India is currently reeling under the effects of the deadly Coronavirus. The second wave of the virus has turned everything upside down. The severity and intensity of the second waved have surprised everybody and have ensured that the country goes and stays in lockdown for a while, just like last year. In fact, that seems to be the only way to break the chain at the moment. As a consequence, the automobile industry has gone into a shutdown as well. As a matter of fact, all the sectors and industries find themselves in a similar situation with the future uncertain. The largest carmaker in the country, Maruti Suzuki, has extended the shutdown at its manufacturing plants until next week. It has also turned one of its plants into medical equipment manufacturing unit to contribute to the efforts to tackle and defeat this virus. But what does this mean for the automobile industry in times to come? How does this pandemic affect the industry overall? Let us find out.
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One of the most challenging aspects in the production of new vehicles globally is the shortage of semiconductors. Now, as we all know, all modern vehicles have a ton of electronic equipment for various functions. This requires semiconductors along with other electronic hardware without which the entire electric circuit is rendered useless. There simply is no other way around this problem in manufacturing a modern car. Since a ton of countries are in lockdown or partial lockdown and work-from-home scenarios, the demand for electronic appliances has increased exponentially, for instance, home appliances, smartphones, laptops, tablets, etc. The primary requirement of the semiconductors is in those devices and the secondary and a relatively smaller requirement is there in the automobile industry. The production of the semiconductors being limited at the moment, the preference is being given to the electronic devices market which is much larger than the automobile market.
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As a result, many companies already had to delay the launches of some of their new and upcoming products in our market. That affected the industry to some extent, as well as the sales of some of the carmakers in India. That is also one of the relatively smaller reasons for declining sales in India last month. However, the bigger reason continues to be the lockdown and we shall discuss that now.
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Production Halts and Launch Delays
The production facilities of some of the major car manufacturers in India have been closed due to the prevailing conditions. In fact, some OEMs have decided to cease the production of the vehicles and dedicated these manufacturing facilities for the production of medical equipment instead. This is a welcome initiative by the carmakers since the manufacturing facilities are already equipped with industrial tools and installations. That means that the focus has deliberately been diverted from making vehicles to making medical equipment in order to defeat this virus. We must remember that every little contribution counts during these tough times. This has pushed many launches back by a couple of months at least. The companies delayed the launches last year for the same reason but today, the situation is the same. It doesn’t make sense to launch new products at this time when people are just struggling to make a living. Surely, buying a new car is not on the priority list for almost all people at the moment.
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Drop in Demand
Like we mentioned in the previous section, the customers don’t need a new vehicle at this time and this translates to no sales in the automobile industry. Hence, the producing new cars don’t seem right and this is a problem. Only when there is sufficient demand, are companies willing to run the manufacturing facilities to afford the running costs of a manufacturing plant. The demand will most likely continue to remain low because the situation in the country doesn’t seem to take a sharp positive turn anytime soon.
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Digital and Virtual Showrooms
There are, however, some positives from this situation as well. The industry had to come up with some new ways of still interacting with the customers and attend to the needs of the consumers who were already looking for some way of getting services. Almost all the major carmakers in the country have set up online or virtual showrooms where one can easily avail of the services to minimize and in some cases, eliminate the contact between people, which is the need of the hour. Some OEMs had offered online booking, pick-up and delivery of the vehicle in case servicing or repair are needed. Additionally, people wanting to buy a new car had to option of configuring their cars online with various tools at their disposal at the dealers’ websites. Now, one can book the new car online entirely. These are some of the changes that the automobile industry has adopted to cope with the requirements of the changing times.
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A couple of months down the line
The situation might very well look extremely grim at the moment, but we expect betterment in the situation a couple of months from now. Staying positive is the only option we are left with at this point in time and positive we shall remain. After the dust is settled, there will be a huge bump in demand for new vehicles and personal mobility and the industry might strike back with a bang. Al least, that is the hope. Thereafter, the industry will keep on growing as India is already one of the fastest-growing automobile markets in the world. Already, all the major carmakers in the country are coming up with new products along with some entirely new players planning to enter our market. The future is bound to be a bit better than the present.
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Image Source – Wikipedia