While the first wave of the pandemic brought out the talk of the new normal in our auto industry, an unprecedented second wave has smashed the concept of things getting back to any sort of “normal”.
But if the show must go on, what exactly does it need to do? As the recent wave of the pandemic subsides – or so we believe – and all of us try to stumble back into our respective humdrum, the whole talk now is about how soon can we get back up to speed.
Fortunately, or unfortunately, we went through the same drill last year so we are better prepared.
Last time the recovery was fairly swift, swifter than we expected and it was more down to how the manufacturing got back to full speed and demand – both pent up and new – and more importantly, the sentiment was more optimistic that the worst was behind us.
But that was in 2020.
Will it be the same in 2021? At first glance you’d might want to believe it will be no different.
The industry is better prepared, there is pent up demand thanks to the recent lockdown and once again general population is wanting to get back to “pre-pandemic” way of life, which arguably and disturbingly seems some time way in some states.
But the latter is another discussion.
One of the major concerns though that the second wave brought back is the chance of a third or future waves which has impacted one of the most important aspect of recovery – sentiment.
A recent survey by the Boston Consulting Group threw up this statistic.
To quote from it: “58% of consumers (from its sample of around 4000 respondents across categories, not just auto) think their income in the next six months will be lower than pre-COVID levels – higher than 44% in the last round conducted over July last year.” Not surprisingly, this affects spending, directly.
It goes on to add that ‘the latest round had 51% consumers expecting their spends over the next 6 months to be lower compared to 40% in the last round.” The latter statement would a bit uncomfortable for the sales guys and a cue to the marketing people to hustle and try harder to alter this dreaded “sentiment” of customers and convert it from need, to want.
“I think we are in a state of flux,” says Balbir Singh Dhillon – Head, Audi India.
He counters that while recovery might be subdued initially, the pace will pick-up as India ramps up its vaccination drive.
“In the luxury segment – most customers are business owners and we have seen that their state of preparedness has been much better this time,” he adds.
However, he does caution that it is difficult to quantify the impact for the whole year, especially with the fore-warned future waves of the COVID-19 pandemic.
“What we can affirm, however, is that our strategies are intact and are being implemented.” Mercedes-Benz India CEO and MD, Martin Schwenk suggests that the overall economic impact has been comparatively lesser this year as industries were allowed to function in a scaled-down manner.
“We are already seeing improved customer and market sentiments with markets sequentially unlocking and economy gradually picking up pace,” he adds.
“We hope this sentiment sustains in the coming weeks and months and is further buoyed by the festive season.” While sentiment will be key to recovery brands will have to get their act together with their launches.
Last few months we have seen how those brands who have continuously managed to reveal and launch new products have been able to create a healthier chance of recovery than those who haven’t.
It will be imperative for them to get their act together on that front to make customers who are sitting on the fence head to their dealerships (or portals) for making those purchases.
The onus also will be to showcase more on the affordability and even a more hassle-free ownership from buying to running and even selling.
In which case, the digital footprint and scale of activities will make sense.
“Prior to the Covid-19 pandemic, digital was an enabler, but today it has become a necessity,” says Madhukar Manpuria, founder and CEO of My New Car, a multi-brand new car e-commerce website.
He points that during the pandemic, we had no way to live, work or shop without using the online channels, even for rural and older populations.
“Companies that adapt their business sooner to this changing customer behaviour will be most successful in the post-pandemic world.” he believes.
A senior research analyst at Global Data, Bakar Sadik Agwan confirmed that recovery to pre-pandemic (first wave ) levels “will remain a distant dream this year”.
However, he too maintains that “The latter half of 2021 is expected to be better and full-year production will be better than the previous year despite the turbulence in recovery.” In effect, it does look like a tough year ahead with an added hurdle of depressed sentiment.
However, with new learnings from last year in place, it does look like we are headed for a slower recovery this year, but recovery nevertheless.
— By Girish Karkera (Consulting Editor – Times Auto)