier by
market brands, including Old was proved right: Launched in makes Jain call Radico one of the fact that unlike earlier, he
Admiral brandy. “From 1998 to 2006, Magic Moments ranked “the most consistently says, when “the crea on of
2006, from a base of zero, we No. 7 in IWSR’s list of the fastest performing, family-managed brands was a pressure, today
went on to sell 10 million cases growing global spirit brands. Indian alcobev companies”. it’s a pleasure.”
32 F A D A Journal October 2020 | fada.in
Perspective
COVID-19 Impact - Will India Evolve As The
Regional Procurement Hub
- Chartered Accountants - Balaji Ananthasayanam and Kundana Naga Prudhivi, PwC
BALAJI ANANTHASAYANAM The latest pandemic, COVID- than 2.2 million vehicles look at more local manufac-
KUNDANA NAGA PRUDHIVI 19, is having a significant produced in 2019. All assembly turing of components,
impact on the global plants in that region remain modules and technologies.
automo ve industry, with its shut through at least March 20.
complicated global supply The auto industry in India has
chains. At this me, each of the Auto produc on in other parts started to de-risk itself and is
major geographical hubs is of Asia where the virus has working on deep-localisa on,
experiencing major disrup on. spread, namely South Korea due to Supply shortage of
Supply chain disrup ons and Japan, is also being cri cal components and recent
combined with the significant nega vely affected. Many of stand-off between India and
and growing macroeconomic those South Korean and China. However, we cannot
uncertainty fueled by COVID- Japanese assembly plants are have knee jerk reac ons
19’s global spread can make experiencing parts shortages especially during the mes of
formula ng the right response for vehicles that are dually disrup on considering the
a moving target. produced in China and Japan. dependency of India on
imports. There is no denying
Over the past 2 decades, China Like many countries, India that the industry needs to be
has served as the global relies on China for products 'Atmanirbhar' and companies
produc on hub for companies such as electronic components and the government should
in mul ple industries. and drug ingredients because together define a roadmap and
Countries that have been it cannot make them or source deliver accordingly.
heavily impacted by the them elsewhere as cheaply,
outbreak, in par cular, China, company and industry figures Supply chains that pursued
Japan and South Korea, say. India’s reliance on China is single-source strategies for
account for a significant share spread across sectors. In 2018- economies of scale will
of global auto manufacturing. 19 India imported auto increasingly involve a second
China’s Hubei province, the components worth USD 17.6 source for the same part from
pandemic’s epicenter, is one of billion, of which 27% - USD a different geography. This
the country’s key automo ve 4.75 billion - were from China. redundancy will likely increase
produc on centers. China is The major component imports cost but will contribute to build
likely to experience about a 15- from China include drive in the required resilience.
20% decline in auto transmission and steering Capital and opera onal
produc on, based on PwC parts, electronic and electrical efficiency at a more flexible
analysis – and that is assuming items, cooling systems, and smaller scale of
the virus is soon contained. suspension and braking parts. produc on will become
The auto industry in China has Over a quarter of India’s auto important skills. Countries like
already lost about two million parts imports - $ 4.2 billion India, where one- me set-up
units of produc on because of came from China in 2019 - costs are compe ve, can
the extended shutdowns a er according to data from ACMA. serve as a rac ve second
the Chinese New Year and the loca ons for global sourcing.
slow ramp-up of plants in early Impact of Covid-19
March. In addi on, the Hubei Geopoli cal Conflicts
region, where the virus Given the Covid-19 situa on,
outbreak first occurred, is the industry got short- With globalized supply chain
China’s fourth largest vehicle circuited with the over networks currently
produc on hub, with more dependence on sourcing from programmed for the lowest
China and realised its need to possible price, most Western
34 F A D A Journal October 2020 | fada.in
Perspective
companies have set up decided to shi manufacturing Moreover, Owing to the suppliers are now scrambling
centralised manufacturing (par ally or fully) to other low- aforemen oned issues, India to establish shorter or
facili es in lower-cost cost des na ons, such as has got a huge opportunity to localised regional supply
economies, where final India, Vietnam, Thailand and a ract investments in this chains.
products are assembled other Southeast Asian regard considering the
compe vely and shipped to countries, in their bid to avoid advantages of cost- Even months before the
higher-income markets. the hike in tariffs in 2019. With effec veness of opera ons COVID-19 outbreak, there was
Automakers source parts and manufacturing companies (In terms of Low labour cost a growing interest among
electronics from China, mainly worldwide increasingly and ease of availability and global automakers to localize
because they are cheaper. focusing on reducing their availability of raw materials), manufacturing of cri cal
However, rapid poli cal supply chain dependence on efficient manpower, and a components.
