MUMBAI: The Federation of Automobile Dealers Associations (FADA), the apex body championing the interests of India’s Automobile Retail Sector, has teamed up with Frost & Sullivan, a Growth Pipeline Company to spearhead an ambitious Customer Experience Index (CEI) Study. This ground-breaking project aims to meticulously analyze various aspects of the customer journey, encompassing sales, after-sales service, and product quality across the passenger vehicle spectrum.

In its maiden year, the comprehensive study will target the Passenger Vehicle Category, including Hatchbacks, Sedans, SUVs/MPVs, EVs, and Luxury vehicles, utilizing a detailed questionnaire to capture insights from 8,000 participants across 26 cities. This includes seven metropolitan areas, sixteen Tier-2 cities, and three Tier-3 locations, ensuring a broad data set that spans the diverse Indian landscape.

Manish Raj Singhania, President of FADA, expressed his enthusiasm for the initiative, stating, “Launching this study marks a significant milestone in our continuous effort to deeply understand and meet the evolving needs of automobile consumers. FADA remains dedicated to deploying its collective expertise for the betterment of the entire Automobile Industry. Over the past three years, we have conducted the Dealer Satisfaction Survey (DSS) and recently launched a specialized DSS focusing on Finance & Insurance. Now, by incorporating this Customer Experience Index survey, we are broadening our analytical scope to encompass all facets of the Indian automobile ecosystem, thereby providing a comprehensive voice and strategic vision for all stakeholders. Partnering with Frost & Sullivan not only enhances this study’s credibility but also amplifies our commitment to advancing the Industry. The insights garnered from this expansive survey will directly inform and refine OEM strategies, facilitating tailored customer experiences that foster brand loyalty and satisfaction.”

Further emphasizing the study’s strategic importance, Vinkesh Gulati, Chairman of FADA’s Research & Academy, highlighted, “The Indian automotive sector is at a critical juncture, poised for significant growth amidst changing consumer behaviors and technological innovation. This Customer Experience Index survey is a strategic initiative designed to systematically harness customer feedback across a wide demographic, something that has not been undertaken at this scale in our industry before. By integrating detailed assessments of sales, after-sales & product quality experiences from various vehicle categories, we aim to provide OEMs and Dealers with the insights necessary to elevate their service standards and product offerings. This study is about transforming anecdotal feedback into empirical data that will drive operational changes and enhance customer satisfaction across the board. Our goal is to not only meet but exceed customer expectations, setting new benchmarks for excellence in the automotive sector.”

Aroop Zutshi, Global Managing Partner & Executive Board Member at Frost & Sullivan, said, “Transformation is imminent. Every organization and every industry needs to be agile to adapt to evolving customer needs to survive. India is poised to witness exponential growth in the automotive industry driven by the rising middle-income and youth population, adoption of electric vehicles, increased investment in the Indian automotive industry, and Government policy impetus. The Customer Experience Index by FADA in association with Frost & Sullivan will be a powerful tool for all OEMS and the Dealer fraternity to leverage.”

The Customer Experience Index by FADA and Frost & Sullivan is set to redefine industry standards for customer satisfaction and service excellence. The results, which will provide invaluable insights for the entire automotive ecosystem, are eagerly awaited in September 2024.

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The report highlights significant growth in the two-wheeler, three-wheeler, commercial vehicles, and passenger vehicles, with respective rises of 21%, 41%, 8%, and 10%. However, the tractor segment experienced a slight decline of 0.5%. The surge in two-wheeler purchases was particularly contributed to by rural areas.

Despite initial underperformance during Navratri, particularly in the passenger vehicle sector, the situation improved by Deepawali, ending with a 10% growth rate. SUVs were the highest-demanded vehicles, but inventory levels for passenger vehicles remain a significant concern as OEMs continue to push further dispatch, thus keeping the inventory rate at near all-time high levels.

Tractors, which saw an 8.3% decrease in sales during Navratri, made a remarkable recovery, ending the festive period with only a 0.5% decrease. This turnaround highlights the robust purchasing power in rural India.

FADA President, Mr. Manish Raj Singhania, commented on the festive period retails, stating, “During the 42-day festive period of FY2023, we reached a new milestone with vehicle sales climbing to 37.93 lakh, a 19% increase from last year’s 31.95 lakh.“

The report also includes a chart showing the vehicle retail data for the 42-day festive period, with two-wheelers leading the way with 28,93,107 sales, followed by passenger vehicles with 5,47,246 sales.

FADA is the apex national body of the automobile retail industry in India, representing over 15,000 automobile dealerships with over 30,000 dealership outlets, including multiple associations of automobile dealers at the regional, state, and city levels. Together, they employ approximately 5 million people at dealerships and service centers.

Overall, the report indicates a positive outlook for the Indian automobile industry, with record-breaking sales during the festive period. However, concerns over inventory levels for passenger vehicles remain a significant challenge for the industry.

