The Covid-19 pandemic has changed the way we live and work. And recent surveys have also found a change in consumers’ attitudes because of the way the pandemic has disrupted our lives. However, the disruption can also have surprising consequences.
For example, a recent survey by auto industry body Society of Indian Automobile Manufacturers (SIAM) and consultancy firm Grant Thornton India offers a glimmer of hope to the auto sector, which has been facing tough times. According to the findings of the survey, titled ‘Personal Mobility Experience post Covid-19’, consumers are likely to prefer using their own vehicles than use public transport. The survey says that 73% of the respondents were willing to purchase new vehicles as the economy slowly revives.
“The automobile industry was witnessing a de-growth even before the pandemic. Covid-19 has further intensified the situation. The survey revealed two clear trends on the personal mobility front: While most consumers prefer personal mobility over public and shared transportation, the slowing economy and its adverse impact will continue to remain a cause of worry for consumers when it comes to making new purchases,” said Rajesh Menon, director general, SIAM.
Due to safety concerns in the wake of the pandemic, customers who earlier were not considering buying vehicles, have become potential buyers, Menon said. “The automobile sector has traditionally been one of the most resilient sectors and findings of this aforementioned survey corroborates our optimism towards a healthy resurgence soon,” he said.
When it comes to the time preference of their purchase, nearly 29% of respondents planned to buy a new vehicle in 12 months, while 8% planned to buy one six months after the end of the lockdown. This suggests that the prospective demand is encouraging for manufacturers and could help the automobile sector to predict demand in the post-Covid-19 era, the survey suggests.
Among the respondents who plan to postpone the purchase of a new vehicle because of Covid-19, 56% believe it makes better financial sense to keep their current vehicle, while 32% were unable to afford a new vehicle. Some of the reasons for consumers to postpone their purchase were that sticking to their current vehicle makes financial sense; they cannot afford a new vehicle in these times; there is no requirement of a vehicle; risk of Coronavirus transmission; no good price/deal to buy a vehicle in these times; and the need to estimate the trade-in value of their current vehicle.
“Rapid recovery of the automotive market is uncertain. Therefore, it is important to ascertain the uncertainty around consumer preferences towards mobility solutions in the automobile industry and the incentives that would stimulate the demand for vehicles in both short and medium terms. With Unlock 1.0, an all-new digital retail landscape is making its way to dealerships and robust online sales solutions are now expected for a satisfying purchase experience,” Saket Mehra, partner and automotive sector leader, Grant Thornton India, said. But dealers need to be able to reach customers at home, he added.
According to the survey, respondents also showed a preference towards two-wheelers and electric vehicles (EVs), accounting for around 20% each. Overall, 68% of total respondents preferred to stick to the traditional concept of visiting showrooms for vehicle purchases. While 25% were open to exploring online channels, only 7% of the total respondents preferred to use digital platforms.
“The findings suggest that the persistently weak consumer sentiment is expected to be further amplified until the pandemic subsides. As the consumer grows warier about the financial outlook, the automobile manufacturers are likely to witness a significant drop in numbers. Most consumers are likely to hold on to their vehicles longer and only make necessary purchases,” Mehra said.
Around 57% of the respondents said they would buy a new vehicle to avoid use of public transport while 40% said they would buy a new vehicle to upgrade from their existing one, and 20% wanted to own a vehicle for the first time. Interestingly, respondents will go for purchases with features like ‘hygienic air filters’, ‘mobile in-car offices’, and co-rider separation shields.
Menon said that the performance of the auto sector in FY20 had not been up to the mark. “All sales have dropped to -18% in comparison to FY19. The pandemic has resulted in a steep decline in sale of all the vehicular segments. In FY21, demand would degrow in the range of 26% and 45% across various industry segments,” he said.