developments, natural China, the country’s fast-growing dynamic
disasters and now the global significance as a market, strong government Intending to establish
pandemic have revealed the manufacturing hub has ini a ves as well as alterna ve, flexible and
inherent weakness at the core dimmed. In April 2020, the con nued growth in FDI, adaptable supply chains —
of such a model of offshore Japanese government Availability of Port while mi ga ng single-source
manufacturing. For example, announced a US$2.2 billion infrastructure, Technology vulnerabili es – OEMs,
when the pro-Brexit (UK’s economic s mulus to help adop on and automa on, component manufacturers
decision to leave the European manufacturers shi Lowest tax rates among and auto sub-system
Union) vote was announced in produc on out of China. South Southeast Asian countries, assemblers are now looking to
2016, European auto Original Korean and US firms are also Large domes c strategically source, assemble
Equipment Manufacturers looking for alterna ve consump on. and deliver from within their
manufacturing bases. It is regional borders, and are also
(OEM”) and suppliers expected that it would take 2 - In 2019, India was one of the reconsidering se ng up
immediately planned for the 3 years to take lead and top 10 recipients of FDI, regional logis c hubs.
worse and rushed to invest in emerge as the preferred totaling US$49 billion, up 16%
new supply chain resources in des na on. from that the previous year. Further India’s dependence on
the UK. While a change The Indian government China has decreased over the
towards more flexibility and Key Opportuni es and recently allowed up to 100% last 5 years, from impor ng
mul -level sourcing by the Constraints for India: FDI in contract manufacturing, finished products, India is now
global auto industry had aiming to increase the share of assembling products and
already begun cau ously, the The growing presence of investments in manufacturing developing the ecosystem.
COVID-19 impact has now global automobile OEMs in the in total FDI.
made it a more defini ve and Indian manufacturing The ac vity of localisa on
urgent course of ac on. landscape has significantly Globaliza on to region- cannot be done singularly by
increased the localiza on of aliza on either the industry or the
Apart from the above, In the their components in the government, both will have to
year 2019 scenarios have country. India has become the The abrupt closure of work in tandem. The Ease of
changed with increasing cost preferred designing and produc on centres in China doing business, availability of
of labor as well as tensions manufacturing base for most and its domino impact, causing capital at lower rates and
created by the US- China trade global auto OEMs for local widespread chaos among globally compe ve logis cs
war clouded China’s sourcing and exports. It global auto manufacturers, and energy costs are some of
percep on as a favourable contributes significantly to were felt progressively in the prerequisites that the
produc on centre which was various macro-economic Europe, the US, India and government should look into
considered to be the metrics as given below: South America. Having to ensure growth of the
produc on hub for the last 2 domes c auto component
decades. On account of geo- 2.3% 5 Mn 13% 1.5 Mn+ industry.
poli cal conflicts, developed
na ons like the US and Japan Share in Employment CAGR Hybrid & Reconfiguring and reducing
are looking for alterna ves to India’s GDP Generated (Over 6 yrs) EV Sales the length and complexity of
China for sourcing a host of global supply chains is not
products. Global MNCs looking for Non- offshored their manufacturing without its challenges.
Chinese countries as Produc on ac vi es to low-cost countries, Inevitably, short-term costs
More than 50 mul na onals &Procurement hubs many automo ve OEMs and will be a considera on, as
well as the ability to recruit
fada.in | October 2020 F A D A Journal 35
Perspective
new staff with the requisite tariff wars between major Among the deciding factors physical systems in
skills, knowledge and trading na ons, and poli cal will be the types of orchestra ng complex
experience, and access to instability in regions that components or aggregates manufacturing ac vi es will
adequate capital. supply cri cal raw materials, being produced, along with become indispensable.
combined with a rise of market demand, speed of
With thousands of suppliers na onalism and protec onism response and ability to supply India is taking several
involved in a vehicle’s value around the world. custom-engineered solu ons ini a ves to emerge as the
chain, diversifying suppliers to with short lead- mes. new manufacturing and
increase resilience involves The current configura on of procurement hub by focusing
significant investments and interna onal supply chains Conclusion on localisa on and drawing
recurring costs. Automo ve relies predominantly on low foreign manufacturers moving
components are typically trade barriers and assurances Currently, most leading global out of China which includes
sophis cated, intricately that they will remain for a automakers source 30% to reduc on in corporate tax rate,
engineered, bulky and fragile, reasonable me period. 60% of their parts from China, reforms in land acquisi on and
with high logis cs and Unfortunately, the devasta ng including modules and sub- relaxa on of FDI norms among
transport costs. In most economic impact of COVID-19 assemblies. Given the others.
