Allow entire value chain in automotive sector re-commence operations in unison: Auto industry bodies

Three industry bodies of the automotive sector, SIAM, ACMA and FADA, on Friday asked the government allow the entire value chain in the auto industry to re-commence operations in unison.

In a joint representation to Home Secretary Kumar Bhalla, the Society of Indian Automobile Industry (SIAM), Automotive Component Manufacturers Association of India (ACMA) and Federation of Automobile Dealers Associations (FADA) said if any of the segment does not commence operations the value chain will not be able to re-start.

They also said the sector is losing revenue to the tune of Rs 2,300 crore per day and therefore starting of economic activity in the sector is critical.

"The automotive industry in India, which was already facing a severe downturn for over 15 months, with the lockdown, is now confronted with total disruption of its entire value chain," they said, adding with challenges of working capital across the sector, several of the players in the industry, right from the component suppliers to the dealerships, are faced with the challenge of staying solvent.

Asking the sector to be allowed "to resume operations in complete unison", the three apex chambers representing the entire automotive value chain said "the automotive value chain is highly complex, integrated and interdependent".

"A vehicle manufacturer cannot commence operations if any one of its suppliers is unable to undertakeproduction. Further, production for a vehicle manufacturer would only amount to adding to inventory and thus blocking working capital in case dealers are unable to sell vehicles," the joint representation said.

It further said, "It is therefore pertinent to note that, if any element in any segment does not commence operations, the value chain will not be able to re-start."
It further said, "This would include the vehicle manufacturers (OEMs), the component suppliers, the dealers, the service workshops, and the regional transport authorities. In fact, auto dealerships / workshops will not be able to open till such time the citizens are not allowed to come out of their homes freely."
Underlining the contribution of the auto sector to India's economy, the three bodies said, "The industry needs to be treated akin to 'essential services' and be allowed to function as has been done in case of steel and cement sectors."