Indian Automotive Industry Suffering Significantly Due To COVID-19 Crisis

The Industry Outlook Team

The automotive industry has been put to a standstill this year (2020) due to COVID-19 Pandemic. Indian automotive industry being the fourth largest in the world by volume has been critically hit by this pandemic with drastic declines in terms of sales.

While according to Counterpart Research, it is expected that there will be a decline of about 25 percent in all the categories of Automotive Industry. While, a report by Flitch Solutions has exclaimed that there will a contraction of 8.3 percent in the vehicle production this year.

However, there is always a positive side to every event and even this pandemic has brought a significant opportunity for digitization and adoption of various new technologies – especially in the passenger vehicle segment.

According to Frost & Sullivan’s recent note titled Changing Retail Strategy & Consumer Connect - Auto Industry Road Map, “With COVID-19 triggering an 80-100 percent drop in physical visits to showrooms and contactless transactions expected by customers, digitisation has emerged as key to survival. It is empowering automotive retail and after-sales, and enabling more meaningful customer engagement.”

Passenger Vehicle
As the automotive industry has been a great support to the growth of India’s economy, it has been fighting really hard to overcome the situation - low demand with the high cost of production. Maruti Suzuki - a passenger vehicle market leader – has also reported 86 percent decline in total sales in May.

“Since inception, Kia Motors India has always been innovative and futuristic. Technology-led digital transformation has been a key pillar of our approach. We pioneered this process with seamless, end-to-end digitalisation of our sales process aligned with dealer partners. Even before the launch of Seltos, we had collaborated with banking and finance partners to provide online financing options,” highlighted Manohar Bhat, Vice President and Head - Marketing & Sales, Kia Motors India.

Also, this pandemic has changed how vehicle testing was done by the buyers. Now, there is a new concept – Home Test Drives – where the customer doesn’t have to go to the dealer’s place, but rather the vehicle will come to the consumer’s location for the test drive.

Trucking and Logistics
Raaho Co-Founder and CEO at Quick Digital Technologies has said that the pandemic has impacted the trucking and logistics in multiple ways. The logistics industry is $210 billion industry which steadily becoming the third last automotive industry in the world. And, Indian roads provides 70 percent of total logistics with approximately 35 lakhs to 40 lakh trucks running across the roads of the country. Hence there is a massive economy that is dependent on the roads and the trucking sector. But the current COVID-19 crisis has hit the demand and business of close to 90 percent of these trucks.

“I know of people who own three to eight trucks. They do not know what’s going to happen tomorrow. Every month’s first week, they will have to pay EMIs. Where are those EMIs going to come from? Can you imagine EMIs of 35 lakh trucks getting defaulted?” asked Mohammed Imthiaz, Co-founder and CEO, Raaho (Quick Digital Technologies).