Auto industry recovering from 2020 mayhem

The year 2020, without doubt, was the worst ever for the Indian automobile industry. The sector was already reeling under a slowdown and the Covid-19 pandemic brought the industry to a complete standstill.

Due to the lockdown, there was zero automobile production and sales in April. The industry is slowly recovering, but there is some distance to go before there can be cheers.

One good bit of news in 2020 was India’s switch to the cleaner Bharat Stage-VI emission norms. This will mean drastic reduction in environmental pollution from tailpipe emissions.

Rajesh Goel, Senior VP and Director, Marketing and Sales, Honda Cars India, said: “Year 2020 saw an unprecedented crisis and proved to be the most difficult one for the industry. After the strategic run-out of BS-IV stock and highest degrowth last fiscal, everyone was hoping to come out of the prolonged slowdown this financial year. But the Covid-19 pandemic deepened the crisis further, resulting in industry starting the new fiscal with zero sales.

“Thanks to the resilience shown by the industry and realignment of businesses in the new normal, sales recovery has been quicker than the earlier outlook. HCIL volumes also gained steadily after the successful ramp-up of our operations,” he added.

Shashank Srivastava, Executive Director, Marketing and Sales, Maruti Suzuki India, said: “Things were down last year but in January and February, we witnessed revival. The lockdown affected the overall financial year. There was pent-up demand this year and we did see good demand in Q2 due to the festive season. In October, we saw the highest sales month ever.”

It was even more difficult for the luxury car segment. Balbir Singh Dhillon, Head of Audi India, stated: “The year 2020 was of reinventions and our resilience was under test. In terms of business, the automotive industry and in particular the luxury car market witnessed a challenging period and we were no different. During this year, more than ever, we remained engaged with our customers, stood by our partners and strengthened the entire value chain."

Sharad Agarwal, Head of Automobili Lamborghini India, said: “This year has been challenging due to the Covid-19 pandemic in India. However, in the last few months, we have witnessed a very positive trend both in sales and aftersales business.

“However, this is pertinent in the passenger cars segment and is not reflective in the premium and super-luxury car industry which continues to grapple with the effects of the pandemic in the country.

“This segment of customers is driven by emotions and the current socio-economic environment has changed the preferences and priorities for them. Hence, this is not the best time for them to make such purchases,” he added.

“Although the pandemic has had an impact on the overall business, we expect to perform better than the segment and should be reporting a decline that is lower than the industry average of 30 per cent this year," he added.

Sales improved once the lockdown was lifted. There were some local lockdowns that upset companies’ plans a bit. However, one of the reasons for the revival is that people prefer personal mobility rather than using public transport due to the fear of getting infected. The festival season brought some cheer to the industry.

As we look to 2021 for growth, the introduction of BS-VI has forced manufacturers to increase prices. Even otherwise, material cost has risen.

Meanwhile, there was always the buzz about electric vehicles in the background. Some models were launched, while some charging infrastructure is slowly improving.

The auto industry is recovering from the mayhem of 2020 and manufacturers are hoping for a better 2021.

“Auto industry demand depends on GDP capita growth which we found from data in the last 30 years. Car buying is a discretionary purchase and so sentiments have to be good. But now the sentiment is largely dependent on Covid-19,” said Srivastava.

Goel felt the coming days would be better. “Going forward, as the challenges of the pandemic will continue for some time, rise in personal mobility is expected to help us sustain our sales momentum in the coming months,” he remarked.

Agarwal stated: “With news of the vaccine, we anticipate sentiments to turn more positive in 2021. We are witnessing a positive trend both in our new orders intake and in our after-sales performance.

“We anticipate that the super luxury segment will rebound much faster and expect it to return to the previously held 2019 level, especially from Q2 2021," he added.

Dhillon was confident about 2021. “We are optimistic about 2021 and are extremely excited about what we have in store for our customers. We will kick start 2021 with the launch of one of our best-selling models, the Audi A4, in January followed by other new products,” he stated.