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Old 26th March 2020, 18:54   #1
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Default Kotak: Consumers would prefer car ownership over public transport due to virus fears

According to a report by Kotak, car buyers could choose private cars over public transport due to the virus fears.

The study looks at the impact of the SARS virus on consumers after its outbreak in China between November 2002 and July 2003. Due to the outbreak, China's economic growth fell. Once the spread of the disease subsided, buyers in the infected regions chose private cars and two-wheelers over public transport and ride-sharing services due to the fears of being infected by the virus. As a result, in CY2003, China’s auto market grew by ~79% YOY.

While SARS only affected China, Coronavirus has spread all over the world. The report suggests that due to the similarities between the two viruses, consumers might prefer private cars over public transport and cab aggregators. In India, passenger vehicle sales are expected to increase by 6% YOY in FY2021. However, two-wheelers sales are expected to see a single-digit volume decline YOY in FY2021 due to the increase in prices caused by the BS6 emission norms.

Kotak: Consumers would prefer car ownership over public transport due to virus fears-kotak-study.jpg

Kotak: Consumers would prefer car ownership over public transport due to virus fears-kotak-automobiles-components-march-25-2020page002.jpg

Kotak: Consumers would prefer car ownership over public transport due to virus fears-kotak-automobiles-components-march-25-2020page003.jpg

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Last edited by ChiragM : 26th March 2020 at 18:58.
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Old 26th March 2020, 19:23   #2
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

I'm sorry to be cynical about this report.

While this study has been put out by Kotak Institutional Equities, the sister companies in the Kotak group are actively in the business of lending money - to suppliers, vehicle OEMs and vehicle dealers as working capital, and to consumers to finance their purchases.

Clearly, in a shared economy, the number of vehicles required significantly reduces, as the many cars owned by individuals are replaced by a lot fewer cabs and public transport vehicles.

Fewer vehicles means less money is required to keep the auto industry going. This is not in the interest of a money lending company.

I am not surprised that Kotak are now producing studies tom-toming how individual / private car ownership is making a comeback.

Last edited by FourWheelDrift : 26th March 2020 at 19:25.
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Old 26th March 2020, 20:16   #3
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

Quote:
Originally Posted by FourWheelDrift View Post
I am not surprised that Kotak are now producing studies tom-toming how individual / private car ownership is making a comeback.
I would not call this report a junk. One of the first things that people took a call with the virus outage was to choose private transport.

Majority of the fence sitters who choose cabs over cars will start exploring cars as an option. They may still use cabs but will consider owing a car as an option.

The way this virus is currently it is here for a decently long haul. So private cars coming back is not a pipe dream.
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Old 26th March 2020, 21:23   #4
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

In fact, this pandemic upends all notions of public interaction and engagement. There will be huge changes in the way people work or move about. The very least thing I foresee is a significant reduction in liberal visa rules across countries. Commercial aviation will change as a result-UNLESS there is a vaccine developed quickly in the next 1-2 months and globally makes its effect felt in the next 6 months.
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Old 27th March 2020, 08:36   #5
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

As the report says, this has been observed in the past with people preferring staying away from public transport and using their own vehicles. This definitely can support the demand in short term post the COVID-19 crisis is over. I am not sure if this can support demand in long term (say 5 to 7 years from now). Anyways, the Global auto industry is up for a very tough time this year. One of the top industry forecasting firms says that the Global demand is expected to plunge over 13% this year. Mind it, the decline during 2008-09 crisis was 'just' over 9%.
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Old 27th March 2020, 10:24   #6
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

Kotak has a counter-view to what one would think, but after reading their report, I completely agree with it. Even after the curfews are lifted, life isn't exactly going to get back to normal. People are going to wear masks and avoid crowded / public places as much as possible. That includes public transport = car usage (and thus, ownership) will definitely rise. At least among those who can afford it, because the economic calamity from this virus is going to be vast.
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Old 27th March 2020, 12:53   #7
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

Even in early March, when things were so quiet, most of the people in my IT office, who used to car pool had started to come in their own cars. No one wanted to take risks. No one wants to take a chance. Those who can afford it will take private transport. The ones who use public transport will be the most affected.
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Old 27th March 2020, 13:09   #8
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

This is true. Since January I haven't used any Public Transport System (Metro, Bus, Auto, OLA, UBER, etc) for commuting. I believe people should start cycling more now. Also due to economic reasons there will be a huge demand for used cars/bikes now.
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Old 4th April 2020, 13:50   #9
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Default Impact of Coronavirus to new car purchase

I came across this survey o the internet . Is gives a nice overview of the impact of Chinese consumerís purchase intention of new cars under the impact of Covid-19.

Starters: Generally I don't trust these surveys, so like any other survey, I'll take it with a pinch of salt and advice everyone to do the same.