countries, government has led to a resurgence of incredibly high number of
policies encourage sourcing protec onist sen ments in parts required – each with Many other countries such as
from local producers by most countries, and a highly different lead mes – a return Vietnam, are already giving
achieving a local content probable threat of such benign to regional supply chains does India s ff compe on in terms
threshold to qualify for policies being withdrawn. present an incredibly complex of a rac ng foreign
reduced import tariffs. Further, the economic challenge. However, that investments for se ng up
However, even if such arguments for offshoring are challenge is being considered manufacturing units.
suppliers are considered as not as persuasive as they used worth taking on by
alterna ves, they are required to be, with average wages in stakeholders for a post-COVID While it is true that even the
to be tooled, trained and China’s manufacturing sector, world. top contenders don’t have the
resourced to produce to for example, having increased infrastructure, which matches
specifica ons and quality over countries such Brazil or Covid 19 has exposed the that of China, it is expected to
standards. Mexico. vulnerability of a globally get be er as each country
op mised supply chain. progresses and subsequently
The benefits of shortening Characteris cs of an Op mi- Automakers have come to invests more into it. India must
supply chains are sed Supply chain realise that efficiencies gained focus on its strengths over
considerable, specifically in the process have other na ons and work
greater security and increased There could be many other compromised resilience. This towards taking short term
resilience to causes of significant factors behind re- may not be the last pandemic steps to a ract investors,
disrup on. Although COVID- shoring decisions too, such as or natural calamity the world simultaneously work on a long
19 has brought these into access to qualified personnel, will face. As global disrup ons term solu on to retain them as
focus, it is not the only risk to skills, technology and become more frequent, supply well as work on developing
established OEMs. There is the innova on. Proximity to chains will evolve to place local en es. Ac ve
ever-present threat caused by primary markets is another key more emphasis on par cipa on of State Govt
natural and man-made events, considera on, as well as adaptability. cannot be undermined, and it
the ongoing trade disputes and improved quality. OEMs look is impera ve for them to
for quality at the most Lockdowns under Covid have cooperate with the central
Accelerate "Make in Develop compe ve cost. One of the also highlighted the expanding government in order to build a
India” components advantages of working with role for digital technologies conducive environment for
ecosystem to enable local suppliers is their ability, if and virtual pla orms. Post- foreign investors. To a ract
set up correctly, to deliver Covid, protec ng the companies to produce locally,
complete both. Working with localised workforce will require India needs to be more
manufacturing suppliers also reduces addi onal investment and compe ve and lower our
rather than just challenges associated with cost. This is bound to costs compared with other
communica ng across encourage more automa on countries, by op mising the
assembly mul ple me zones, languages on produc on lines. Many supply chains, and by taking
and cultures. elements of Industry 4.0 that advantage of digitalisa on and
Work on advantages Manufacture for emphasised the value of cyber- Industry 4.0.
like lower labour Global Markets
costs (one third of
China) skills
availablity
Opportunities for India Inc
36 F A D A Journal October 2020 | fada.in
Chart of the Month
fada.in | October 2020 F A D A Journal 37
Opinion
Five Factors That Will Impact November 2020
Commercial Vehicle (CV) Sales
- Kaushik Narayan, CEO, Leaptrucks
Manufacturer performance momentum for 2020 and grew in comparison to last year. over the same month last year.
by an impressive 30%. They However, the pandemic has This follows 2 consecu ve
October was a strong month were followed by Eicher Trucks had a significant nega ve months of growth against last
for all major manufacturers. and Buses with a strong 15% impact of (48%) on year to date year. All manufacturers
The industry de-grew slightly growth. CV industry volumes against performed well in the segment
by (3%) in October 2020 in the same period last year. with the excep on of the
comparison to October 2019. Tata Motors and Ashok market leader Mahindra. As
Leyland both ended the month Small Commercial Vehicles indicated earlier, Maru grew
On the bright side, the industry almost flat in comparison to (SCV) performance strongly by 30% followed by
grew by almost 15% in last year. Ashok Leyland with a growth of
comparison with the previous The SCV segment de-grew 11%. Tata Motors also had an
month. Maru maintained its Mahindra had a drop of (13%) slightly by (2%) in October 2020 impressive growth of 3%.