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The sessions were graced by Mr. Ramesh Iyer, Vice Chairman, and MD, Mahindra Finance,  Guest of Honour Mr HO Suri, Managing Director, IFFCO Tokio along with Mr. Manish Raj Singhania, President, FADA; Mr CS Vigneshwar, Vice President FADA, Mr. Sai Giridhar, Secretary – FADA; Mr Amar Jatin Sheth, Treasurer FADA and Mr. Sachin Mahajan, State Chairperson Maharashtra led the sessions along with other FADA dignitaries and some of the industry leaders from Finance & Insurance sector.

Expressing his gratitude to the distinguished guests and appreciating the role played by the insurance and finance sectors in shaping the automobile industry and helping to revive it, Mr. Manish Raj Singhania, President of FADA, said, “Finance & Insurance (F&I) has always been the foundation of the Indian economy and the sector has significantly aided in the expansion of the Indian auto industry and the dealer network in recent years. Dealerships are a dynamic industry that frequently needs financial support; the finance and insurance sectors have consistently provided us with the greatest assistance possible. The insurance and financial sectors are crucial in reviving industrial confidence on both the supply and demand sides.  FADA as an association, with efficient use of technologies, aims to make finance and insurance more accessible, affordable, and future-ready to catalyze a resurgence in vehicle purchases and thus bolster our auto sales. We together aim to adopt practices that support both the dealer in maintaining a comprehensive vehicle line-up and the financier in ensuring their investment is safeguarded.”

He further added, “As a responsible association, FADA stands committed to addressing various obstacles that the auto industry faces today such as rising interest rates, slow-moving vehicle inventory build-up at dealerships, supply chain constraints, the increased cost of funds and the ever-evolving IRDAI norms. The association also actively works towards complex factors in banks and finance companies wherein FADA urges  them not to extend the inventory cycle beyond 60 days, keeping in view the precarious nature of inventory management and the necessity for quick stock turnover.”

Power Panel I: Financing the Future of Auto Retail: Smart Strategies for Growth and Profitability

The first power panel highlights how the automotive industry’s dynamics are evolving along with the changes happening in the financial market. The panel focuses on important industry issues that are being addressed along with various ongoing challenges and smart strategies adopted for the growth and profitability of the future. Also, the panel describes the role of mergers and acquisitions in sharing the industry’s needs by offering opportunities, cost savings, and synergies further contributing to a stronger and more resilient industry.

The power panel 1 was moderated by Mr. Ketan Thakkar, Group Business Editor, Autocar India & Autocar Professional along with industry stalwarts like Mr. Lavesh K Sardana, Country Head-Retail Assets & Debt Management, Yes Bank, Mr. Parveen Naruka, Head Sales, Kuwy, Mr. Raul Rebello, Chief Operating Officer, Mahindra Finance, Mr. Vikas Pandey, Sr. Executive Vice President HDFC Bank and Mr. Sharvik Shah, State Chairperson, Rajasthan & Director, Rajesh Motors (Auto) Pvt Ltd

Power Panel II: Insurance Innovation for Auto Retail: Challenges, Regulations, and the Path to Comprehensive Coverage

The second power session focused on the Automotive Industry and Vehicle Insurance. The session discussed how vehicle Insurance has developed into a more significant option for business owners to maintain a longer relationship with their customers. The panelist discussed the ongoing challenges, government regulations, innovative solutions to address the problems, and the path to comprehensive insurance coverage for customers. Innovative strategies such as ‘cross–selling’ and ‘Umbrella Policy’ were an important aspect of the session which can benefit the industry by maximizing the revenue, both for auto dealers and insurance companies, by diversifying their offerings further creating a more robust and sustainable business model.

The panelists for Power Panel 2 were Mr. Amit Sureka, Joint President-Motor Business, HDFC ERGO General Insurance, Mr. Nitin Khanna, Business Head, ICICI Lombard General Insurance, Dr. Sandeep Dadia, CEO and Principal Officer, Aditya Birla Insurance Brokers Ltd, Ms. Sreedevi Nair, General Manager, New India Assurance Co. Ltd., Mr. Vedanarayanan Seshadri, Managing Director & Principal Officer, Mahindra Insurance Brokers Ltd., Dr. MP Shyam, Executive Member FADA & Managing Director, Advaith Motors Pvt Ltd, and the session was Mr. Amit Roy, Partner at PwC – Insurance & Allied Businesses

The Finance & Insurance summit was further extended to FADA Golden Dealership Awards 2023 to celebrate the legacies of dealerships that have been in existence for over fifty years along with the FADA Dealership Excellence Awards, a recognition equivalent of the Oscars in the Auto Retail Industry.

Enlightening the event, a motivational session was also held wherein Mr. Shekhar Suman, actor, anchor, and producer shared his wisdom and experience along with Mumbai’s iconic Dabbawalla’s grace the summit highlighting their ingenious model of process management and quality assurance, further motivating the auto industry to work on similar principles.

