The 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 market share.
It called for resetting the clock for auto dealers on working capital limits, including complete waiver of interest on all categories of loans from banks and non-banking finance compes.
The association said auto sales and registrations could drop by 35 per cent for some segments.
"If not supported in such a scenario, many auto dealers will go out of business, impacting livelihoods of hundreds of thousands of workers whom we employ," said FADA President Ashish Harsharaj Kale in a letter to Prime Minister Narendra Modi.
Kale called for extending 4 per cent interest subvention, subsidy for working capital and loan requirements to compes for a period of nine months after the lockdown period.
The government should allow 20 per cent additional overdraft on sanctioned credit limits for six months, he said adding that salaries of employees for the lockdown period should be paid through Employees' State Insurance Corporation (ESIC) as this is a pandemic and salary liabilities should be covered the ESI.
"To boost vehicle demand further, we request that the Corporate Depreciation Scheme which was valid till March 31 be extended till FY 2021," said Kale.
Besides, an incentive-based scrappage policy should be introduced immediately for all vehicles which are on roads since 2010.
( With inputs from ANI )