The auto industry has been in a very bad shape due to the lock-down in every country. The first quarter of 2020 has registered a big plunge in sales. Even the May-June period of FY 2020-21 is expected to take the hit.
This slowdown and halt in production are expected to curtail the prosperity of the Indian automobile industry even after situations of COVID-19 gets under control
No one has a clue on, how the exact situation of the economy will be post-COVID, and particularly in which direction the demand curve of the Auto industry will bend.
When Astrologers and Economists are talking in the same language, CarDealerTracker.com (CDT) conducted a survey to find out the car purchase preferences in the coming months, directly from customers. The outcome of this survey might bring cheer to car manufacturers and dealers.
a. 23% of customers are ready to buy the next car within 12 months
b. 61% Plan to go for a new car purchase, not the used car
c. 45% said they would prefer to buy an SUV, good news for companies dependent on SUV sales
d. 21% of customers would like to buy an additional car for the family
e. 46% of customers are ready to prepone their buying decision if they get an attractive offer
f. 0% want to buy a Chinese product, general trust deficit & emotional backlash against Chinese products is evident
Market pandits across the world have predicted a major global recession, but the Indian market is comparatively stronger because of a large domestic market and a huge domestic demand. Globally the focus on local demand will be the trend, after Trump’s ‘America First’ and UK’s Brexit, etc. However, the Indian economy was never dependent only on exports.
India has one of the biggest automobile markets in the world. The domestic demand is huge and export is high too due to the availability of cheap labor, mature ecosystem and a good infrastructure. Many automakers have their manufacturing plants here that focus on exporting cars alongside catering the domestic consumption. Due to the global economic slowdown, the export will be low and is expected to be that way until the economy recovers across the world. Till then, all automakers will have to rely more on domestic demand.
Luckily, the Indian automobile market might not take as big a blow as other countries. The domestic demand in India is decent and due to the preferences of the majority of buyers, the budget-friendly and efficient passenger car segment might recover sooner than otherwise.
So, the need of the hour for the automakers is to focus on efficient passenger cars for the Indian domestic market. Maruti Suzuki is even chalking out plans to resume production based on the government’s idea to resume important industrial activities.
Having said that, the wave of electric cars might also be delayed here in India. This is not just due to the economic effects of the COVID-19, but another important aspect. According to Gaurav Vangaal, the Associate Director at LVP, IHS Markit, the crude oil prices will also regulate the delay of electrification in India. According to him, the electric car sales will take flight only when crude oil recovers to $60 again.
As auto experts, economists and astrologers are predicting that by September-October when the festive period begins in India, our economy, particularly the Indian auto industry will see a REVIVAL.
