The coronavirus pandemic might be a blessing in disguise for the automobile sector which wasn’t doing so well for a long time.
There are various segments of people who buy vehicles according to their own objectives. For some, cars serve as the purpose of a need while for some it is a status symbol. Traders, businessmen, entrepreneurs drive the demand of the vehicles and at the current time these are the worst affected ones from the pandemic. The demand for vehicles would surely go up as people would try to reduce the usage of cabs and other public transport but people would now prefer to buy lower-priced cars because the incomes have also shrunk down. People would prefer to sit in their own vehicle knowing that there hasn’t been any contamination in it rather than in a cab where hundred people have been in a day. The demand for other classes of vehicles is also bound to change.
If we look at the places who have already gone through the pandemic and have come out of it, the only place we come out it is China. In China, the demand for the vehicles has gone up since the pandemic. RC Bhargava, Chairman, Maruti Suzuki India Limited said that in China, the demand for personal cars went up since the lockdown has eased. Similarly, we can say that even in India, the demand might go up if the income level is up.
In India, the customer is the king. And the king loves discounts. There isn’t much brand loyalty prevalent in the Indian minds. The people who own various stores know when to offer discounts according to the consumer demand inflating at that time. More than 40% of the personal automobile sales occur during the Diwali time. since the start of the pandemic, there is one thing which has definitely declined, the earning capacity of every individual. If the salaries aren’t going to the people, how will they fulfill their basic needs let alone the higher-level needs? The buying capacity of the people will reduce and they won’t be able to purchase a lot.
As far as the automobile sector is concerned, we would be talking about the personal automobile segment for the consumers. This segment includes all the vehicles you purchase for your own use and for your family. It includes cars, scooters, and any other vehicle for personal usage.
According to experts, the purchases will surely be downsized, in quantity and well as the type of vehicle to be purchased. So, a larger number of customers would be looking at smaller cars with lower price points. There isn’t much disposable income available so the consumers would be going for the same. According to the current scenario, the hatchbacks and quality compacts would be at an all-time high. There would be a surge in the demand of cars which were used earlier like Alto, Kwid, Celerio, Santro, WagonR, Tiago and few other models, where the biggest sales rise would be for Maruti Suzuki as they have the largest number of small and compact kind of cars.
Since there will be a change in the preferences of the customers with the main change in the price variable, the sale of big cars like SUVs and MPVs will change. Since the people of the digital generation have joined the race for purchasing the vehicles, buying and customising of a car has been shifted to the online mode. SIAM says that there has been a tenfold rise in the number of people visiting websites related to cars. Currently, almost every carmaker in India has started accepting online orders of cars and SUVs and deliveries of new vehicles are just a matter of time. According to reports, somewhere around 30% of the customers are planning to purchase a car and not rely on public transport to reduce the chances of getting infected.
Daily commuters of local trains might start going for personal transportation. And in the wake of the situation when we see that the salaries and wages are cut, the only transport they will resort to is the two-wheeler, a favorite of the 20th century! If not two-wheelers, they would go for used cars or second hand cars. Basically, people would only buy out of need and not for the need of show off and as a symbol of pride. The auto stocks have gone down by 40-70% in many cases since February because the sales have gone down but it is expected that in the near future, the need will increase. The ‘subscription model’ would see a hike in the number of people. This model basically means that customers will be allowed to buy cars on a monthly or annual subscription which will be a replacement for the current plan, the EMI plan. A subscription plan includes maintenance costs, registration charges, and road tax.
India has changed, the air is cleaner, people want to be clean and stay safe. If this continues, the demand for vehicles will rise.
The sales of Suzuki Motor Corp. went down by 52% in last month and it is expected to fall even more this month. The largest SUV makers, Mahindra & Mahindra Ltd. and Tata Motors Ltd. Were forced to stop production after the lockdown came into motion. The biggest luxury brand, Jaguar Land Rover also stopped production after hearing about the lockdown. And now, customers seem to be more into the idea of purchasing a vehicle after the pandemic ends.
The automobile industry has been the backbone of the Indian manufacturing industry and generates a lot of employment. The companies need to have digital modes of showing cars as the customers won’t be coming to the showrooms any time soon.
The biggest gain coming out of all this will be for Maruti Suzuki. Historically also, Maruti has been the best friend of every Indian household and during times like now, everyone would trust their best friend and not some random brand. Maruti has always focussed on smaller cars and customer satisfaction. They have made the best compact cars for the benefit of the Indians. There have been brands that initially came up with small cars like santro but later shifted to SUVs and according to the current scene, SUVs won’t be preferred because the disposable income of the people has gone down.
The government should help this sector and make up for the losses they have undergone. If this sector stops working, there won’t be any personalized automobiles available for the people and the safety of the people will be at stake. This is something which India as a country can’t see and handle. The used car market needs to be regulated with proper rules and regulations as it will see new customers in the near future. As for as the two-wheeler market is concerned, it might see a rise too. And we feel that there won’t be many Audi, BMW, and Mercedes on the roads now, it will be about comfort more than prestige!