It looks like the whole world is under a crunch right now and the automobile industry is equally shook. Being ‘not an asset anymore’, cars are more of an economic burden on the buyer, considering the current scenario. Let’s take a look at what this means for the automobile industry.
The maximum adverse impact of the pandemic can be seen in the following industries:
- Travel
- Tourism
- Hospitality
- Financial Markets
- Automotive
The impact on Indian Car industry
While on the buyer’s side, financial crunch will be a problem, on the business side, the supply chain will be heavily affected. A large amount of raw materials are sourced from various regions and one of the biggest suppliers is China. The Coronavirus crisis has seriously impacted the process of car making. Therefore, there’s not just a problem with demand but supply as well. The complete impact will only be known once the ‘new normal’ becomes regular and the economy starts taking baby steps again.
From hindered production and sloppy logistics to depleting consumer demand, the makers need to be prepared for everything that goes into making a car to selling it. Furthermore, most manufacturing plants will remain shut or will run with reduced capacity which will add to the depletion of supply. This isn’t just for India but the automobile industry across the globe will feel the negative impact of the process. Slumped demand for vehicles will be a big hurdle to overcome and add to it the environmental factors that are bound to make things worse.
What could be the revival strategy in such a scenario?
While one size fits all isn’t going to be possible, there are certain ways in which the automobile industry can minimise the adverse effect of the pandemic.
- While China will struggle to keep up it’s collaboration as far as supplying materials is concerned, other countries can pitch in for the same and replace China. India is definitely a very good contender for the same. This can be looked at as a great opportunity for India to attract business from those who are withdrawing from China. However, since global markets emphasise on quality, India will have to step up it’s hygiene and cleanliness levels at these supply plants in order to deliver world-class materials of unmatched quality.
- Electric vehicles have already been admired and after the environmental disaster we have been facing, the governments will push the use of EVs even more. It is time for the automobile industry to focus on electric vehicles and leverage this opportunity.
While the automobile industry can brace itself for a whopping 40% drop in car sales this year as compared to 2017-18, it can also think of managing the crisis by devising strategies based on the changing world and economy. After all, evolution breeds success. Keep driving!