[blackwasp]

I was reading up the below post when I thought about the changes that could come about in the Indian auto industry due to Covid-19. Since I have been closely associated with the industry, I thought I will share some of my thoughts on the same.

The Indian automobile industry will stand up into a transformed one once this pandemic is under control and the economy gradually limps back. These 45 days will bring learnings, both by choice as well as compulsion.

Rituals will be challenged.
Myths will be busted.
New methods will be tried.
True friends will be revealed.

This haemorrhage the entire mobility eco-system and will go through to ensure the industry does not return to its “normal” state, as before. The norms will have changed. Right from manufacturing, HR practices, operating styles, sourcing, policy support to retail, communication and emergency response mechanisms.

Source

While the author has listed 15 points, I will not be posting all of it, but only those which I think could happen / some other ones:

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))

2. Factories will incorporate improved automation and reliance on robots to account for labour unrest, absence and situations like this pandemic where parts of the assembly could be kept running with minimal staffing.

3. Improved digital opportunities - Online showrooms / dealerships, better digital interface and on-demand support instead of the customer visiting the physical location.

4. A hard look at the existing retail model - Some car dealership owners have multiple brands with multiple showrooms in one city. They could start multi-brand dealerships and workshops (workshops at the very least, if not showrooms). Imagine getting your Maruti serviced at the same place as a Mercedes.

5. Skip the retail setup altogether - Just like Zoomcar, dealers could have a small office for sales people and a parking lot with TD cars spread across the city. All customers have to do is schedule a TD at home/office and the dealer would send the car to their place. Or better yet, tie up with car share guys to organise TD over longer duration (1-2 days). MG has tied up with Myles, but not at the scale I would have hoped.

6. Future of EV - While the government is still pushing for EVs, this would be the last thing on carmakers minds. Now its about survival and EV development can wait.

[ashis89]

I can think of following changes in the auto industry, including buyers, OEMs and vendors:

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. Indian OEMs might leverage and try to strengthen this sentiment (there are several posts in the social media these days).

3. Due to the state of the economy, the auto market slump will continue for quite some time (few months at least). Buyers will defer their purchases wherever possible.

4. In the near term, there could be a spurt in first time car buyers. Again due to COVID-19 concerns, people have started avoiding public transport.

5. In the near term, dealers will renegotiate terms with the OEMs to reduce their expenses - capital and opex. Inventory levels should go down. Workforce will be trimmed. As mentioned in the above post, there could be collaboration among dealers (sharing resources) or even multi-brand retail outlets.

6. To reduce costs further, OEMs and dealers would adopt digital means to improve efficiency.

Few months down the line, once the state of economy improves, people will go back to the earlier stage and some of the above points might not stay relevant.

[JohnyBoy]

Originally Posted by blackwasp

...
... Imagine getting your Maruti serviced at the same place as a Mercedes.
...

You may be happy, but I won't be happy to service my Mercedes at the same place as your Maruti.

People may go for own vehicles, but won't be spending too much money. Lower end car demand will go up. And manufacturers will be forced to reduce the price to customer.

[skchettry]

I think everyone in the world will have a second thought about a Chinese product before buying it.
Although people would prefer own cars over public transport, the economy would be so battered that it would have an impact on everyone's wallet making people stay away from the big ticket items for a considerable time.
And yes, digital world will see new chapters added.

[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.

We are talking much about the Corona for now because there is nothing else to talk about. Once it's history in 5-6 months, most people will soon forget and life will be back on track - as usual. A vaccine might also come along to help our amnesia or selective memory!

History does repeat itself.

[Tgo]

-Decreased running of vehicles since lesser people will travel for leisure as it risks exposure; also, as a result of establishments catering to tourists, eg. hotels and restaurants, would also be recovering slowly.

-Increase in localization of vehicle components to avoid global disruptions in the supply chain.

-Increased number of people going in for germ-kleen and similar interior cleaning services for their cars.

-More cars with cabin air quality sensors and associated features.

