Tuesday, March 24, 2020
By Manoj Kumawat
One Day Shut-Down Costing the Loss Rs. 1500 Crore To Auto Industry
The effects of the COVID-19 are deepening with each passing day and affecting all the segments of the society across the world, the auto industry is not an exception to it. Various global events of the auto industry that were scheduled to be organized in the coming days in the different corners of the world have already been canceled. Now, going through the shut-down condition the auto industry seems to be moving towards great trouble. The condition of the Indian auto industry is not hidden from the auto experts, the industry had been witnessing the huge decline in the sales since the last 18 months. Now the going through the spread of CORONA disease most of the auto manufacturers have either suspended their production activities or partially operating their operations.
According to an estimate, the automaker will have to bear the loss between Rs.13,000 – Rs.15,000 crore during the next ten days. The contribution of the automobile sector in the country’s overall GDP is almost 7.5 percent. It would be interesting to know that all the major automakers including MSIL, HCIL, HMIL, Mercedes-Benz, Fiat, Mahindra, Tata Motors, Renault, Kia Motors, Ashok Leyland, Yamaha, have suspended their production activities.
According to India Ratings and Research (Ind-Ra), the impact of COVID-19 will not only affect the supply of the vehicles but the demand and exports. The lack of automotive parts will affect the supply chain of the materials because most of the raw material is imported from China. On the other side, the Federation of Automobile Dealers Association (FADA) has requested the Supreme Court to extend the deadline for selling the BS-IV vehicles from April 1, 2020, to May 31, 2020. The dealers throughout the country are not able to roll out their existing stock of BS-4 vehicles, and going through the existing situation it is almost impossible to sell out the remaining stock. It is speculated that even if the date is extended up to May 31, 2020, the auto manufacturers will not be able to completely sell out the fleet of BS-4 vehicles.