Amidst the 21-day lockdown imposed nationwide due to the outbreak of COVID-19, the ailing in Indian auto industry sunk deeper into trouble due to production halts and a temporary shutdown of dealerships. Needless to say, the uncertainty in the country’s economy has also forced a majority of buyers to set aside big chip expenses like buying a vehicle until the situation is back on track.
In light of the same to support its dealers during the crisis, Skoda has announced that it will provide financial support to its dealers in India to cover the fixed cost for the April-June quarter. The initiative will be aimed at paying salaries and meet other fixed costs at the company’s 80 dealer outlets in the country. The company plans on directing Rs 50-60 crore this quarter.
Recent research by India Ratings and Research (Ind-Ra) has suggested that the nationwide lockdown has deepened woes of automobile dealers as the coronavirus pandemic crippling most economic and commercial activities will negatively impact demand for automobiles.
The rating agency said some original equipment manufacturers (OEMs) have announced support to auto dealers either by taking the ownership of unsold stock or by requesting their inventory financing partners for an extension of the moratorium to their dealers due to the lockdown.
OEMs could also compensate their dealers for the unsold stock to a certain extent, which was also seen during the goods and services tax implementation, it said in a statement.