The Federation of Automobile Dealers Associations (FADA) has been a cornerstone of India’s automobile retail industry for six decades. From its inception in 1964 by the visionary T.V.S. Santanam to its present-day stature as a unifying voice for 9,000 dealer principals, 15,000 dealerships, and 30,000 outlets, FADA’s journey has been marked by resilience, adaptability, and an unwavering commitment to its stakeholders. In a reflective conversation with N. Balasubramanian, CS Vigneshwar, President, and Saharsh Damani, CEO, FADA, delved into the association’s origins, achievements, and its pivotal role in navigating the industry through challenges and opportunities.
Tracing the Origins: A Visionary Beginning
Recalling FADA’s genesis, Damani shared, “Sixty years ago, India’s road transport policies were fragmented. Each region operated under its own set of laws, creating a need for a cohesive, pan-India approach to address the concerns of automobile dealers.” This led to the establishment of FADA, bringing together four zonal associations to form a unified body. Interestingly, the association’s head office was based in Mumbai until 2001 before relocating to New Delhi, reflecting its growing national focus.
Vigneshwar added, “The association was built brick by brick by 36 Presidents over the decades. Each contributed uniquely to creating a strong foundation that allowed us to adapt to the ever-evolving complexities of the automobile industry.”
Pivotal Milestones in FADA’s Six-Decade Journey
FADA’s journey has been punctuated with significant milestones, each addressing the evolving needs of its members and the industry at large.
1. The Retail Data Revolution:
In 2018, FADA began publishing retail sales data, a groundbreaking move that shifted focus from wholesale to retail sales. This initiative provided stakeholders, including OEMs, government agencies, and financial institutions, with more accurate insights into consumer demand. “Our retail data is now the gold standard, referenced even by the RBI and other national bodies,” noted Vigneshwar.
2. Navigating GST Complexity:
The introduction of GST in 2017 brought widespread confusion, especially for dealers managing complex inventory and taxation systems. FADA organized nationwide GST seminars, bringing together experts and government officials to demystify the tax structure. “These seminars were not just about compliance; they empowered dealers to manage their businesses holistically under the new regime,” said Damani.
3. BS4 to BS6 Transition:
The transition from BS4 to BS6 emission norms in 2020 posed one of the greatest challenges in FADA’s history. The COVID-19 lockdown disrupted the clearance of BS4 inventory, leaving dealerships with unsold stock worth hundreds of crores. FADA’s legal intervention at the Supreme Court ensured a pragmatic resolution, safeguarding the industry. “This was a defining moment, showcasing FADA’s ability to advocate effectively for its members,” remarked Vigneshwar.
4. Championing Skill Development:
Recognizing the importance of a skilled workforce, FADA has collaborated with leading institutions like IIT Delhi and NMIMS to create specialized programs for dealers and their teams. Initiatives like NextGen, Women in FADA (WiF), and the FADA Academy aim to groom the next generation of leaders while promoting inclusivity. “Today’s dealers need to be agile and future-ready, and these programs are designed to equip them for the challenges ahead,” said Damani.
Strengthening the Dealer-OEM Relationship
One of FADA’s most significant contributions has been its efforts to balance the dealer-OEM relationship through the introduction of the Model Dealer Agreement (MDA). This agreement seeks to address longstanding issues such as inventory dumping and return policies. “We don’t seek one-upmanship over OEMs, but fairness and equity in our partnerships,” emphasized Vigneshwar. While some OEMs have embraced the MDA, FADA continues to advocate for its widespread adoption.
Damani elaborated on the complexities of the relationship, pointing out, “Push sales and excessive inventory often strain dealers financially. The MDA offers a framework that benefits both parties by fostering transparency and mutual accountability.”
A Transformative & Progressive Decade
Reflecting on the last decade, Damani highlighted the rapid pace of change in the industry and FADA’s proactive role in navigating these shifts. “From digitization to sustainability, the last ten years have brought more transformation than the previous five decades combined,” he remarked.
Vigneshwar echoed this sentiment, noting, “Disruptions such as the pandemic, regulatory changes, and the rise of electric vehicles (EVs) have tested the resilience of our members. Yet, these challenges have also driven innovation and collaboration, strengthening the industry as a whole.”
Sustainability and Green Initiatives
FADA has taken a proactive stance on sustainability, urging its members to contribute to environmental conservation. Initiatives such as gifting saplings with every vehicle delivery and eliminating floral bouquets at events underscore FADA’s commitment to greener practices. “Our role doesn’t end with selling vehicles; we must also mitigate their environmental impact,” said Damani.
The Human Element: Skilling, Employment, and Community Impact
One of FADA’s lesser-known but highly impactful contributions is its role in employment and skill development. With dealerships employing over two million people directly and indirectly, FADA’s training programs ensure a steady supply of skilled workers who are proficient in all aspects of vehicle servicing and sales.
“The dealership workshop offers 360-degree training, far beyond the compartmentalized roles in factories. This creates a workforce that is not only skilled but also adaptable,” explained Damani. He further highlighted the economic stability dealerships bring to smaller towns and rural areas, reducing urban migration by creating local employment opportunities.
Challenges on the Horizon: Navigating Disruption
As the automotive landscape evolves, FADA is acutely aware of the challenges that lie ahead. The shift to EVs, digital disruption, and the absence of a Retail Protection Act are some of the pressing issues. The abrupt exit of OEMs like Ford has underscored the need for stronger legal safeguards to protect dealers’ investments.
“The lack of a Retail Protection Act leaves us vulnerable. Imagine investing crores in infrastructure, only to have the OEM exit without notice. It’s an unsustainable model that needs urgent attention,” stated Vigneshwar.
The Future of Dealerships in a Digital World
The rise of digital platforms has sparked debates about the relevance of physical dealerships. However, both Vigneshwar and Damani believe that brick-and-mortar outlets remain integral, particularly in a country where vehicle ownership is an aspirational milestone.
“Buying a car is a deeply personal decision involving families and communities. Customers want to touch, feel, and test-drive their vehicles before making such a significant investment,” explained Vigneshwar. Damani added, “India’s per capita income and economic profile ensure that physical dealerships will coexist with digital channels for the foreseeable future.”
Road Safety and Consumer Awareness
FADA has also taken the lead in promoting road safety and consumer awareness. Campaigns like Buckle Up encourage the use of seat belts and helmets, targeting both urban and rural audiences. “As the face of the automobile industry, dealerships play a crucial role in educating customers about safety and responsible driving,” said Damani.
A Bright Road Ahead
FADA’s 60-year journey is a testament to its adaptability and vision. As the automotive industry undergoes rapid transformation, FADA’s proactive initiatives ensure that dealerships remain a vital part of the mobility ecosystem. From advocating for equitable dealer-OEM relationships to fostering sustainability and skill development, FADA continues to set benchmarks for excellence.
“We are not just automobile dealers; we are mobility solution providers,” concluded Vigneshwar. With a legacy of achievements and a forward-looking vision, FADA is poised to lead the industry into a future marked by innovation, inclusivity, and sustainability.