-I hope the self drive and rental car companies start giving importance to clean cars for the customers. Heavy penalties for a dirty car should be expected along with the namesake antics like a sanitizer bottle, gloves and face masks in the first aid kit.

-Insurance companies could roll off the usage based insurance model as the customers now understand it and could demand for it.

-Lastly, increased road accidents involving wild animals since they would have started wandering on the empty highways.

[johannskaria]

A gig economy POV

[pganapathy]

Originally Posted by blackwasp

I was reading up the below post when I thought about the changes that could come about in the Indian auto industry due to Covid-19.

I believe that vehicle sales will increase (new and used, two and four wheeler) because people will be scared of using any form of public transport, be it plane, train or bus. Of course, with a stagnating economy, people out of jobs, businesses struggling and a potential world recession, that number may well be lower than in the past, but people will all aspire to personal rather than public transport. Some of them will choose to use autos/taxis over buses/trains, so sale of fleet vehicles to companies like Ola/Uber will increase as well.

Originally Posted by skchettry

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

I am not sure people will stop buying Chinese products for a couple of reasons. Firstly, the price is generally cheaper than most other products. Secondly, not many people know which the Chinese brands are. For example, people are buying MG's assuming it is British, when it is just a rebadged Chinese SUV (forget the brand).

Originally Posted by Miyata

How did life change after the 2009 swine flu pandemic? .

The truth is Corona has gained as much publicity as it has thanks to Social Media. It is no better or worse than other pandemics like MERS or SARS. After all, it is a mutation of the same family of viruses. This is not the first pandemic, nor will it be the last to hit humans. I believe people are over-reacting to this one thanks to the spread of smart-phones and social media, which lets information spread very easily.

Originally Posted by johannskaria

A gig economy

This is the price you pay for choosing a gig economy or business. At some point you will face economic conditions that make life difficult for you. I sympathise with them but accept that as the price you pay for freedom in work or business

[AMG Power]

Within a year or so after the pandemic is wiped out totally, everything will be back to normal.

All of what is mentioned would happen in the near term. Precautions, changes, approaches to meeting people etc.

Humans have very poor memories.

Does anyone remember anything about the Spanish flu pandemic that lasted 2 years, does anyone take any precautions for that?

It will be business as usual here too - we have folks who couldn't care less even during the lockdown do you think they wouldn't start using Uber once the pandemic is completely wiped out?

In short nothing will change. Except for the near term.

[indian21r]

Electric cars if priced reasonably will see wider adoption. Millennials and the newer generations are seeing skies, hearing birds etc that they have not seen in their lifetime. This is an opportunity for us to give something back to the nature.

Auto sector will use this as an opportunity to cut the flab right from manufacturing level to the dealer level.

Public transport will be hard hit. Especially all the new cabs that were purchased. How they are going to cover the EMI's will be a big challenge.

I keep reading news that Chinese products will be foregone etc. That I feel will not really happen. Right now China is one of the few countries where things are actually running. That being the global manufacturing hub, they will be ready to supply to the world when needed. Getting to the scale that the Chinese deliver is not a near term solution at all.

[Bibendum90949]

In February this year, auto analysts were talking about the industry hitting rock bottom and that things could only improve from here. This was before the pandemic outbreak. What's the present state of affairs is anybody's guess.


BS6 transition and the extended global lockdown is a double whammy of sorts for the car industry and it would take its time to recover from this body blow. How soon is the million dollar question . There are lessons learned and many hard ones at that.

https://www.business-standard.com/ar...0101460_1.html

[400notout]

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.

We are talking much about the cornoa for now because there is nothing else to talk about. Once it's history in 5-6 months, most people will soon forget and life will be back on track - as usual. A vaccine might also come along to help our amnesia or selective memory!

History does repeat itself.

but I couldn't resist.


I don't think its that simple, this has more to do than just the number of people infected or killed. The H1N1 did infect and kill thousands, however it did not affect the daily routine of most of the country or the world.


