Coronavirus and the period of lockdown has caused great loss to every sector of the country and automobile industry is not different from them. The manufacturing units are being suspended from march 22, are now opening slowly. But this pandemic hasn’t gone yet and had no idea when all this get over. This has stopped the growth of Indian automobile industry which is the 4th largest in the world. Already automobile industry has been going through a tough time from some time. In 2020, the sale of passenger vehicles drops down to less than 3 million which was over 3.3 million in 2018. According to a report by Fitch solution, vehicle production in India is likely to contract by 8.3%in 2020. Research experts predicted that a decline of overall 20% will be observed in all categories in this year. In April 2020, it has been observed zero growth in the sale of vehicles and in march it was down to 52%.
To make minimal human interaction, industries are proceeding towards digitalization to buy and sell of vehicles. Implementing digitalization will remain the core principle now to prevent their customers from human contact. The full processing can’t be digital but can be up to some level. There has been a drop of 80-90% in physical visits to showroom because people ant contactless service.
A Gurgaon based startup name Spinny which used to sell and buy used cars has already implemented a contactless delivery system in 2 cities with over 50 plus orders till now. This startup follows a virtual tour, contactless home test drive, proper santization of car and full trained employees to follow measures prevent the disease. Because in this lockdown social distancing is becoming a prominent thing to follow in order to avoid contamination.
Analysis of effect of corona on auto sector: –
India imports a huge array of automotive parts like fuel injection pumps, EGR modules, electronic components, turbocharges etc. from China. And a deficiency in supply of these parts can limit the further production of passenger vehicles, commercial vehicles and two-wheelers by manufacturing plants. The only solution to this problem is to switch suppliers and this step can’t be sudden and not effective at a single glance. Dependent om a single country for import isn’t a good decision a manufacturer should have multiple sellers from different regions in order to work with distraction. The companies like Maruti, Honda, tata which are operating with excellent operational parameters which includes high productivity and high quality, well trained work force etc. will take off faster than others and the period after lockdown will be a great opportunity for them. During this period, they have got their time to think how to recover from this loss and will implement a better strategy for success in future. Corona has adversely affected the profitability of company up to 30%of its annual profit. The sales compensation effect can happen after lockdown is completely lifted.