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auto | IST

Amid COVID-19 crisis, SIAM warns of deep slowdown in automobiles sector

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The Society of Indian Automobile Manufacturers (SIAM) have warned of the possibility of a deep slowdown in the absence of a fiscal intervention by the government. This comes at a time when auto sales dipped by 75 percent in the first quarter of FY21 with commercial vehicles segment registering a sharp 85 percent decline over the last year.

The Society of Indian Automobile Manufacturers (SIAM) have warned of the possibility of a deep slowdown in the absence of a fiscal intervention by the government. This comes at a time when auto sales dipped by 75 percent in the first quarter of FY21 with commercial vehicles segment registering a sharp 85 percent decline over the last year.
Rajesh Menon, Director General of SIAM, said that passenger car sales are going through the longest spell of slowdown in twenty years. As a result of COVID-19 and the lockdown, auto sector production declined by almost 80 percent and exports fell by 63 percent in the first quarter.
India’s automobile industry has made three recommendations for a demand revival, including a temporary GST reduction by 10 percent, a scrappage policy with incentives and a major government procurement policy.
“Supply disruptions are actually increasing every day. It’s a start-stop sort of situation. We are very concerned with these disruptions. The number of cases are also going up in different areas and this is leading to work stoppage. Auto companies in Waluj are not able to produce due to the lockdown imposed recently,” said Rajan Wadhera, president of SIAM.
Wadhera also said that disruptions and delays in customs clearance at ports have been addressed by the government.
Most auto companies are currently operating at 20-30 percent capacity and these levels could increase to 40 percent by next month. SIAM officials admitted that temporary workforce in the auto sector has been impacted due to lower production levels.
“There will be no loss of permanent workforce if we reach a capacity utilization of 50-60%. Temporary workforce will be required if capacity utilization goes beyond 60%. Currently temporary workers are not available and we do not need them also,” said Rajan Wadhera.
Tarun Garg, director, sales and marketing at Hyundai India, is optimistic about India’s economic recovery but expressed worry about the impact of future lockdowns.
“We do not want any more lockdowns as we need to bring economy back on track. Hyundai is hoping to reach 90% of the company’s July 2019 wholesale numbers. Tier 2 and Tier 3 cities are definitely seeing a better traction than metros. We are planning to start a third shift soon”, he said.
SIAM believes that India’s auto sector growth in FY21 will be driven by rural sales. The industry is seeing positive trends in demand for two wheelers, small commercial vehicles and three wheelers from rural parts of the country. “Rural India could be a bright spot for the auto sector due to the agri package that was announced by the government. We are seeing activity emerging in rural sector and it could be a rural led growth”, said Wadhera.
Speaking about the government’s pitch toward self-reliance, Wadhera said auto sector needs a long -term localisation road map.