[Lobogris]

Originally Posted by ashis89

1. OEMs and vendors will try to decrease dependence on Chinese suppliers and might start looking at local production.

2. In the near term, buyers might have a subconscious bias against Chinese manufacturers.

Originally Posted by skchettry

I think everyone in the world will have a second thought about a Chinese product before buying it.

These are completely illogical assumptions. The virus might have started in China but it has spread everywhere. Would people also have a bias against Italian, Spanish, American, Turkish, Brazilian and Iranian products? By the time this is over, most countries would have had lots of cases. Already many have far surpassed China. Secondly, China is the only place that is now open and able to ship products. For many months most countries will be in shut down while China opens up more and more. No other country can try to take manufacturing away from China as forget about expanding capacity and opening new factories, most countries are shutting down their existing ones to contain the pandemic. Once things improve, they would already have had at least 6 months of normal supplies from China and there would be no reason to try and shift production. Which other country do you think would have handled the interruption better than China? Does anyone think India would have been a more reliable production base than China? Once things are normal, production would go back to places where there is the best infrastructure, the best environment and disciplined labour. Right now everything in the world is in short supply and people needing a product are happy to be able to even get it let alone worry about where it is made. If I am in the US, would I be more afraid of product coming from China or from New York or Italy? All are baseless fears of course but I am addressing the misconception that there should be some concern regarding the origin of the product.

[vipul_singh]

Originally Posted by Lobogris

No other country can try to take manufacturing away from China as forget about expanding capacity and opening new factories, most countries are shutting down their existing ones to contain the pandemic.

I was having the same argument with a friend two weeks ago. His point was that maybe the world would like to de-risk manufacturing dependency on China. My counter-argument was: if the Chinese can start reopening factories within 3 months from the date when the epidemic struck, maybe *more* production will move there?

If (and this is by no means certain) more component production moves to China over the course of next 2 years, it could be an overall win for them, even if fewer people buy Chinese branded vehicles.

By the way, does anyone have reliable data on the percentage of Chinese manufactured components used in cars sold in India?

[locusjag]

Originally Posted by Lobogris

These are completely illogical assumptions...Once things are normal, production would go back to places where there is the best infrastructure, the best environment and disciplined labour.

Originally Posted by vipul_singh

I was having the same argument with a friend two weeks ago. His point was that maybe the world would like to de-risk manufacturing dependency on China.

I see your points of view and am registering them as possibilities.

My own PoV is that the world had already entered a localization phase as of the mid 2010s. The fall of the Berlin wall heralded a wave of globalization that saw gates thrown open for free movement of people and goods everywhere.

But globalization's malcontents (e.g., the newly impoverished white gentry of interior US, who were thrown out of their former blue collared jobs due to manufacturing outsourcing to Asia) have been voting in their leaders who have been erecting barriers to trade. There is a critical momentum that has been already attained towards self-isolation. The world, IMO, is contracting and shutting its doors.

After the COVID situation eases, I can foresee a self-serving push toward self-sufficiency in manufacturing by a lot of nations. Worse yet for China, what they did to severely weaken their case as a continuing global manufacturing base was to deny medical systems and supplies to nations that wanted them badly. (I'll say nothing about China's shipping of spurious medical supplies to Spain and Pakistan.) This might nudge even the most doubtful nations towards identifying essential goods that cannot be outsourced any longer.

Of course, global trade has only historically created wealth. And trade isolationism can only depress all nations into all-round poverty, because no one wins at the end of the day. It is what it is.

[troublemaker]

I believe, it is correct thinking for all the countries to reduce dependency on China but it is far easier said than done.

Every manufacturer is so much dependent on China, it will take years to re-think the supply chain.

One related example- our beloved auto giant TATA. Harrier's sunroof is made by a company in China!

[nishsingh]

Originally Posted by blackwasp

1. Consumers will prefer own cars over shared transport, public trains and buses etc. (related thread (Kotak: Consumers would prefer car ownership over public transport due to virus fears))

Agreed; I believe for the short term at least, people will think of buying cars over Ola and Uber - either as a second car, or as their first car without spending too much. This would mean growth of entry-level cars.

Carmakers would do well to load touch-screens and such gizmos into their entry-level offerings, as this, in my opinion, will become a very competitive market for the next couple of years.

[Kosfactor]

Some questions for those in the industry and especially those into sales \ marketing etc.

Who is the majority used car buyer?
Who is the majority new car buyer?

I am expecting some sales due to lockdown backlogs , but afterwards the situation is not very clear.

[1.2TSI7DSG]

My personal opinion is mixed. I think the two-wheeler market will explode considering that a "personal vehicle" is better than the public transport. This will also put a push towards having a second car (most possibly a cheap end car) for those who can afford.

Apart from this, all aspirational purchases will slow down (not the extreme high end but the above Dzire to below E class). This will major segment for MSME business owners and mid senior professionals who will put off their purchases till the optimism return to the economy. Considering the slowdown, I will find company-owned cars being used longer and money saved on unnecessary fixed costs.

[RaghuVis]

I hope auto companies realize the one big change they would want to implement is the most simple thing to do. Do a follow up of your potential customer. Absolutely free of cost to implement. No manufacturer other than MSIL does this with such consistency and that pays off well. Read along most of the TD reports in any thread, the most common reaction will be "they never called back".