Mahindra had a drop of (-12%)
in comparison to the same
month last year. We also
observed that Mahindra grew
by almost 8% from a strong
performance in September
2020.
38 F A D A Journal October 2020 | fada.in
Opinion
Light & Intermediate Medium & Heavy Commercial segment. However, the will improve the viability
Commercial Vehicle (L&ICV) Vehicle (M&HCV) performance industry is down by (66%) in of BS6 trucks.
performance comparison to the same
October 2020 was a crucial 2. I m p r o v e d t r u c k
The L&ICV segment grew by month for the M&HCV me last year. u lisa on: U lisa on of
over 8% in October 2020 over segment. A strong trucks in most market
October 2019. Both Tata performance by all major Five factors affec ng segments was be er in
Motors and Eicher Trucks & players was not expected to November 2020 sales October as opposed to
Buses performed strongly with happen as early as October September. We expect
double digit growth in this 2020 with a growth of 10% 1. Decrease in diesel prices: the trend to con nue in
segment. Mahindra reports over October 2019. Eicher Diesel prices dropped by November and the second
L&ICV and M&HCV numbers grew by an impressive 68% 4% last month. This half of the year.
together and showed a drop of followed by Ashok Leyland should provide relaxa on
37%. This sets the stage for a at 13% and Tata Motors at and improved profitability 3. Financing challenges:
strong finish to the year for the 3%. This bodes well for a to operators despite flat Financiers con nue to
L&ICV segment. faster turnaround in this freight rates. Further await the Supreme Court
reduc on in fuel prices verdict on the loan
moratorium which is
currently deferred to
November 18th. This will
dampen the appe te of
financiers to resume
disbursement at pre-
Covid levels.
4. P a s s e n g e r s e g m e n t
difficul es: Passenger
transporta on con nues
to be impacted nega vely
across the country. As
colleges and schools re-
open in some states, there
will be some recovery in
demand. However, this
segment will have a very
slow recovery
5. Diwali in November: This
year, Diwali has
celebrated in November
as against October last
ye a r. We a n c i p ate
posi ve sen ments and
addi onal momentum to
sales as a result of the
shi .
In summary, we con nue to be
bullish about the CV industry
performance in H2 2020.
October 2020 provides a good
springboard to the industry to
finish the year well a er a very
disappoin ng start.
fada.in | October 2020 F A D A Journal 39
Insight
Reimagining the Auto Industry’s Future:
It’s Now or Never McKinsey & Co.
Disrup ons in the auto are temporarily laid off and OEMs may now be moments and emerged
industry will result in receive a substan al amount concentra ng on the core to stronger.
billions lost, with recovery of their pay through the keep the lights on, the failure
years away. Yet companies that government. Globally, the to inves gate other Radically focus online
reimagine their opera ons will repercussions of the COVID-19 opportuni es could hurt them
perform best in the next crisis are immense and long term. Right now, more consumers
normal. unprecedented. In fact, many than ever are using online sales
auto-retail stores have As they navigate this crisis, channels to engage with
Electric mobility, driverless remained closed for a month automo ve leaders may gain businesses in every industry.
cars, automated factories, and or more. We es mate that the an advantage by reimagining According to a recent
ridesharing—these are just a top 20 OEMs in the global auto their organiza onal structures McKinsey digital sen ment
few of the major disrup ons sector will see profits decline and opera ons. Five moves analysis, in Europe, the use of
the auto industry faced even by approximately $100 billion can help them during this digital channels has increased
before the COVID-19 crisis. in 2020, a roughly six- process: radically focusing on by an average of 13 percentage
Now with travel deeply percentage-point decrease digital channels, shi ing to points (Exhibit 1). Growth in
curtailed by the pandemic, and from just two years ago. It recurring revenue streams, online channels is high for
in the midst of worldwide might take years to recover op mizing asset deployment, every country surveyed, but
factory closures, slumping car from this plunge in embracing zero-based the biggest boost has occurred
sales, and massive layoffs, it’s profitability. budge ng, and building a in Germany, which has seen
natural to wonder what the resilient supply chain. One the use of digital channels
“next normal” for the auto At the opera onal level, the guiding principle—the need to jump 28 percentage points in
sector will look like. Over the pandemic has accelerated establish a strong decision- response to the COVID-19
past few months, we’ve seen developments in the making cadence—will also crisis. Moreover, 72 percent of
the first indicators of this automo ve industry that help. We believe that the first- me users in Germany
automo ve future becoming began several years ago. Many window of opportunity for and 70 percent of regular users
visible, with the biggest of these changes are largely making these changes will are planning to con nue
industry changes yet to come. posi ve, such as the growth of permanently close in a few engaging online even a er the
online traffic and the greater months—and that means the crisis subsides. According to
Many of the recent willingness of OEMs to these metrics, having an online
developments raise concern. cooperate with me to act is now or never. presence may be a game
For instance, the COVID-19 partners—automo ve and changer for businesses.
