This week in Auto: Companies go digital to attract buyers, migration of people could challenge the restart

The lockdown has posed new challenges to create demand for retail car. Some of these can be sorted by the automotive companies and they are going aggressively after it.

In this edition of our weekly news wrap we detail the measures taken by companies to sell vehicles online knowing that fresh demand is still some time away. First, here is a look at all the major news from the automotive space during the week.

Tata Motors withdraws NCD plans

Tata Motors on May 7 said it has withdrawn its issue for a private placement of unsecured non-convertible debentures (NCDs) aggregating Rs 1,000 crore.

This is in view of the higher cost expectations from the market participants due to the tight money market conditions, the company said in an exchange filing

Dealerships finally reopen at 40 days

After being shut for more than 40 days, two-wheeler, car and commercial vehicle showrooms are finally beginning to open in areas that were lesser impacted by the COVID-19 pandemic.

Dealerships of Maruti Suzuki, Bajaj Auto, Mahindra & Mahindra, Hyundai, Toyota, Honda Cars, VE Commercial Vehicles have already opened. While some have opened for the fumigation and disinfection process, others have started to do business.

Migration of labour could spell trouble for auto sector

If issues such BS-VI switchover and coronavirus-induced lockdown - that led to zero auto sales in April - weren’t enough, the automotive industry could see itself grappling with the third challenge – loss of contractual labour. That is, if the inter-state migration does not stop.

The automotive sector employs over 37 million people (directly and indirectly) in India spread among vehicle and auto component making companies, dealerships, service centers, road-side garages, auto spare parts shops and transport entities to mention a few. A sizeable portion of this comes from semi-skilled and or unskilled contractual labour.

Indian automotive market pushed back by four years

A potent mix of demand slowdown, switchover to new emission norms and COVID-19 has pushed the Indian automotive market back by four to five years.

Sales of almost each of the vehicle segments, including commercial vehicles (CV), passenger vehicles (PV) and luxury cars, clocked in FY20 are at the same level as FY16, according to data available with the Society of Indian Automobile Manufacturers

BMW launches M8 at Rs 2.15 crore

Alongside the 8-Series Gran Coupe, BMW has launched the M8 sportscar in India at Rs 2.15 crore. The M8 is now BMW’s flagship sports car and gets two doors.

The M8 is powered by the same 4.4-litre V8 as the M5 putting out 600 PS of maximum power and 750 Nm of peak torque. The transmission comes via an 8-speed automatic specific to the M series of cars.

Ordering a car online like ordering a pizza

At the last count at least 15 automotive manufacturing companies shared press statements that talked about them getting the go-ahead from local authorities to restart production. While actual roll out of vehicles will take some more time the initial process of preparing for a smooth flow of sustained production is underway.

Maruti Suzuki, Hyundai, Bajaj Auto, Mahindra & Mahindra, TVS Motor Company, Royal Enfield, Ashok Leyland, Hero MotoCorp, Honda Cars, Toyota Kirloskar, Isuzu, VE Commercial Vehicles, Daimler India Commercial Vehicles, Mercedes-Benz and BMW have got the green signal for restarting production.

Though every company right now is focusing on meeting delivery commitments of vehicles to their dealers,  it will be a few more days before they start production for fresh demand.

Important to note that several companies barring Maruti Suzuki had been running on low Bharat Stage IV (BS-IV) inventory before the clampdown happened. Maruti Suzuki, had completely shifted to BS-VI before the shutdown started.

To crank up the engine of demand and supply vehicle makers do not want to wait for the lockdown to be lifted especially since there is no certainty of a given date. They are instead bringing the buying experience right into the living rooms of the customers.

The push for selling vehicles using a website has never gained as much momentum as it has today. Probable buyers are not only able to order vehicles online like they would order food using a mobile application, they get to customize the vehicle just like adding the choice of toppings for a pizza.

From add-on accessories such as touchscreen system, music systems, sporty kits, annual maintenance contracts to exchange offers, motor insurance purchase and finance schemes; everything that was conducted in a car showroom is now done online.

With the exception of meeting the vehicle delivery executive in person there will be no physical presence of any personnel during the entire duration of the transaction. Documents such as proof of residence, identity proof and salary statements will be required to be uploaded online. The dealer would be responsible to get the vehicle registered with the regional transport office (RTO) before delivering the vehicle to the doorstep of the buyer.

Veejay Nakra, Chief Executive Officer, Automotive Division, Mahindra & Mahindra said, “In the recent times, online has been a preferred purchase channel across categories and going forward, the online purchase of vehicles is set to gain more traction. We are ready to lead this change in automotive retail by providing many industry-first experiences to our customers.”

The push for online sales also stems from the assumption that people would switch to personal mobility from public mobility when offices and work stations reopen.

“Initial response from countries like China is changing consumer preference toward private transportation post lifting of the lockdown. We believe this could be a transitory benefit and would last till fear of the pandemic is fresh in the minds of people. This trend would be witnessed, particularly in urban and semi-urban markets for two-wheelers and passenger vehicles”, said a Motilal Oswal report.