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Rising fuel prices will negatively impact the auto industry, affecting demand for vehicles, while adding to overall inflationary pressure, the auto industry body SIAM said on Wednesday. The Company of Indian Automobile Manufacturers (SIAM) has also suggested to the government a scrapping policy based on fitness instead of a policy based on stimulating demand.

“Unfortunately, with the rise in the price of fuel, we will have a negative impact on our industry. We don’t know how long this kind of situation will continue, but we expect fuel prices to become reasonable as soon as possible.” , said the president of SIAM. Kenichi Ayukawa told reporters at a virtual conference.

He was responding to a question about the impact of rising fuel prices, with gasoline above Rs 100 per liter and diesel above Rs 90 per liter in many parts of the country, on automobile industry.

“We need to carefully monitor the demand in the market because automatically, (along with) rising fuel prices, people will be reluctant to use vehicles. This is a big concern for us,” Ayukawa said.

While stating that the SIAM cannot predict the extent of the decline in sales, he said: “Historically, every time there is an increase in the price of fuel, there has been a slowdown in demand. ”

“We have to see how it goes,” Ayukawa said.

In addition, he agreed that with the rise in diesel prices, freight costs will also increase and thus “accelerate inflation”.

Commenting on the scrapping policy announced by the government in March this year, Ayukawa said the auto industry suggested placing importance on the fitness of vehicles.

SIAM’s view is that “the suitability of the vehicle is important for road safety and for the environment. Vehicles must be roadworthy,” he said.

Ayukaway added, “So we should do regular testing of in-service vehicles. If such vehicles are not in good condition, these vehicles should have sufficient possibilities for reconditioning. The industry therefore suggested adopting a scrapping policy based on fitness instead of a policy based on stimulating demand. ”

Commenting on the upcoming challenges of the auto industry, he said the significant increase in raw material prices; The global semiconductor shortage and fear of the third wave of covid have been major hurdles.

“With such uncertainty in the supply chain, it is very difficult to predict a bright future. I can only say that the industry is working on everything that is under our control. We are working hard to maximize production and sales. while ensuring the safety of our staff throughout the security chain, ”said Ayukawa.

He said the second wave of covid came with “great force, great scale and great speed. It gave us very less time to deal with the situation. Lives and business have been affected.”


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