crisis has compelled about 95 otherwise—to address This ar cle illustrates winning
percent of all German challenges. Others, however, moves and principles for Automo ve players were
automo ve-related can have nega ve effects, such automo ve players, o en by uncertain about using digital
companies to put their as the tendency to focus on drawing parallels to players channels before the COVID-19
workforces on short-term core ac vi es, rather than from other industries that crisis hit, while companies in
work during the shutdown, a exploring new areas. While have successfully navigated other industries aggressively
scheme whereby employees similar “now or never” moved ahead. Consequently,
40 F A D A Journal October 2020 | fada.in
Insight
the automo ve industry now to consumer demand. In fact, more than a year a er the all industries and markets.
lags other sectors in this area. according to our analysis, crisis subsides, while another Noncyclical stocks reacted
A 2019 Digital Quo ent posi ve customer sen ment 48 percent are somewhat with far less vola lity,
analysis, which is a McKinsey for digital sales interac ons is likely to do so. however, and some even grew
method for evalua ng an now about twice that of in value.
organiza on’s overall digital tradi onal models. A recent Within the automo ve
maturity, revealed that the McKinsey study shows that 96 industry, the benefits of In mes when cash is scarce
average automo ve business percent of B2B companies adop ng a digital strategy and uncertainty about the
has a clear need to digi ze, have shi ed their go-to- surfaced early in the COVID-19 future abounds, customers
with the industry earning a market models in response to crisis. In February 2020, China o en hesitate to make large
below-average score the COVID-19 crisis, with 64 experienced an 80 percent up-front purchases. Instead,
compared with other business- percent believing the new decline in overall automo ve many people prefer short-
to-business (B2B) players. digital model is just as effec ve sales. term, subscrip on-based
or more so than before. offers that do not e up
Industries in general recognize Shi to recurring revenue significant capital. Within
that remote selling models are Likewise, 32 percent of B2B streams mobility, a preference for
becoming the next normal, companies say they are very subscrip on-based models is
and some players are already likely to con nue to pursue Between February and March o en apparent, even during
preparing for that in reac on these sales-model changes for 2020, major stock indexes good economic mes,
dropped by almost 40 percent, especially among younger
with the drop affec ng nearly consumers. Before the COVID-
19 crisis, 34% of Genera on Y
consumers expressed a
preference for rental and
ridesharing products, whereas
6 percent of baby boomers
shared the same sen ment.
These preferences show how
recurring revenue streams
could become very important
to automo ve players. Other
factors to consider when
mobility players think about
increasing recurring revenues
include the following:
On-demand mobility is on the
rise. The COVID-19 crisis has
reinforced the exis ng trend
toward greater flexibility, as
customers hesitate to commit
to large-scale investments and
want flexibility in a fast-
changing world. To adapt,
many mobility players have
already reposi oned their
offerings to increase customer
flexibility. For instance, more
rental companies are offering
short-term leases as an
alterna ve to car sales, and
some OEMs are doing the
same.
fada.in | October 2020 F A D A Journal 41
Insight
Recurring revenues create same kind of momentum. Even terms of investments will be a through physical workplace
robust income streams. One before the crisis, OEMs and challenge. If OEMs want to stay reduc ons. Today’s higher
US EV maker’s current market suppliers held long discussions ahead of the innova on curve degree of uncertainty calls for
capitaliza on clearly suggests about their focus and and maintain a future-oriented a shi away from an annual
what will drive the value of technology investments as business, collabora ng with budget toward dynamic
mobility players in the future. they a empted to “future former compe tors, tech resource alloca on. Instead of
Tradi onal vehicle sales proof” their businesses. Auto- players, and investors will likely sta c budgets that restrict
accounted for roughly $20 industry incumbents face become an inescapable fact of their degrees of freedom,
billion of the company’s rapidly growing and hugely life. automo ve players should
valua on, while so ware inven ve tech players—from embrace a zero-based
upgrades and over-the-air EV makers to autonomous Embrace zero-based income budge ng approach and
(OTA) updates contributed vehicle (AV) innovators statements reconstruct their income
more than an es mated $25 —whose leaps and pivots are statements from scratch.
