Auto Industry: Customer in Driving Seat
The year 2020 was full of unwelcome surprises and inescapable new realities as what started out as a health challenge escalated rapidly into an economic and humanitarian crisis. The pandemic and subsequent lockdown presented industrial giants, including automotive, with a new landscape - a "next normal" - in which to survive and thrive. The auto industry players responded by working on multiple mechanisms to reimagine themselves and come out with flying colours post Covid (probably late next year).
Koichiro Hirao, Managing Director, Suzuki Motorcycle India says, "The Indian auto industry was looking at 2020 as the revival year. However, it was a year of consolidation rather than expansion. Now with the festive season bringing a ray of hope - we registered highest ever domestic sales in October 2020 - it would be safe to say that 2021 will further bring a sigh of relief for the automakers, dealers and auto ancillaries." He adds: "With things gradually opening up, travel has also started picking up and so has preference for personal mobility, hence we are optimistic that 2021 will be a good year for the auto industry and specifically for two-wheelers."
Megatrends Galore
Even in the pre-Covid period, the auto industry was in the throes of disruptive trends like digitisation of sales, semiautomation at shopfloors, electrification of public transport. Now with the pandemic turning the dice completely, there could be an inexorable march of new-age trends such as touchless experiences, sustainability policies, and changing consumer preferences around ownership such as leasing/ subscription models, phygital stores, augmented intelligence, etc.
So how different will the scenario be in 2021? Avik Chattopadhyay, Cofounder of brand strategy consultancy Expereal, sees the brick-and-mortar showroom giving way to digital engagements. "Brands will start to focus on "customer advocacy" rather than mere satisfaction and delight. And to make all the above happen, augmented (not just artificial) intelligence will be in operation on a day-to-day basis, bringing both efficiencies as well as greater personalisation of experiences," he says.
OEMs Take a Plunge
Going forward market volumes will likely improve on the back of greater economic activity and better sentiment due to Covid vaccine. Meantime, companies are looking at ways to reinvent themselves such as reaching out to the customer in an all-new way through online platforms while delivering a personalized experience. Chattopadhyay of Expereal reckons that to revive firstvehicle buyer interest, both entry-level two-wheelers and four-wheelers will have to undergo a design and package makeover.
Shashank Srivastava, Marketing and Sales honcho at Maruti Suzuki avers, "On the consumer sales process side, we can expect the digitalisation to accelerate and more of the process will be on digital platforms. As regards the product aspect we will see a re-emergence of the earlier trend towards shared mobility and on the segmentation side probably the SUV segment will continue to see more traction. On the fuel type, I would say that CNG and electrification are likely to increase. Also, manufacturers will have to increasingly build the CAFE criteria while making product plans."
Likewise, Vijay Nakra, CEO, Automotive Division, Mahindra & Mahindra states, "A positive outlook for monsoon, strong rural demand and the availability of finance are all indicators of a good economic recovery and buoyant demand, going forward in 2021. Having said that, some challenges will remain in the short term given the uncertainty of the pandemic and the implication of that on the supply chain. However, every crisis is an opportunity and we are trying to learn from it and define new norms, which we can benefit from."
Nakra adds: "The other trend going forward will be subscription of personal vehicles that will help customers fulfil their aspiration of driving their desired vehicles without necessarily owning them and this will drive sales in this segment."
Business Outlook
From the aforementioned insights from multiple industry stakeholders, it can be presumed that it is going to be a fast-paced and changing scenario in the auto industry with a robust recovery foreseen across automotive segments in 2021. Green shoots are already visible as two-wheeler and passenger vehicle sales have seen sustained y-o-y growth since August 2020 due to pent-up demand and preference for personal transport, supported by discounts and attractive finance schemes.
Rohan Rao, Partner - Industrials and Automotive, KPMG in India, maintains, "A strong recovery is expected. Two-wheelers, small cars and SUVs are expected to lead the recovery along with tractors and we expect twowheeler passenger vehicle volumes to grow by over 20 per cent. CV sales are closely linked with economic activity and will lag the economy by a couple of quarters, with LCVs leading the recovery. Electrification is strongly back on the agenda for the sector with twowheelers leading the way. Electric twowheeler specialists have a headstart but mainstream two-wheeler OEMs have been watching the space keenly. A lot will also depend on the government making good on their intent to facilitate establishment of a robust charging network and localisation of cell manufacturing."
