Vinkesh Gulati, Chairman of Research and Academy at FADA, claims that each Association has its own Agenda, which changes depending on the individual in charge, thus preventing consistent growth towards the unification of the automotive aftermarket in India. He further details the status quo of the Indian automotive aftermarket, the struggles it faces, the prospects it presents and how FADA is aiding in the development of the industry.
What was the notion behind establishing FADA?
Founded in 1964, the Federation of Automobile Dealers Associations (FADA), is the apex national body of the Automobile Retail Industry in India engaged in the sale, service and spares of 2/3 Wheelers, Passenger Cars, UVs, Commercial Vehicles (including buses and trucks) and Tractors. FADA India represents over 15,000 automobile dealers having 26,500 dealerships including multiple Associations of Automobile Dealers at the Regional, State and City levels representing the entire Auto Retail Industry. Together we employ ~4 mln people at dealerships and service centres. And one most important fact in this huge workforce is that we dealers do not displace people but employ them in their hinterland only. To illustrate this, just the top 3 Maruti dealers employ more manpower than Maruti Suzuki itself.
This association’s inception came from the background of the complexity of the business where we are not just a retailer, but a service provider also. We actually do not sell vehicles or service them; we provide an experience and fulfil the customer’s mobility needs.
How has FADA contributed to the growth trajectory of the Indian automotive industry?
FADA actively networks with the industries and the authorities, both at the Central and State levels to provide its inputs and suggestions on the Auto Policy, Taxation, and Vehicle Registration procedure. We have been instrumental in the auto retail growth by diligently following up with government in smoothening the registration process and strengthening our dealers with information and training to improve the customer’s experience. We share the retail data monthly which was not precedence as OEMs share the manufacturing data only which does not show the exact position of the market and in turn affected the customers’ decision-making judgement and demand.
Dealers in the automotive industry often serve as a bridge between OEMs and the Automotive Aftermarket, helping to facilitate overlap and engagement between the two. To this end, how FADA is engaging with associations representing Manufacturers and Aftermarket to build a mutually beneficial relationship, with the goal of creating a unified automotive ecosystem in India?
FADA regularly organise meeting with SIAM and ACMA to discuss synergies for the issues plaguing auto retail. The leadership team of FADA often represents the issue in the Executive body meeting of both the association. But a “Unified Automotive Ecosystem” is still far. Every association has their agenda and it changes with the person leading the same which hinders consistent progress towards unification.
What do you think about the need for reskilling in order to keep up with the changing landscape of industry 4.0?
Re-skilling is the buzzword today. Not only the business environment but the customer expectations are changing rapidly. And it is very difficult for dealers to keep tabs and update themselves regularly. There have been a lot of changes in compliance too. FADA has been consistently working on training and reskilling the leadership team of dealers for these changes. Wearing another hat as treasurer of the Automotive Skill Development Council, I am working on the upgradation of the curriculum as per the latest technology changes. FADA with ASDC and Google had launched a course on digital and electric vehicle related skills.
I have just started the FADA Academy, which aims to keep our dealers abreast with the changing dynamics and prepare them. We support dealers in skilling their teams with the subject matter and training faculty. They face a business climate of advancing technology, shifting trends and ever-increasing pressure. Dynamic, advantaged organisations need leaders who can lead at the highest levels. They create, manage and thrive in a unique culture they create for their organisation. I am working towards making FADA Academy the go-to place for anything and everything to learn about auto retail. We have just launched a course on “Management and Leadership for Entrepreneurs” for dealer owners. We are also working on a course on “Management by Dashboard”. The FADA Academy will develop your ability to be that catalyst for change and make an immediate impact.
How do you think the Indian automotive industry will evolve with the introduction of EVs and hydrogen-powered vehicles?
Automotive Industry is at the cusp of disruption. The evolution of the electric mobility ecosystem in India may follow a different growth trajectory as compared to the developed or economically varied global EV market. In India, the transition is more likely expected to be driven by two-wheelers and three-wheelers that clearly dominate the shared mobility space. Further, business plans such as the battery swapping model would make a business case in India, as it significantly reduces upfront EV costs and increases the commercial run time of e-vehicles.
Hydrogen is another alternative energy being discussed for adaptation. But it looks like this will be implemented in commercial vehicles more and a bit in passenger vehicles, though it is still time to ascertain the exact effect it will have as a share in mobility. There is also disruption going through in Battery technology – Lead, Lithium, and Sodium…. One thing is for sure disruption in the choice of alternative energy will be the biggest one in automotive
The Electric Vehicle (EV) segment in India is likely to see investments worth US$12.6 bln over the next five years across the automotive value chain according to a 2021 joint report by Indospace and Colliers. Tamil Nadu is the leading state with the highest share of investments at 34%, followed by Andhra Pradesh and Haryana.
How will the new vehicle scrapping policy impact the automotive industry?
The Vehicle Scrappage Policy is a breakthrough in de-congesting our country and controlling our pollution. But it’s still in the nascent stage. We Indians have an emotional attachment to our vehicles and giving it up never occurs in our minds. The current Policy is voluntary and a good step towards the acceptability of scrappage as a concept.
As the markets mature, the government will make this mandatorily according to the age of the vehicle and then we will witness another auto retail boom in the country. The vehicle owner should be given a lucrative offer and to make this work, government will have to adapt to Stick and Carrot method.
What do you think the future holds for the industry?
The Indian economy is going through a robust growth phase, a testimony to the right policies and interventions by our government in these tumultuous times. In fact, we are today the world’s 5th largest economy having recently out-performed Great Britain. We have a young population and a policy framework which encourages us to become a factory to the world, an office for global businesses, and a hub for manufacturing and we are undergoing a massive energy transformation. India overtook Germany to become the 4th largest automotive market in May 2022.
The passenger vehicle segment is going through the best-ever numbers. Customer expectation from their vehicles has transformed tremendously and they are willing to invest more to get a feature-rich and safe vehicle. There are a lot of disruptions ahead for the auto industry and there is no doubt about the future of this Industry.