billion. So ware subscrip on leaving their slower-moving The pandemic has devastated
services, which enable people peers in the digital dust. Their auto industry growth. A zero-based approach can
to pay for programs that success o en results from According to the es mates, catalyze long-overdue changes
unlock features from heated collabora ons with other global car sales will decline in the automo ve industry,
sea ng to full self-driving players, making these between 20 and 30 percent in including the consolida on of
capabili es, allow dealerships arrangements more popular. 2020. Moreover, depending on produc on facili es, the
to develop an ongoing the region, it may take up to elimina on of ac vi es that
rela onship with consumers Tech players, already serious four years to recover to pre- add li le value, and the radical
while offering them addi onal compe tors before COVID-19, COVID-19 levels. reduc on of investments in
flexibility and customiza on. are now placing addi onal non-cri cal new assets.
Driven by higher mul ples, low pressure on incumbent OEMs While plants remain shut Considering the challenges
incremental costs, and due to their strong financial down, many people are in imposed by the pandemic, the
changing customer behaviors, standing during the global short-term jobs or working airline industry is currently
the EV player’s offerings are a pandemic. from home due to pandemic leading the way in applying
great match for today’s measures. With so many agile and zero-based
markets. The economic outlook for people working remotely, a budge ng approaches and
tradi onal OEMs will likely window of opportunity has reconstruc ng income
Op mize asset deployment worsen in the post-COVID-19 appeared to introduce a fresh statements.
through strategic partnerships world, as cash flows ghten way to manage a company’s
and technology players see profit-and-loss (P&L) Build resilience into the
Investments in autonomous con nuously strong revenues. statement, for example supply chain
technologies, connec vity, Especially in a “winner-takes- through including flexible-
electrifica on, and shared all” market, going it alone in work loca ons and, as a result, The early weeks of the COVID-
mobility (ACES) are a challenge opera ng-expenditure savings 19 pandemic revealed how
for automo ve OEMs and
suppliers alike. Given the
significant resources required
and the need to deliver these
solu ons now, it makes sense
for industry players to work
together instead of compe ng
alone. A er all, the limited
resources of tradi onal OEMs
must stretch even further in
the COVID-19 crisis as cash-
preserving measures and cost-
cu ng ini a ves leave li le
roomfortechnologyinvestments.
Coopera on in the automo ve
industry needs to gain the
42 F A D A Journal October 2020 | fada.in
Insight
complex yet fragile global more resilient a er the Fast decision making lays the Clear accountability drives
supply chains have become. pandemic. For instance, they founda on. When comparing success. Historically,
Already in February, before the should perform rigorous the decision-making speeds of companies that have emerged
outbreak arrived in Europe and checks on worker health and companies, we noted that fast stronger from a crisis have one
the United States, a supply- product safety, monitoring decision makers will likely thing in common: they do not
induced shock caused interac ons and flagging achieve 95 percent higher hesitate to act when
produc on interrup ons at concerns. They need to ins ll profitability in the next normal underperforming, even le ng
many er-one suppliers, as confidence among key compared with their peers. go of their top management
cri cal parts from China went stakeholders, restar ng Unfortunately, many team if necessary. For
missing. opera ons based on data and tradi onal OEMs are s ll instance, one successful
analy cs-driven demand and hampered by organiza onal automo ve OEM replaced
The increasing dependence on supply-chain transparency. silos and a hierarchical 25% of its top managers during
single-country sources of Overall, organiza ons should decision-making process, its transforma on, boos ng its
supply, especially China, has not return to business as usual, which is the opposite of what is market capitaliza on by a
grown more visible due to the but should restart with new, needed in a fast-moving world. factor of four and raising
crisis. If the links break, the faster processes and tools and opera ng profits by
disrup ons increase. From scaled, agile prac ces. Execu on discipline forms the approximately ten percentage
2000 to 2020, mainland China backbone for success. High- points within five years.
