While the Covid-19 has impacted the economy adversely, it has also given many lessons to humankind and business houses. It is expected then that certain industries will have a golden time post the Covid-19 era, and the key to the success of those will depend on many changes, which they will have to do to sustain and grow.
There are six factors that shall boost the demand in the two-wheeler industry in the coming days.
1. Social distancing and personal mobility
The best way to reduce the impact of coronavirus is to adhere to strict social distancing measures. The latest government guidelines also suggest that private vehicles, scooters, etc., shall be ridden by minimum persons only. This shall push individuals to purchase or own entry-level cars and entry-level two-wheelers. Hence, the two-wheeler industry is expected to benefit a lot from this.
Two-wheeler firms have already prepared themselves to increase the production and cover the deficit by this pandemic.
2. Shifting towards low-budget transport vehicle
Purchasing high-value vehicles definitely come at a higher cost. We can see that paying hefty EMIs for owning big cars will not be the priority of individuals now.
Two-wheeler is understood to be the most-affordable mode of commuting for the millennials as it is easy to own, and payment of EMIs is not that heavy as compared to cars.
3. Vehicle financing will be the mantra
While the industry can never grow if they do not have financiers in place, the percentage of buyers who take finance for auto buying is hardly 50 percent. With the growing uncertainty in the economy, individuals would like to save their cash and would be happy to take finance.
Paying monthly installments will be a much-preferred option in comparison to shelling out full cash from their pockets.
4. Leasing is better than owning
In times of growing uncertainty, a fixed commitment is something that will not be preferred by most individuals. At this time, leasing and renting is the best alternative.
Instead of making a heavy down payment and having the worry on mind always, individuals can choose the limited tenure leasing module and enjoy the ride. It gives certain other benefits as well and the cash outflow is much lesser compared to bank EMIs.
5. Limited and lower commitments
Individuals will prefer two-wheelers as the smartest and cheapest mode of transportation, and there are many options available by which one may not have to pay high down payment and higher EMIs. Individuals can also opt for pay-for-use kind of models.
In such models, the right to use can be fixed from 12 months to 36 months. At any given time during this tenure, there are options available to exit with a minimum penalty. Even maintenance of the vehicle can be taken care of by paying a minimum monthly charge.
6. Technology will be the key
The traditional way of doing two-wheeler loan transactions in India is outdated and less lucrative.
Financiers need to come up with better technology-based platforms where they can provide finance to individuals faster, and with the least expected documentation. Paperless documentation and KYC processes shall help individuals to limit their unwanted travel and to make faster decisions.
App-based easy financing approval methods will be the key for two-wheeler financing organisations. Technology platforms like e-KYC verifications and utility documentation verification companies will gain a lot from this as well.