[Malyaj]

I think predictions spelling doom for public transport and cabs are misplaced and highly premature. Of course it will happen for a few months post the lockdowns ending as people will remain cautious. But there is nothing to suggest that they will avoid public transport altogether. Personally, if I feel assured that the pandemic is done and dusted with, I will resume using public transport they way I did before the pandemic. I have no reason to believe that the virus will keep on lingering in our midst forever.

If anything, car ownership will slow down, not so much because people can't afford them but because there may not be much need for it in a fast proliferating WFH scenario. Families that own 2 cars, one each for husband and wife (or similar reason) will no longer feel the need for 2 cars. Couples may adjust their WFH days such that only 1 car is enough. This will also result in freeing up of roads and increased speed for public transport (hence more usage), something that authorities have been trying to achieve for so long now.

Demand for smaller commercial vehicles for last mile delivery will increase as during the lockdown period more and more families have gotten accustomed to ordering groceries home.

I don't think automobile showrooms are going anywhere. There may be consolidation and some dealers may merge their locations. Some dealerships will go under, some brands may go under as well. AI/ML AR/VR is not the alternative to every experience no matter what its practitioners may want to believe.

It may sound counter intuitive, but the first 'casualty' of situation returning to normal will be hygiene. No, people are not going to be travelling with hand sanitisers all the time, they are not going to spend on protective coating for cars and public transport will not get cleaner. Number of people wanting to become drivers will increase as cab usage will increase at the expense of personal vehicles. The gig economy as it is called will actually increase as people become jobless.

The phrase that "The world will be a very different place after this crisis" is being overused. The world is itching to get back to normal and it will.

[CarJunki]

We may see a lot of repossessed vehicles coming to market. The economic situation will hurt much wider segment and more to people buying entry segment cars. Even the salary earners who are buying higher segments will be impacted just the proportions will be different.

Growth in car sales will take much longer than anticipated if this lock down continues for another 3-4 weeks. I am not suggesting that lock down will continue, just that extended duration will elongate the recovery time multi fold.

After any pandemic it may be natural response of earning people to build up some cash level before spending resumes.

Call me a pessimist, but calendar year 2020 looks washed out for automobile sector.

[MMV]

Used/Pre worshipped car segment will immediately get fresh lease of life as new car purchase will take time to ramp up, especially since economy will take time to be back on its feet.

Addon services like germ cleaning / disinfection of cars (Toyota has a Bactaclean service offering which they recommend during every servicing) will become popular. People might end up doing it every week. Even startups will enter this space in a big way.

Fleet taxi and app based car operators will have to offer these features to lure back customers.

[RMN]

Everyone would want to reduce the dependence on China but by the time everyone is in a position to do so...they would have forgotten about this episode. With China being the only country back in business, where else is everyone going to go for supplies? Everyone around the world is desperate to get the cash flowing and they wouldn't give a toss about where its coming from.

[gupta_chd]

Originally Posted by Miyata

How did life change after the 2009 swine flu pandemic? According to some estimates, "the virus infected as many as 1.4 billion people across the globe and killed between 151,700 and 575,400 people." Eventually a vaccine came about and soon enough the pandemic was history. Many may not even remember it now.

Not a simple comparison we may think.

Although figures quoted are true in absolute terms, confirmed deaths from H1N1 ranged about 18000. 151k to 175k figures as per various studies and research by WHO and other institutions hypothetically accounting the unaccounted and unreported numbers. Similarly, 1.4 billion people infection is as per studies. These figures may be true and may be wrong to the extent of 90-95%.

In comparison, deaths from Covid-19 will be much more than these figures in confirmed terms. Hypothesis will be accounted later. New York has officially confirmed that they are under reporting the deaths due to lack of testing infrastructure. China numbers may be always dubious. This is a magnitude of scale not seen in few decades. It is being called biggest crisis for civilization since WWII by many premier govts and agencies. While it is true that once things head back to normalcy, people have big tendency to forgive and forget. Still the two may be as incomparable as a cyclone and a dust storm.

[humyum]

I guess as a standalone I would say Corona would not have affected India much Automotive industry wise as it was already suffering and that would have continued, but when the Titanic was already taking in water and Corona punched some more holes, it caused quite a lot of scare and the sinking became a lot more faster.

For example, I was not thinking of buying a car even though I drive an 11 year old, 1 lakh 80 thousand run Swift D for the simple reason, I just wanted to hold onto my money till the acche din comes, which I was not seeing in the front before Corona too and definitely not after Corona will be surpassed. It was not a money issue, it was just the want of spending it was not there because of an uncertain market in which any decision could be taken anytime and suddenly who knows, I might be out of a job?

Automotive Industry was going through a tough time before too and now because of fuel prices not being lowered, additional taxes being added here and there, economy tanking world over ( India's too) as there can't be a V curve when this ends, I see the Automotive Industry plummeting further more.

Yes many people have money to buy a car, but will they be spending it or holding onto it? My bet goes to holding onto it.

[landcruiser123]

I know there has been good progress on this front, but I hope RTO paperwork will be a thing of the past and can go completely online.

Citroen, Peugoet, and other Chinese auto makers have to wait sometime for the market to stabilize before starting to sell their products. I'll not be surprised to see factories of (VW, Nissan) being sold to Chinese auto makers at cheap prices in 2-3 years.

Lastly, Supply Chains will be re-organized. The old adage "Do not put all your eggs into one basket" will be true. I hope there's no political directive to "Buy Indian" to encourage manufacturers to buy from local suppliers.