Covid-19 dent: Only 20% auto dealerships operational across India

India's auto sector continues to reel under the economic impact of the Covid-19 outbreak, as only 3,500 dealerships are operational across the country now.

The low number of operational dealerships comes even after relaxed movement norms were implemented across the country in the third phase of the nationwide lockdown.

In fact, half of these dealerships are just utilising their workshop's capacities. According to the Federation of Automobile Dealers Associations (FADA), even under lockdown 3.0, as on date just 20 per cent of the total network has opened up, which is close to 3,500 outlets.

Currently, FADA represents over 15,000 automobile dealers having 25,000 dealerships, including 30 Associations of Automobile Dealers at the regional, state and city levels, accounting for 90 per cent of the total market share in India.

"This number is going up on a daily basis as many dealers are in the process of obtaining permission to open up their businesses" Ashish Harsharaj Kale, President, FADA, told IANS.

At present, the country has entered into the third and a more relaxed phase of lockdown. Some industrial and retail activities are allowed under this phase, depending on the geographical area of the operations.

The whole country is divided into zones which are designated as red, orange or green depending upon the number of Covid-19 cases detected in these areas.

The lockdown has dealt a heavy blow to commercial activities, leading to temporary closure of shopping malls, dine-in restaurants, grounding of aircraft, shutting down of factories, leaving major market places deserted. Not just the automobile sector, even the government's own revenue collection has been impacted.

In terms of sales during the current month, Kale said: "May is going to be a slow month in terms of sales, as the auto industry is currently focusing on getting operational. It is difficult to comment on how the recovery in business is going to be like."

Business and demand revival will strongly depend on the withdrawal date of the nationwide lockdown. More importantly, the support package offered by the government to kick start the economy and the extent of it, along with new initiatives taken by the vehicle makers for boosting retail, will also have a bearing on demand revival.

The country's auto sector is a key engine of economic activity. Presently, the automotive industry accounts for almost 50 per cent of manufacturing gross domestic product (GDP), 15 per cent of Goods and Services Tax (GST) and employs 37 million people directly and indirectly in India.