COVID-19: FADA writes to PM, seeks immediate financial support

The Federation of Automobile Dealers Associations (FADA) has written to Prime Minister Narendra Modi seeking immediate financial support from the government for the ailing sector amid the nationwide lockdown due to coronavirus pandemic.

In its letter to the prime minister, FADA sought complete waiver of interest on all category of loans from banks and NBFCs for the lockdown period.

The industry body, which represents around 15,000 auto dealers, also sought extension of 4 per cent interest subvention/subsidy for working capital/loan requirements to companies for a period of nine months post the lockdown.

FADA sought that the salary of people employed at the dealerships during the lockdown period should be paid through ESIC.

It has also asked for grant of MSME extension to auto retail.

The subsidies and incentives received under the MSME division will provide much needed relief to dealerships, which provide direct and indirect employment to lakhs of people, FADA said in the letter which was also marked to Finance Minister Nirmala Sitharaman and Transport Minister Nitin Gadkari, among others.

The industry body has sought measures like GST cut on automobiles, incentive based scrappage policy and priority sector tag for the sector to boost demand post-lockdown period.

FADA said the auto industry has already been reeling under a severe slowdown for the last 15 months, with more than 275 dealerships already shut, resulting in huge job losses.

"The current situation can lead to an existential situation for many of our members and their employees. Majority of them are small scale family run businesses with no financial sustenance for such a crisis after already having gone through a tough period in past 15 months," FADA President Ashish Harsharaj Kale said in the letter.

Over the years, the auto dealership business model has come under severe strain with increasing costs and low operating margins, thereby reducing the sector's strength to face challenges like the current situation and its after effects, he added.

"While we are taking it up with SIAM at a complete change of the business model to build up sustenance for the after effects of COVID-19 and for any future disruptions, the immediate situation is extremely bleak if not supported," Kale said.

Many auto dealers will go out of business and livelihood of hundreds of thousands will be lost if the sector doesn't get government support, he added.