It’s difficult to name a single industry in India that hasn’t suffered greatly because of the COVID-19 crisis. To contain the spread of the virus, the government imposed has been imposing partial/full public lockdowns since last year. But those measures have had a devastating side effect: the country’s economy faced a downward spiral, thought it has been lately showing signs of recovery.
The auto industry, in particular, was already undergoing a considerable slowdown before the full impact of the pandemic could be felt. There were many factors responsible for this including:
- The GST
- A shift to shared mobility
- Axle-load reforms
- Liquidity crunch and more
The national lockdowns, therefore, had a cumulative effect. The prolonged reduction of consumer demand seriously affected auto manufacturers’ revenues. Furthermore, with factories shut down, crucial parts unavailable and supply chains disrupted, the auto industry was crumbling.
What’s even more unsettling? It left most auto companies starved of R&D funding to sustain their core operations. Any progress made on alternate fuel and mobility technologies could potentially be pushed back by a few quarters.
Commenting on the July 2021 sales data, Rajesh Menon, Director General, SIAM (Society of Indian Automobile Manufacturers) said “Indian Automobile Industry continues to face heavy headwinds in the form of global semi-conductor shortage and steep rise in commodity prices. On one hand, the Industry is managing such supply chain challenges while ensuring safety of its people, and on the other hand industry is also keeping a close eye on the onset of a 3rd wave in India and across the world.”
Hope is on the Horizon
However, factors like easing restrictions, increasing preferences for personal mobility and promising forecasts from several analysts and studies – all suggest that the COVID-induced stagnation could be over soon and that India will once again march on the road to recovery.
The festive season in India is a lucrative time for the economy, regarded as the period from late September till the end of the year. Let’s look at how some top auto companies fared in 2020 during the festive season:
Speaking of their success, Tarun Garg, Director (Sales, Marketing & Service), Hyundai had said, “The October month sales performance set a positive tone for overall business environment and we are confident that we will continue to strongly contribute towards sustainable growth of economy, community and all its stakeholders.”
Maruti owns the largest portfolio of affordable, compact cars among local automakers. This has made them benefit by the growing preference for personal mobility during the pandemic. What’s more, the number of first-time car buyers for Maruti grew from 43% to 48% since 2019.
In with the New
Analysts say that the COVID-hit auto industry is heavily depending on new car models to steer clear of the slowdown as the continued pressures on the economy, loss of jobs and salary cuts have made buyers nervous. Some auto companies have already followed the suit by launching new car models, hoping to excite buyers.
Mercedes-Benz India rolled out the Rs.1.2 crore GLE 55 AMG coupe, while Toyota launched the Urban Cruiser mini off-roader.
Besides this, we saw the launches of vehicles in 2020 such as:
- Kia’s Sonet mini SUV
- Hyundai’s i20 premium hatch
- MG Motor’s Gloster
- Mahindra’s Thar
- Maruti’s Celerio hatch
Luxury carmakers are trying to make the most of this festive season by offering heavy discounts, free insurance, and attractive service packages to lure customers.
Accelerate Your Growth Now
The current landscape provides the perfect opportunity for Indian automakers to lead the way by embracing all the various disruptive changes taking place across segments and gaining a competitive advantage.
Consumer demand is likely to spike soon, just like the last time. And when that revives, OEMs must be ready to engage with timely advocacy, hyper-personalized products and superior omnichannel experiences to translate that improving demand landscape into high revenues and business growth.
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