went from producing 5 to 30 Establish a strong decision- performing companies have
percent of the world’s making cadence management teams that are The automo ve industry has
manufacturing value added. very disciplined when it comes reached a fork in the road: one
We have observed that Experience suggests that to se ng targets and path leads to reinven on and
industry leaders now have an company transforma ons nego a ng key performance success, while the other
increased sense of urgency o en fail to gain the necessary indicators (KPIs). Once a maintains the current status
over supply-chain resilience; trac on and rigor for consensus is reached, there is quo. Business leaders will only
several manufacturers in successful execu on and li le need to readjust have a brief window of
Europe and the United States implementa on. Yet to thrive a erward. Such teams hold opportunity to reimagine
are considering suitable in the industry’s “next normal,” frequent reviews in order to their core opera ons. To
backups, such as local sourcing excelling in these dimensions is pinpoint minor devia ons, ensure their survival and
or insourcing. Companies will key. Three principles can explain them to the CEO, and success now and in the future,
need to focus on specific areas maximize a company’s chance make adjustments where it’s me for automo ve
to make their supply chains of success. necessary. industry players to act.
fada.in | October 2020 F A D A Journal 43
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Beeaar Autowheels India Pvt Ltd Lucknow U ar Pradesh
Super Wheels Banda U ar Pradesh
U am Sons Pvt Ltd Lucknow U ar Pradesh
Suryanshu Automobiles Orai U ar Pradesh
M B Motors Gorakhpur U ar Pradesh
R S Vehicles Pvt Ltd Aligarh U ar Pradesh
JAY Motors Banda U ar Pradesh
Kolkata Auto Agencies Pvt Ltd Kolkata West Bengal
Bengal Speed Automobiles Pvt Ltd Kolkata West Bengal
Hi-Tech Motors Belda West Bengal
Aadhya Automart Pvt Ltd Burdwan West Bengal
Debnath Auto Center Cooch Behar West Bengal
Payel Motors Pvt Ltd Contai West Bengal
Gokul Auto Credit Pvt Ltd Kolkata West Bengal
Universal Auto Kolkata West Bengal
fada.in | October 2020 F A D A Journal 47
Competition Law
Competition Law Updates
G R Bhatia the EC, all companies components and systems, pending before the SC for
admi ed to coordina ng ac ve and passive safety final disposal and is likely to
Partner & Head their pricing behaviour and technology for automo ve be listed on 02.12.2020.
Competition Law Practice Group exchanging commercially applica ons and other
Luthra & Luthra Law Office sensi ve informa on in associated components. European Commission
order to preserve each Wolong is a motor and drive no fies acquisi on of joint
European Commission other’s business and avoid a manufacturer, specialising in, control of Trak onssysteme
fines car parts suppliers deteriora ng of the inter alia, various electric Austria GmbH by Voith
approximately EUR 18 prevailing pricing levels of motors and controlling Group and PCS Holding AG
million in cartel se lement the supplies. In view of the systems, photovoltaic power
acknowledgment of the sta ons, UPS ba eries and Vide no fica on dated
The EC has imposed fines on par cipa on in the cartel and construc on machinery. 16.10.2020, the EC has
Germany based auto their coopera on with the announced the proposed
components suppliers Brose inves ga on, the fines Supreme Court to adjudicate acquisi on of electric
and Kiekert for par cipa ng imposed on Brose and on allega ons of resale price trac on motor and generator
in cartels concerning supply Kiekert were reduced to EUR maintenance (RPM) against maker Trak onssysteme
of closure systems for cars in 3.23 millon and EUR 14.97 Hyundai Austria GmbH by Voith
the European Economic Area million respec vely. Austria Gmbh and Swiss
during the period August Vide order dated 14.06.2017, en ty PCS Holding AG.
2010 – February 2011 and European Commission the Compe on Commission
June 2009 – May 2012. approves forma on pf joint of India (CCI), a er a detailed The business ac vi es of the
Magna, a supplier based in venture between ZF China analysis of the findings Voith Group, headquartered
Canada, and Brose took part Investment Co. and Wolong arrived at by the Director in Germany, span various
in a bilateral cartel in rela on Electric Group General (DG) in the sectors inter alia
to supply of door modules inves ga on report had held manufacture and sale of
and window regulators for a The EC has recently cleared that Hyundai Motor India paper-making machines,
certain car model the forma on of a joint Ltd. had imposed ver cal hydropower installa ons,
manufactured by the Daimler venture between the restraints of RPM and tying- transmission and control
Group, whereas Kiekert and cap oned en es, Wolong in, in viola on of Sec on technology for commercial
Magna cartelised in the ZF Automo ve Electric 3(4)(e) [Resale Price vehicles and buses,
supply of latches and strikers Motors Co., Ltd., which will Maintenance] and Sec on automa on and IT for
to the BMW and Daimler be headquartered in 3(4)(a) [ e-in arrangements] mechanical and plant
groups. Shanghai and will focus on of the Compe on Act, 2002 engineering. Voith Turbo, the
the development, design, (Act). CCI also imposed a ver cal under which the
The cartel was revealed by manufacture and sale of penalty of 87 crores on acquiring Voith en ty falls, is
Magna who was electric motors and related Hyundai. engaged in the manufacture
consequently not fined by services thereto for of drive components and
automo ve markets The NCLAT, by way of its systems, mainly on a
worldwide. order dated 19.09.2018, set hydraulic or mechanical
aside the order of the CCI, basis. PCS Holding AG,
ZF China is a subsidiary of ZF primarily on technical through its subsidiaries, is
Friedrichshafen AG, global grounds of alleged non- ac ve in rolling stock and
supplier of products for apprecia on of evidence special-purpose vehicles for
passenger vehicles, independently by the CCI and municipali es and
commercial vehicles and relying completely on the agriculture.