It is now a fact that this Corona Virus has impacted the life and economy of the world..the automobile industry was no exception either. The EU car sales is expected to reduce by 20% this year. The Indian car sales statistics of March 2020 filled with red colour is a testimony to that fact

Name:  12.jpg
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Source: Autopunditz

Every person is looking almost all decisions in their life from a different perspective. It's quite natural that car ownership decisions also will be affected. So this survey has attempted to find out that. The key points from this survey done in China by end of Februay 2020 are:
  • Non-car owners are now interested in buying new cars, for obvious fears associated with public transport.
  • Health-related features are favoured
  • Online sales and after-sales services are preferred
  • More than half of the 1620 respondents are aged less than 30.

Of course the dynamics of different markets are different but this may pretty much apply to Indian market too especially the younger crowd. I've shared 2 slides from the presentation and attached the complete survey result at the end

Interest in private passenger cars has increased
Kotak: Consumers would prefer car ownership over public transport due to virus fears-annotation-20200404-132415.jpg

Reasons behind this interest
Kotak: Consumers would prefer car ownership over public transport due to virus fears-annotation-20200404-130452.jpg

Hope this survey comes true and when this crisis subsides and normalcy returns, car sales may actually recover and increase after a nosedive. That would be just the shot of relief the automotive industry needed. On the other side, less public transport would mean higher pollution. Hopefully the increased number EVs in future may offset that.

Complete survey presentation is attached below Source: ipsos
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Old 4th April 2020, 14:49   #10
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Default Re: Impact of Coronavirus to new car purchase

I think it is a bit too early to judge the actual impact with a survey because most of the respondents would be using the current fear as the basis for their response. Health-related features and online facilities suddenly coming up on top of the survey, for example.

But I do agree that this could provide a boost to car ownership in the long term.

Of course, in the short term - everyone will hang on to their money because of the fear of an upcoming recession, and the associated fear of job security. But, once the market recovers - people will wary of being fully dependant on shared transport for their mobility needs. As the COVID-19 situation has clearly showed the world - public and shared transport facilities were the first casualties of such an outbreak.
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Old 5th April 2020, 09:29   #11
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

In the recent past shared transport options like quickride gained a lot of momentum due to ease of availability, was relatively cheap on pocket and ofcourse was good for reducing traffic to some extent. But post this covid fiasco am sure that will go for a toss.

Lot of people who could afford to buy cars weren't doing so due to lack of motivation to drive, thanks to bad traffic situation in tier 1 cities. But now they have a motivation. Am sure lot of people will exit the car pooling brigade for sometime till this corona thing gets behind us. This will probably lead to some increased shopping.Having said that, not to forget the global economy going weak along with probable job losses or the fear of same. Am sure this will deter people from going all out in their purchases.

So I believe there will be increased shopping of cars but in lower segment as a necessity and not like a luxury for sometime to come.

Last edited by SoumenD : 5th April 2020 at 09:31.
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Old 5th April 2020, 11:36   #12
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

They may have a point here but this change in preference would at best be temporary. Traffic, parking woes and increased monthly expenditure would probably make consumers shift back to public transport in less than a month. Indian consumers are very good at mathematics when it comes to home finance. And I don't see them investing in a depreciating asset just due to fear of Corona which they would anyways be exposed at a million other places once they leave the confines of their homes.
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Old 5th April 2020, 11:57   #13
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

So those passengers on public bus, train/metro who have the means would try to get a entry level 100cc bike or a maruti/hyundai car.

Imagine the cataclysm that is gonna get unleashed on our limited infrastructure.
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Old 5th April 2020, 12:53   #14
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

I have 2 friends who want to buy a car as soon as the lockdown ends. Not because of virus fears but because they have been unable to do their grocery shopping. With them being dependent on big basket / uber until now and both not available any longer they are now only able to buy what is available nearby and what they can carry by hand. They also now fear what they would do if some sudden emergency occurs.

Of course they might change their mind once the lockdown ends and things get back to normal but the old calculations based on cost of ownership of uber vs private car have gone for a toss.
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Old 5th April 2020, 15:14   #15
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Default Re: Kotak: Consumers would prefer car ownership over public transport due to virus fears

Quote:
Originally Posted by indian21r View Post
The way this virus is currently it is here for a decently long haul. So private cars coming back is not a pipe dream.
Can't disagree more. People who didn't want cars as they found the app services more convenient have different reasoning altogether. The infrastructure is the same so is the parking situation. A spike in purchases or avoidance of public transport will only make matters worse.

On the other hand I hope digital workplaces become common and work from home becomes a norm wherever it's application is possible.

I hope you realise that there is a stop to revenue of many non essential businesses, especially those which cannot go digital.

People would be glad to have jobs. And those with jobs would be glad to be paid on time. Buying a new car to avoid cab sharing and public transport? I am skeptical.

Maybe some rich folks splurge to feel good and regular commercial purchases continue. But last year when we were thinking the auto industry was going through a bad phase, this year will be the worst ever. The only thing being they'll have company in their misery.
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