Over the past several weeks the auto industry has been speaking about high manufacturing cost on account of high steel prices and precious metals. The auto industry has now raised the issue with various ministries seeking an intervention.
Vinnie Mehta, DG of Automotive Component Manufacturers Association (ACMA), said that auto industry is coming out of a deep recession and passing on costs to consumers has its limitations.
“The auto industry, like many other industries, is coming out of a deep recession. We were under a downturn in the year 2019-20 and 2021 is what you all know. So increase in prices is a big concern on the raw material side because I am not too sure how can cost efficiencies make good for it. Passing on to consumer definitely has a detrimental impact on the market. So, this is definitely of concern to the whole industry,” he said in an interview to CNBC-TV18.
Mehta said that they could look at localisation of output and aggregation of purchases. “The government has this huge agenda on localization. So ACMA together with the steel industry, as also with the vehicle industry body SIAM, we working together to see if there could be more localisation of the automotive grade steel specially so that we can bring down prices and if there could be a case for demand aggregation from vehicle manufacturers and the auto component industry combined. Then you could have a certain critical mass of consumption in the country because typically it is the auto grade steel that gets imported. So, this is being actively worked upon,” he said.
Mehta also said that they have been flagging these concerns with the government. “We are working with the government. We have been flagging these concerns to the government, but I do not know as to what government can do in terms of easing out input prices. This is market driven in some sense,” he said.