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Auto manufacturers have announced a Rs 1,800 Crore aid package to their dealers during the current COVID-19 pandemic. The relief package will help dealers to pay their staff and keep the businesses running.
A nationwide lockdown has been announced for 21 days in the country and as a result, the showrooms are shut, and manufacturers are witnessing the lowest sales numbers in recent history. To help the dealers during these tough times, carmakers have announced relief packages.
Dealers usually receive support packages and incentives (depending on sales volumes and performance) during April and May, however manufacturers have made these payouts and offered additional relief packages during March and April this year to help their dealer networks during this COVID-19 pandemic.
Manufacturers have released incentives in full this time around, irrespective of set performance parameters. The move is unprecedented and comes at a time where the entire Industry needs somewhat of a bail out.
According to ET Auto, Maruti Suzuki contributed Rs 900 Crore to the relief package as the manufacturer controls 50 per cent of the Indian automotive market. The remaining amount is shared by the rest of the carmakers that include Hyundai, Ford, and Toyota Kirloskar Motor.
An estimated amount of Rs 20,000 Crore worth of vehicles and spares are stuck in showrooms across the country. Additionally, the interests piling up on the unsold vehicle stock at the showrooms are estimated to be at about Rs 200 Crore. Manufacturers have said that they will cater for some part of the interest that dealers have to pay.
In related news, auto manufacturers are helping the Indian Government to tackle the COVID-19 pandemic by manufacturing medical equipment. Maruti Suzuki has announced that they will start production of ventilators soon — here are more details.
Thoughts About The Auto Manufacturers Announcing Rs 1,800 Crore Aid To Dealers During COVID-19 Pandemic
The Coronavirus has resulted in an economic slowdown in the country. The 21-day lockdown announced has resulted in zero sales with no cash inflow for the dealers. Without a functioning dealer network in place, manufacturers will have no customers walking into the showrooms to buy their products. However, auto manufacturers have extended helping hands to their dealers in order to keep them running by offering financial support during these unprecedented times.