RETAIL RECOVERY – REAL OR REEL?

The first green shoots of recovery are beginning to appear in the Indian auto industry. I attended the annual Society of Indian Automobile Manufacturers (SIAM) Conference in New Delhi a few days back, and there is an unmistakable sense of optimism and energy amongst industry executives.

The reasons are many. The political environment has achieved a degree of stability that has not been seen in almost three decades. There is a sense of purpose in the functioning of the Government, that is a refreshing change from what had been dished out during – what is being widely proclaimed as – ‘India’s lost decade’. Prime Minister Modi’s guiding principle – ‘Maximum Governance, Minimum Government’ – and his recent clarion call – ‘Come, Make in India’ – have hit the right notes with top industry executives, and the positive sentiment is for all to see.

The approaching festive season will be a moment of truth. Whether the rapidly improving consumer sentiment results in buyers putting their hands in their pockets is a question everyone is eagerly awaiting the answer to. The initial signs are positive, with passenger car dispatches clocking year-on-year increase since four months in a row now. It has been a long, arduous journey to recovery for all industry stakeholders, and the next two months will tell if the wait has been worthwhile; if the recovery is real, and sustained, or merely a flash in the pan.

The last couple of years have presented a great – if painful – opportunity to learn and reinvent the wheel for businessmen in the automotive retail trade. I am sure there are automotive dealers who have figured out better, more efficient, more cost-effective ways of running the business during this time of adversity. These are the dealers that will benefit most from the long-overdue recovery.

A bullish market, combined with their learnings of managing costs and inventories will result in a business that is significantly healthier than it was before the downturn, and ever more resilient.

I am reminded of the time American auto dealers emerged from the lows of the Global Financial Crisis with overall margins and profitability higher than ever before. If we can repeat that story in India now – that, for me, will be the real silver lining on the cloud of the last couple of years.

Here’s looking forward to a festive season full of success and cheer for all.

Jayesh JagasiaManaging Partner & CEOSewells Group Indiainfo-india@sewellsgroup.com

RETAIL RECOVERY – REAL OR REEL?

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