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The Indian Automobile Sector Post Covid-19

Published on May 7, 2020
Last modified on March 10, 2022

Back in 2019, the Indian automotive industry was struggling because of economical, customer-led, and political factors. But now, with the present pandemic, the nationwide lockdowns, job cuts, and the decline in vehicle demand, the situation has worsened. The impact of the perpetuated shutdown is being felt across segments that include OEM’s, vendor operations, and retail business. According to The Federation of Automobile Dealers Association (FADA) the spread of coronavirus led to a 70% drop in sales in the recent days. (Reuters)

The Indian automobile sector will be staring at an uncertain future after COVID-19. It will have to carefully address its short and long term challenges to resume normal operations. Some automobile companies are adapting and seizing this opportunity to restructure now, in order to deftly navigate the crisis and emerge as a winner in the future. Let’s explore what is changing now and will change soon.

1. The New Standard Operating Procedure

The post COVID car purchasing process will be different for both customers and dealerships. MSIL(Maruti Suzuki India Limited), for example, has stopped offering test drives to customers, and will only offer it just in case the customer insists on one. And if any test drive is to take place, the test drive cars should be sanitized before and after the drive. Also, protective covers will be used on surfaces exposed to the driver such as the seats and steering wheel.

Tata Motors and Toyota have instructed partner dealerships to ensure temperature screening is a prerequisite for employees and customers before entering any showroom. And in case the temperature is higher than normal, the customer will be turned away from entering the showroom, as high temp or fever is a common symptom of COVID-19.

OEMs have also instructed dealerships that customers can visit showrooms only after setting an appointment, where dealerships have to get the exact timing for the customer visit and get confirmation from them as well. And they have been instructed not to allow customers without masks from entering the showrooms.

Other guidelines and instructions provided by OEM for the standard operating procedures include:

  • Online documentation for vehicle registration and insurance for customers through the mail, to avoid the need for any contact.
  • OEMs have requested dealers to remove any newspaper or magazines for customers’ entertainment, in the waiting area.
  • Prevented dealers from handing out quotations, brochures, catalogs, or any other branding material to customers in hardcopy format.

Companies have also provided other checklists for precautions to ensure repeated sanitization of surfaces, extreme hygiene cleaning, and social distancing in areas where customer interaction occurs.

2. The Digitalization

Guidance towards stay-at-home orders, social distancing, and the nationwide lockdown has made the online vehicle shopping an appealing experience. In response, carmakers should focus on enhancing the digital experience of showroom, to better explain the car features and specifications to the customers. At the moment, many carmakers have started accepting online booking cars.

OEMs have also encouraged dealerships to rely more on technology and other services to decline the time spent by customers at the showroom as much as possible, for example:

  • MSIL has requested dealers to offer home delivery of cars service.
  • They have requested dealerships to complete paperwork in advance before the customer visits the showroom for car delivery. Showroom salesforce  can rely on telecalling software for communication and prospect management technologies to achieve that.
  • OEMs are focusing on digital car demos to showcase the features and specs of the car.

Although the automobile industry in India has witnessed the worst sales in March 2020 due to the lockdown, there has been an increase in online bookings. Some of the leading players in the automobile industry are already gearing up towards digitizing every aspect of the car selling process, such as sales, marketing, and customer relations to guarantee a strong comeback after the pandemic. And others have been relying on technology even before the pandemic to drive business and retain customer relations. For example, an automated telecalling software like NeoDove for communication and prospect management has helped dealers of OEMs like TATA and Bajaj manage their employee engagement and customer relations successfully.

They feel that the intuitive platform is designed with an interface simpler than any other standard CRM tool. The AI-supported digital space drives help them with up-to-date and relevant information in real-time and maximize their calling output through telecalling software. 

3. The Change in Preference 

Post the pandemic, the consumer preference will shift towards hygiene, cleanliness, and individual health during traveling. Consumers will switch more towards personal mobility. And a study revealed by the multinational market research firm, IPSOS, confirms that. The study indicates that after COVID-19 in China, citizens prefer using a private car than public transportation. And that there has been an increase in the overall footfall at the automobile dealerships. The reason behind it is that people believe that private cars are safer than public transportation, as it reduces the chance of getting infected. So there is an expected increase in demand for vehicles in the next 4-6 months in China.

There are indications that India will follow the trend for this situation in China, and that it may also emerge even stronger in India, but still, there might not be an immediate uptick in vehicle sales in the country.

Due to Covid-19, automotive demand will significantly impact in FY21, but it is expected to rebound in FY22 positively. And the new normal for the industry will indeed bring in many challenges, but it will bring along multiple opportunities as well. The new future of the automobile industry is anticipated to show more flexibility and resilience, through both digitization and extra precautionary measures must be taken to overcome any risk.

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