More than the infection rate and mortality, the Covid-19 has paralyzed the economy domestic and international, and most people have lost and will lose their only source of income.



If the lock-down will be relaxed on 14th the first thing that will happen will be an exodus, of people to their natives where they don't have to pay rent and will be much safer than city clusters. I already know many people who don't know how they will get paid for April. Salaries will be delayed, jobs will be lost and industries will collapse. All this in the peak of summer. There are many businesses which anyway are slow during monsoon for those normalcy is a good 6-7 months away.



The biggest change will be in consumption patterns, we now know our wants and needs much better than any other time in life. I know restaurant owners who pay lakhs in rent and staff salaries over that. Now they have no idea where they are going to pay this money from considering income is zero and its very difficult to predict how their patronage will be once whenever normalcy resumes.


The Print media which was any way struggling have now found themselves totally redundant. The distributors have refused to deliver and they dont know what they will say to their advertisers. Since lockdown the only edition that got delivered to my home on 1st April was a "leading newspapers" thinnest edition in the last 20 years. The Auto industry will record lowest ever sales in the coming months. Real estate? expect more loan defaults and more banks being merged or collapsing.



Like daily wage workers there are many enterprises that run on month on month cash-flow. This is a clean reboot of the economic system. The govt. suggestion to pay employees during non productive period is noble but far from practical.



I'm fortunate to be the ones who can "work from home" so there is still some continuity in business. I can imagine the psychological plight of people not habitual to sitting in one place. But if this situation worsens globally I don't see an income beyond May.



People might not remember the swine flu as it didn't affect their life directly. For many it was just a "news" item. This on the other hand , is World War III without the guns and bombs. Not one soul today will forget for the rest of their life the time they are going through. We are going to see some real tough times I just hope and pray this ends soon.

[GTO]

One thing for sure = Coronavirus has put the smaller brands on ventilator support. OEMs like Nissan & VW were anyway struggling in India. With a slow 2019, BS6 norms and now the virus, their international headquarters will cut off any & all support (already happened with VW). Nissan Japan & VW Germany have bigger fires to fight and will focus on more important global markets.

Ford USA will be giving themselves a pat on the back for effectively handing over the Indian liability & risk to Mahindra.

Will be extremely tough times for FCA India. The Compass is struggling, 1.3L MJD business has stopped and there is no blockbuster product coming anytime soon. Fiat-Chrysler internationally has been facing challenges since 2 years now and a country where they sell 600 cars / month won't even get the senior management's attention.

[arindambasu13]

Originally Posted by GTO

Ford USA will be giving themselves a pat on the back for effectively handing over the Indian liability & risk to Mahindra.

Not sure if that is indeed as effective as it might look at first sight. Remember, it is a 49-51 joint venture, and that legally means, that the economic risk lies almost equally with moth partners. Yes, there may be a large number of strategic and managerial decisions which lie in the court of Mahindra, but Ford will continue to play a significant role in the venture. In other words, Ford will definitely continue to carry significant risk of operations in India and have substantial skin in the game. Yes, they might benefit from the experience that Mahindra has with handling the Indian market, but definitely cannot wash their hands off of responsibility for success or otherwise of the partnership.

[rajvardhanraje]

Considering the impact of COVID on the economy, there will immense uncertainty at least in the shorter term. I do not see automotive sales picking up anytime in the near future.

For the masses, while it would definitely be preferable to avoid any form of public transport to commute, that will not necessarily translate into a surge of automotive sales, especially the first time buyers (those without an existing car in the family). For most of them, a car is still a big ticket purchase. The financial unpredictability will only add further to these woes. In these arduous times, the generic tendency would be to defer these purchases and try to be as fiscally prudent as possible. People would not be willing to plonk in their hard earned money or opt for new loans in these testing times.

For those placed better financially and less affected, the preference would be towards cars from a lower segment. The most affected will certainly be the A segment, those upgrading from a two-wheeler. For households with existing cars not being used on a daily basis, their usage will rise due to the aversion towards metros, buses and other forms of public transport.