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Among global companies, the auto industry faced some of the worst hits due to COVID-19. In India, the pandemic has brought several automotive and related companies to a standstill, as dealerships and factories remain closed.
Due to India’s closing protocols, domestic auto sales in April 2020 reached zero units, except for a small number of units online. In recent weeks, quite a few original equipment manufacturers have switched their focus to online retail platforms.
To avoid further losses, key industry players have written to concerned authorities seeking a full exemption from COVID-19’s blocking protocols, to resume all operations that enter the value chain. In other words, the industry wants to open all vehicle manufacturing facilities and dealerships in the main segments simultaneously. Experts predict that the entire vehicle buying scenario will take a change even after the blockade is lifted; read more details.
In a letter to Ajay Kumar Bhalla, India’s Minister of the Interior, it is clearly mentioned that the “automotive value chain is complex, integrated” and also “interdependent”. Furthermore, it states that an automobile manufacturer cannot do business efficiently, even if one of its suppliers does not work. The letter was a joint effort of three Indian automotive organizations: SIAM (Society of Indian Automobile Manufacturers), ACMA (Association of Automotive Component Manufacturers) and FADA (Association of Federation of Automobile Dealers).
From now on, the national blockade runs until May 17 and, depending on the days to come, the country could even see a fourth phase of extension. If manufacturers are allowed to start operating in their factories while dealerships remain closed, it would create overwhelming inventory and block working capital. Therefore, for the industry to function effectively, almost all players in the field of vehicle sales have to work together.
Data shows that the auto industry represents 7% of the nation’s GDP, 49% of manufacturing GDP, and 15% of GST. In addition to this, it employs more than thirty-five million people directly or indirectly. Due to the shutdown, the Indian auto market is reportedly losing around Rs 2.3 billion rupees daily.
India’s automotive field has switched to BS6 emission standards, but several dealers are loaded with unsold BS4 stocks. Such dealers have been advised to follow one of three options: (1) register BS4 vehicles as used, (2) consult the OEM for a repurchase or (3) send the cars for scrapping.
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