How Pandemic has Expedited the Digitization of Automotive Industry

Janifha Evangeline

At a recent virtual event organized by OLX Autos India, Auto industry experts from companies such as Eplane, MG Motor, OLX, & AdvantEdge stated that COVID-19 pandemic has been a watershed moment for the Indian automotive industry. Specifically, the 2nd wave will result in delaying the consumer demand for cars and mobility solutions, which will, in turn, lead to a confined demand for the same in the future.

At the OLX Auto Talk 3.0, experts from the automotive ecosystem including OEMs (Original Equipment Manufacturers), new age consumer mobility companies & car marketplaces stated that this pandemic will expedite the digitization of the automotive industry swiftly than ever before for the industry to render to the demands of the new-age consumers. OLX Auto Talk 3.0 is an industry discussion that was recently held by OLX Autos India, where it brings together the prominent voices in the automobile industry intending to discuss pertinent issues in the ecosystem.

Talking about the way ahead for the pre-owned car industry, Amit Kumar, CEO, OLX Autos India, said, “It is inevitable that technology will play a major role in helping the new and pre-owned car industry tide over the crisis of the second wave. Technology that can help consumers buy or sell their cars from the comfort of their homes will not only assist the used car ecosystem to maintain a slow growth momentum during the pandemic but also help draw users from new areas especially the non-metros who are evaluating purchasing a used car for their mobility needs.”

Assessing the Impact of Pandemic
Although the automotive and consumer mobility industry was jolted by the first wave of the COVID pandemic, experts thought the industry was prepared well for the second wave. Furthermore, hybrid dealerships, integrated online consumer experiences, new forms of personal consumer mobility options, and Artificial Intelligence technologies will be a must for the industry in order to safeguard itself from any future impacts of the pandemic in the coming days.

Taking a different approach regarding the rise of consumer mobility, AdvantEdge Founders Managing Partner, Kunal Khattar, said, “As a country, a large part of the population cannot afford personal mobility options hence consumer mobility for these users are being catered to by new-age start-ups and companies. Wide-Scale passenger mobility especially in the first mile or last mile situations will need tech-enabled start-ups to do so at scale which OEM’s may not be able to cater to. In the last 1 year, our portfolio of start-ups catering to the segment has seen a massive uptick of up to 5x vs pre-COVID levels.”

“It is only a matter of time that we gradually emerge from the pandemic given the fact that the Indian automotive industry is extremely resilient and has learned its lesson well from the first wave of COVID-led disruption. The automotive sector and consumer mobility industry are geared to address the mobility needs of the population as the economy gradually opens up. This will be done with technology as a key enabler not just for urban mobility but also rural and semi-urban mobility,” he adds.

Growth of the Indian automotive industry
The Indian Automotive industry has soared to a great height from the 1950s when the yearly manufacturing of vehicles was limited to 40,000 only and early stages of manufacturing were limited only to 3 leading manufacturing companies in the country. Also, expertise in this industry was to a great extent were attained by trial & error, in the initial stages. Through the years, India emerged as a significant part of the global automotive industry and became the 4th largest in the Asia-Pacific region in the year 2020.

In terms of progress, the growth of the Indian automotive industry has been immense and 23 million vehicles were manufactured in the financial year 2021, according to reports. While India was the largest tractor manufacturer and 2nd largest bus manufacturer last year, it was also the largest manufacturer of both 2-wheelers & 3-wheelers, globally.

Manufacturing of transport equipment
Automotive is not only one of the core sectors of the country’s economy, but to a large extent, it also serves as a bellwether for its current state. While the manufacturing of transport equipment accounts for ten to twelve percent of the GVA (gross value added) within India’s manufacturing sector, any decline in this area greatly hurts India’s economic outcomes. Not just that, even employment is hit hard when vehicle sales fall, this is because the automotive sector offers thirty-seven million direct and indirect jobs, while stimulating job creation in other industries.

Though the automotive industry in India has faced many challenges, recently which also include the devastating COVID-19 pandemic, its growth potential is however very clear. The automotive industry is expected to generate 65 million new job opportunities in the country in the next five years (by 2026) as enterprises increase their production.

In spite of the ongoing challenges owing to the pandemic, the automotive industry of the country looks to be overcoming most of the challenges, and most of them are now in the rearview mirror. Furthermore, this industry is also benefitting from new tailwinds, which include the global supply-chain rebalancing, government incentives to improve and increase exports, and technology disruptions that result in white spaces. And, these aforementioned developments will facilitate in creating new opportunities at all levels of the automotive value chain.

Industry participants have started to observe a clear highway, where they can accelerate, and go into a higher gear. Also, as they industry attempt to fast-track their value-creation trajectories, they must understand a set of imperatives and enablers for the Indian automotive industry.

There are three main imperatives for the Indian automotive industry. These include:
(i) The focus on domestic, international, and downstream growth
(ii) Achieving greater resilience in operations, especially the product, manufacturing, and supply-chain dimensions.
(iii) Becoming a leader by promoting disruptive trends, especially within emerging markets.

The three enablers for the Indian automotive market include
(i) Reimagining the partnership ecosystem
(ii) Building the organization of the future
(iii) Transforming the organization through digital and analytics

The automotive sector will undoubtedly play a significant and central role in the country’s aspiration in becoming a USD 5 trillion economy. Furthermore, the recovery from the COVID-19 crisis has created a unique situation through which automakers can not only reinvent their industry but also emerge stronger, both within the country and globally as well.