I was convention up with a friend —nearly, of course — & he asked me if I remain an automaker. Given the turbulent state of the auto industry as long as last year, this question was very interesting as I write my idea here.
It was clear that automobiles would be in the middle of the sector’s worst overblown in the wake of the pandemic. In fact, car sales have plummeted far and wide. But there are symptoms that things are changing. In India, car sales rose a huge 29% in September, in the opinion of industry body SIAM. In the US, third-quarter numbers look whip up, buoyed by demand for SUVs and access to low-priced credit. Europe, too, is starting to research, where people are more odds-on drive than fly.
In my viewpoint, it is too early to say even if the good times are back & whether there has been a recovery. This may all be a short-term bump, driven by a short-term preference for private transportation. There may be regional cause too – like the festive Diwali season in India, which is generally associated with strong car sales.
Let’s Rewind To Pre Covid Times 2021
For outlook, it may be helpful to look back prior to the pandemic (remember those times!). Until then, we see that the sector wasn’t precisely in the pink for health. In India, car sales in the fiscal year 2020 fell by 18%, violating the widening trend of many years. Maruti Suzuki, the country’s biggest player, cut manufacture five times in six months, something that had never happened previously. The Singapore auto sector started in 2020 badly as well, and US sales have been on a downward trend for years. It is understandable that Covid-19 alone is not to blame.
This bearish outlook could be for a number of causes: a move toward co-hopping or commuting, market saturation, rising operating costs, to name a few. I theoretically, the pandemic may actually give the sector a improvement in the medium term, so I believe it’s in the industry’s best interest to use this moment to reassess and take lead of some headwinds and develop innovative solutions.
For example, the epidemic affected the frame of mind of the masses, which was reflected in the preference for personal mobility. BCG estimates that 40 to 60% of participants in key markets (US, Europe, and China) prefer to possess their own cars – which bodes well for the industry.
What do We need To Leverage On?
Despite the pandemic, there have so far been some trends happening that we should watch out for. Central to some of these changes is that tomorrow’s customers will be dissimilar.
1st, digitization is happening, and this has been quickened by Covid-19. Younger customers are more likely to search, book, and possibly buy online. They are likely to ask for good over features. A global study by Accenture shows that 74% of young customers are willing to pay for “invisible” services with digital leadership, while Deloitte’s study shows they are willing to do without the bells and whistles like commercial systems. This is a wake-up call for OEMs – those who supply great digital service (before, during, and after buy) are the most likely to succeed. We are seeing signs of this occurrence as some car brands in India are digitizing the entire procedures such as test ride bookings.
2nd, there is a growing partiality for electric vehicles, even in India where the base is not fully developed, and even among Generation Y. Perhaps this is the growing consciousness of pollution or the globally acclaimed case of Tesla. There is no confusion that this is where the future lies.
3rd, consumer conditions may change, especially as WFH has become a standard part of our lives. Untimely this year, India’s largest manufacturer, Maruti Suzuki, made waves by being the first in the country to offer a subscription service for $18,000 per month. Given how cosy today’s youth are in renting quite than owning (homes, furniture, electronics), this is a natural extension and puts the company in a good place to cater to this demographic. Solutions like this will affect outright buy, perhaps even at the luxury end (if Cadillac’s GM book is anything you should go through)
Finally, and maybe most doable, service will be of paramount importance. OEM must take into account that the connection begins and does not end when the purchase occurs. Standard after-sales service and engagement after purchase builds loyalty, brand preference, advice, and possibly even revenue. For example, 21North OEM solutions make it incredibly easy to make after-sales service for shoppers, who won’t need to get out of their homes or take time off work to find a factory. Our fleet of executive-trained ambassadors will take the automobile and drop it off, while an OEM app (supported by 21North) provides location and estimation.
So… Am I optimistic?
Back to my friend’s question, where I started this blog-am I an optimist in the auto industry? I am, but be cautious. I believe it is necessary to understand new customers and their changing requirements, as well as the emulsions created to meet these requirements. Those who make this change through products, functions, layout, business models, and connectivity will flourish and become part of the innovation-driven aftermarket rebellion.