The objective of the summit was to bring industry leaders together at one platform to explore future trends. The summit and award ceremony witnessed the participation of over 275 auto retailers and delegates representatives from the Maharashtra region.

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FADA has reported that these MBOs are acquiring unregistered vehicles in bulk from dealers and reselling them to customers at discounted rates, higher than the prices offered by original equipment manufacturers (OEMs) through authorized dealers, without any commitment to after-sales service. This has not only impacted legitimate dealerships but has also shaken customers’ confidence in the brand and dealer partners. Furthermore, these MBOs indulge in the evasion of GST, and income tax, issuance of fake/ undervalued insurance policies, and delivery of vehicles without registration/ HSRP and helmets, resulting in revenue loss on various fronts.

FADA has reached out to Shri Eknath Shinde, Honorable Chief Minister, Government of Maharashtra, Mr. Vinod Aggarwal, SIAM President, and the Transport Commissioners of Mumbai and Delhi, urging them to take stringent action against these MBOs and ensure their compliance with industry standards and regulations.

The Hon’ble Chief Minister of Maharashtra and Transport Commissioners of Mumbai and Delhi have initiated action against this illegal practice. The Delhi transport department is also taking stringent action against the outlets operating such illegal trade practices. The authorities had already issued notice on Trade Certificate cancellation to such business units.

Commenting on the stringent actions being taken by the transport department, Mr. Kailash Gahlot, Hon’ble Transport & Environment Minister of Delhi said “Delhi govt will not tolerate any such illegal activity or corruption. We are committed to taking action against any such instance”.

Mr. Ashish Kundra, Principal Secretary cum Transport Commissioner, Transport Department of NCT Delhi, acknowledged FADA’s contribution and said, “FADA has been working closely with the Dealer fraternity and the government to maintain a healthy and lawful business environment in the region. A legal notice has been issued to all the involved parties, and their respective trade certificates have been put under the scanner.”

Mr. Vivek L Bhimanwar, Transport Commissioner, Maharashtra said, “The Maharashtra Transport Authority is committed to offering a legitimate business environment in the region. We appreciate FADA’s effort in working with us to eliminate the MBO threat from the state and for bringing our attention to persistent illegal business practices in the region. All parties concerned have been given legal notice. We have canceled the trade plate of dealers supplying vehicles to Unauthorized Multi-Brand Outlets (MBOs)& have impounded vehicles stationed at such unlawful outlets. we have impounded over 6,000 vehicles, and trade certificates of over 50 dealers have been suspended for a week as of now”.

Mr. Manish Raj Singhania, President of FADA said, “We have raised the issue of unauthorized multi-brand outlets (MBOs) in the 2-wheeler industry, which are not certified as bona fide dealers and sell unregistered vehicles without any trade certificates or after-sales services. This has caused many legitimate two-wheeler dealerships to shut down, making their businesses unviable. Such activities not only tarnish the image of dealerships but also harm brand image and values.

The dealership business is dynamic and contributes consistently to the economic development of the nation, generating significant employment opportunities in the sector. Illegal practices such as this cause massive losses to the government and society and lead to significant loss of motivation among dealers, leading to greater loss of employment opportunities.”

FADA has urged all 2W dealerships to remain vigilant and report any instances of unauthorized purchases or sales to the appropriate authorities. FADA has also written to SIAM, the association of OEMs, requesting them to raise the issue with concerned OEMs to amend their sales process, ensuring no supply of new/unregistered vehicles to unauthorized outlets. This will have a great impact on eliminating the multi-brand outlet menace and building the credibility of the entire Auto Industry.

FADA is committed to creating a fair and transparent business environment for the automobile industry, where customers can trust the brand, and dealerships can operate legitimately and sustainably.

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Chart showing Vehicle Retail Data for November

All India Vehicle Retail Data for November’22

Maharashtra Vehicle Retail Data for November’22

Disclaimer:

1- The All India numbers above do not have figures from TS & LD.

2- Vehicle Retail Data has been collated as of 05.12.22 in collaboration with the Ministry of Road Transport & Highways, Government of India, and has been gathered from 1,341 out of 1,428 RTOs.

Commenting on how November’22 performed, FADA Maharashtra State Chairperson, Mr. Sachin Vasantrao Mahajan said, “The covid variant anxieties do not exist anymore. Due to this, Auto Retail in November’22 saw an overall growth surpassing pre covid levels. The baton was passed by the positive run of festive sales to the Great Indian Wedding Season where around 30 lakh weddings will be solemnized across the country. Expectations are that this run will continue till the fiscal year’s end. Better availability of vehicles coupled with new launches along with good schemes from many OEMs as well as financers helped the cause. Also, improved activities in the infrastructure space and fleet replacement helped CV sales.”

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