The revival of the automotive sector will take much more than just filing pleas to the apex court and hoping that the government announces some subsidies. Manufacturers need to rise up to the occasion as well
The Financial Year that ended on 31st March 2020 hasn’t been a good one for the Indian automotive industry. In comparison to FY2018-19, passenger car sale for mass market brands is down by nearly 18 percent. And now that the coronavirus pandemic is upon us, even maintaining consistent numbers will be a herculean task. While the lockdown, for now, has been extended till 3rd May, there’s no knowing if it will be extended further. Given the impact that all of this has had on the economy, car buying sentiment is at an all-time low.
Circumstances for automotive markets abroad are somewhat similar too, the coronavirus, after all, is a global pandemic. To address this deterrent and lure customers into the dealerships, carmakers in some countries, like the United States, are offering some very lucrative schemes. For instance, Kia, Nissan and Subaru are offering 0% finance schemes on their cars. Some manufacturers like Honda and Acura, are also offering cash incentives. Customers who purchase one of the Honda or Acura cars can expect a cash discount of $1000 or $500 respectively. And almost every carmaker, including Ford, GM, Volkswagen, BMW and some others are allowing customers to defer payments by 90-120 days.
Coming to Indian manufacturers, so far they have really played an active part in the fight against the novel coronavirus. Mahindra has developed a ventilator prototype and is manufacturing hand sanitizers, Skoda and Mercedes-Benz have helped set up temporary hospitals in Pune, and many more such initiatives have been taken by almost every manufacturer.
While all of this surely adds to the brand’s goodwill, on the business side of things it seems that manufacturers are heavily relying on the government for aid to the sector grappling with the economic slowdown. Under most talked about measures, auto manufacturers have successfully managed seek approval from the supreme court for an extension of the BS-VI deadline. Meanwhile, FADA (Federation of Automobile Dealers Association) has also written to the Prime Minister seeking remedies like MSME status for dealerships, additional overdraft facility and relief in paying employee salaries. However, while automotive brands are focusing their energies on finding policy and procedural relief to navigate through, the pressing need of the hour is also to keep sight of current and future business prospects.
As an obvious action from any business, the need for existing customers has been addressed in the form of extended service and warranty periods, and in some cases even by offering 24x7 roadside assistance. While that takes care of customer satisfaction, an equal or more important aspect of new customer acquisition is currently being neglected. To stir demand, brands need to take a two-fold approach.
First, to uplift the sentiment and provide comfort in the purchase by offering some direct and tangible benefits, just like they are in the US. For instance, in 2017 Skoda India had run an interesting ‘Buy now, pay in 2019’ campaign to clear their existing stocks – something that could possibly fit well in the current scheme of things as well. And second, with social distancing becoming the mantra of the day, manufacturers can highlight the need for a personal mobility solution thereby compelling potential customers to consider a purchase decision.
It is about time manufacturers in India don’t just rely on government remedies to problems and rise up to the challenge. With the ease in the lockdown a few weeks away, manufacturers can utilise this time to come up with an effective solution that will take the automotive industry back to normalcy sooner rather than later.