industrial technology. Its findings given in the DG's
notable products include inves ga on report. The CCI The provisional deadline for
gearboxes, steering, axles, appealed the said decision of approval of the proposed
clutches, dampers, chassis the NCLAT, which is currently acquisi on is 23.11.2020.
48 F A D A Journal October 2020 | fada.in
Consumer Case Studies
National Consumer Disputes Redressal Commission
JUSTICE PREM NARAIN Jus ce Prem Narain, found any manufacturing corrupted in such a short
PRESIDING MEMBER
Presiding Member - This defect in the vehicle and me. The fact is that the
Ramesh - Appellant
appeal has been filed by the dismissed the complaint. vehicle's 'Mechatronics
Versus
appellant Mr. Ramesh against Learned counsel for the with so ware' was
M/s Skoda Auto India
Pvt Ltd – Respondent(s) the order dated 04.04.2014 of appellant further argued replaced on 30.07.2010.
First Appeal No. 390 of the State Consumer Disputes that the State Thus, within a span of
2014
Decided on 26/04/2019 Redressal Commission, Commission on the one seven months, the major
(Against the Order dated
04/04/2014 in complaint Maharashtra, (in short 'the hand has accepted that system which controls the
No. 14/2012 of the State
Commission Maharashtra State Commission') passed in there were many defects opera on of the vehicle
Complaint Case No.14/2012, in the car, but has finally was required to be
wherein the complaint filed by dismissed the complaint. changed. This clearly
the complainant has been The learned counsel speaks of the fact that the
dismissed. pointed out towards the vehicle had
2. H e a r d t h e l e a r n e d following observa ons of manufacturing defect and
counsel for the par es
except for respondent the State Commission:- no further expert report is
No.2 as the same has
been proceeded ex-parte "14. The undisputed facts required to prove
vide order dated are that, during the manufacturing defect.
27.09.2016. warranty period i.e. Learned counsel stated
30.7.2010 the that now the vehicle has
3. Learned counsel for the 'Mechtronics with been sold in the year
appellant stated that the so ware' of the vehicle 2017, but the appeal had
State Commission has not was replaced through been filed to allow
considered the very fact opponent No.2. compensa on for mental
that the vehicle was taken Therea er in the month of agony and harassment
to workshop frequently May 2011 the ba ery was and financial loss suffered
right from the date of required to be replaced by the complainant
purchase. Different and it is replaced by during eight years when
components of the opponent No.3. It is also the vehicle remained with
vehicle gave trouble at not disputed that during the complainant. The
different mes and the the warranty period 7-8 complainant is en tled to
vehicle was taken to get compensa on even if
workshop for removing mes the vehicle was there were many defects
those defects and for taken to the service centre which may not be called
replacement of those of opponent No.3 and manufacturing defect,
components. The vehicle rendered the services as but created problem in
broke down twice on the shown in the job cards. It smooth running of the
road and it was towed to is an admi ed fact that vehicle.
the workshop and then twice the vehicle was
repaired at the workshop
required to be taken to the 5. O n t h e o t h e r h a n d ,
service centre to the OP
learned counsel for the
No. 2 by towing."
respondent No. 1 stated
Europa Auto Pune. The 4. It was emphasized by the that State Commission
vehicle remained with leaned counsel for the has considered all the
opposite par es for 90 appellant that in a costly points raised in the
days for repairs. Thus, the car whose opera on is complaint and has given
vehicle suffered from mainly governed by conclusion that there was
manufacturing defect. computerised system and no manufacturing defect
However, the State so ware, the system of in the vehicle. The State
Commission has not so ware could not get Commission has clearly
50 F A D A Journal October 2020 | fada.in
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