Auto industry body -- Society of Indian Automobile Manufacturers (SIAM) said rising fuel prices will have a negative impact on the automobile industry, hitting vehicle demand, while also adding to the overall inflationary pressure. It has also suggested to the government a fitness-based scrappage policy instead of policy based on demand stimulus. SIAM president Kenichi Ayukawa said ‘Unfortunately, with the fuel price going up we will be getting a negative impact in our industry. How long this kind of situation will continue we don't know but we expect the fuel prices to become reasonable as soon as possible’.
Ayukawa said ‘We have to carefully watch the demand in the market because automatically, (with) fuel prices going up people will hesitate to use vehicles. That is a big concern for us’. While stating that SIAM cannot predict how much sales drop there would be, he said ‘Historically, whenever there is a rise in fuel price there has been a slowdown in demand.’ He noted ‘we have to see how it is going’. Also, he agreed that with the rise in diesel prices transportation costs of goods will also increase and thus ‘accelerate inflation’.
Commenting on the scrappage policy that the government has announced in March this year, Ayukawa said the auto industry is suggesting giving importance to the fitness of vehicles. SIAM's view is that ‘the fitness of the vehicle is important for safety on the road and for the environment. Vehicles should be roadworthy’. Ayukaway further said ‘So we should have regular testing of in-use vehicles. If such vehicles are not found to be okay, these vehicles should be given sufficient opportunity to refurbish, if it is still not okay, then it should be scrapped. So the industry has suggested adoption of fitness-based scrappage policy instead of policy based on demand stimulus.’