Let’s face it, 2020 has thrown a bit of a curveball at us. It has proven to be a year where strategies, timelines and budgets have had to be thrown out the window. It’s been a year that has forced us all to reorganise and play catch-up. But, as unique as the challenges that have been thrown our way are, humankind has responded in a way only humankind can – by adapting, evolving, and striving to overcome.
The automotive sector serves as a prime example for this resilience. For most of the industry, the year started off as any other. There were targets to be met, there were plans in place to meet these targets, and there was a step-by-step playbook that charted the course of each company through the year. Some of these were plans that were put into place years ahead. But just as the new financial year was around the corner, the entire automotive industry, like most other industries and lives, got thrown into a hailstorm of uncertainty. The pandemic arrived and there was nothing one could do other than put in place reactionary measures to minimise its impact.
For any entity involved in business, this year has been a big challenge. But considering the incredibly personal nature of the automotive business and the fact that the industry was coming out of a financial year that was less than ideal, this challenge has been larger for automobile makers. Think about it – every facet of the automotive business has been impacted.
At the production level, factories have had to function with restricted capacities and labour. At the supply chain level, it has been an incredibly difficult year to coordinate the flow of parts and raw material into the production facilities and finished products out to the dealers. Especially considering a lot of the automobiles in the market today use a large array of components that are imported from other countries.
At the managerial level, everybody has been scrambling to make sense of the new normal and create fresh plans of action to minimise the impact of the COVID-19 crisis. At the dealership level, they have had to completely reinvent the sales experience. At the after-sales level, they have had to rethink the service and repair structure to minimise risk of infection while making sure the ownership experience doesn’t take a hit. The central issue in all these challenges is common – how do we conduct business in a world where human contact needs to be minimised?
Like all other sectors, the Indian automotive sector too took a big hit when the lockdown was announced and the protocols for handling the pandemic were being implemented. Globally, the automotive sector took a hit of 39 per cent in March 2020. In India, sales figures for March dropped by 45 per cent as compared to 2019. In fact, things were looking especially bleak in April when, for the first time ever, the Indian automotive sector reported zero sales. That’s right – zero. Granted, it was because of the government putting into play emergency measures to contain the pandemic, but when you consider the financial implications this had the impact is significant. SIAM estimated that every day that the factories remained closed during lockdown, the sector was losing around 23 billion rupees. And when you do the math on that equation, the situation did look grim.
That said, the Indian automotive industry’s response to the COVID-19 crisis is not a story of just tragedy and loss. It is, actually, a catalyst for change that seems to have redefined how the sector does business for the better. The industry took the time to come up with response strategies that could bring about some form of normalcy to our automotive experience, but respond they did. All while making significant contributions to the government’s and other agencies’ efforts to manage the pandemic. In terms of both monetary and technological assistance, the automotive sector came together across the board to help in whatever way they can.
The pandemic forced automotive manufactures to look at the entire automotive experience in a new light. And, as expected, the results were quite interesting. Almost all the manufacturers now offer online buying options for their products. Some of them even allow scheduling of test drives from their online platforms. After sales services have also been boosted significantly with manufacturers now offering warranty extensions, pickup and drop services and other convenient options. Some two-wheeler manufacturers have even been providing at-home service for their products – just make a call and a service technician shows up at your door and services your motorcycle for you!
Dealer networks too have been receiving assistance from the manufacturers. Interest-costs on stocks have been absorbed, cash-flow support and financial aid was being offered, dealer funds have been dispatched, dealer invoices were being cleared immediately, warranty claims were being settled on priority and dealers were being assisted in setting up sanitisation protocol. Manufacturers were also assisting in training dealership personnel to conduct business in the post-COVID market.
All these measures are the reason why the sales numbers have been steadily climbing post April. In fact, reports suggest that the consumer confidence in making online purchases for automobiles is growing exponentially. And going by digitisation trends across other industries, this marks a shift that might see such online platforms becoming the preferred medium of purchase for the automotive sector as well – just like it did for other consumer goods over the past decade. This assumption is backed up by the significant numbers that have been sold last month – October 2020 has seen car sales hit 2,49,860 units only 8.8 per cent under the 2,73,980 units that were sold in 2019. And with the festive season just around the corner, the numbers are expected to grow significantly in November to show positive growth over 2019.
However hard it is to look at 2020 as a good year, it needs to be acknowledged that under the circumstances, the automotive industry in India hasn’t had a lot of casualties. Agreed, a few launches have had to be pushed back by a few months, a lot of purchasing decisions have had to be put on hold and some exit strategies have had to be accelerated. But overall, the damage from the pandemic could have been much worse.
The fact that it has been contained to a large extent is thanks to the effective response from the manufacturers who stood their ground, their management who tirelessly worked to put strategies in place, their partners who stood by them and the workforce who form the foundation on which this industry is built. So while the fight against the pandemic is far from over, it might just be safe enough to say that the worse has come and gone and we’ve stood unwavering. Congratulations are surely in order for that.