Top Automobile Industry Trends in India During Covid-19 Pandemic

Top 6 Trends Witnessed by Automobile Industry During The Pandemic

The COVID-19 pandemic wreaked havoc in the entire world since the start of 2020. The Governments of various countries, including India, were forced to implement strict lockdowns to keep the people inside their homes and control the spread of the deadly coronavirus. As a result, several industries faced severe financial slump which brought a global recession.

The Indian automobile industry too went through a very tough phase after the imposition of first lockdown in the country in March 2020. Sales figures started plummeting and inventories were mounting up for the manufacturers. As the revenues took a severe hit, the automobile sector in India went through its worst phase since 1997-98.

However, once the lockdown restrictions were eased, India’s automobile industry started emerging out of the headwinds. With rapidly increasing demand in the country for personal mobility, the sales figures started to rise once again, leading to a slow but steady recovery for the automobile sector post lockdown. ICICI Lombard allows convenient purchase and renewal of car insurance online as well as offline.

In the meantime, some ground-breaking trends were observed in various facets of the industry. Most of these trends got accelerated due to the pandemic and are now shaping the future of India’s automobile market. Let’s have a look at some top trends in automobile industry of India witnessed during the pandemic.

1. Rising preference for personal mobility

Covid-19 has changed the preferred mode of commute among most of the passengers in India. A survey by PGA labs revealed that almost 56% of people in India prefer to use a personal vehicle instead of public transport for their daily commute. This increased preference for personal mobility has led to an increase in demand for private vehicles and therefore for Motor Insurancetoo, as it is compulsory for all the personal vehicles.

2. Increasing penetration of alternative-engine powertrains

The alternative-engine powertrain has been garnering a rapid demand in the recent years, especially in the two-wheeler and three-wheeler segment. A substantial change has been noticed in the consumers’ perspective, with preference for alternative engine increasing to 49% in 2020 from 39% in 2019.

Moreover, as per a PGA labs survey, nearly 35% of car buyers are willing to pay a premium of more than ₹ 1 lakh for electric mobility. Further, favorable Government policies such as Fast Adoption and Manufacturing of Electric Vehicles (FAME-II), reduced GST rates on EVs etc., have also contributed towards an increased preference for electric vehicles among the consumers.

3. Increasing preference for connectivity features in vehicles

Though connectivity features in vehicles manufactured in India are yet to develop as compared to countries like Germany, Japan, and the USA, entry of global automotive OEMs in the Indian market has given rise to a new trend. Recent vehicles such as MG Hector, Kia Seltos, and Hyundai Venue have impressive factory-fitted connectivity features.

These cars have garnered the attention of the consumers, resulting in huge sales volumes. In the second half of 2020, Morris Garages sold 15,930 units of Hector, whereas Kia received more than 1 lakh bookings for Seltos within five months after its launch. This trend is expected to accelerate with the number of connected cars on Indian roads estimated to reach 1.7 million by 2022.

4. Digitisation of dealership

The urge to shop from home after the Covid-19 pandemic have led to widespread digitisation of commercial stores and retail dealerships, and automobile industry is no exception. In a bid to save their customers from the hassles of coming to the stores, automobile dealers in India are quickly adopting digital transformation.

This fundamental shift in the dealership model is made possible due to advanced technologies such as AR/VR and data analytics. As per a PGA Labs report, digital dealership stores contribute to more than 50% of automobile sales in India.

5. Growing market for second-hand cars

The second-hand car market has grown immensely after the Covid-19 lockdown. With consumer behavior changing rapidly in India, the ownership period for new cars in reducing and the demand for used cars is increasing. Not everyone can afford to buy a new car. However, the fear of pandemic and urge for personal mobility have prompted the consumers to move towards the used car market.

Despite the lockdown and unprecedented slowdown of the new car market, second-hand car market in India saw a resilient growth of 6.2% during the financial year 2020-21. There is still a high headroom for growth in this segment as more and more consumers are preferring to own a personal vehicle instead of using public transportation.

6. Rising demand for compact and mid-sized SUVs

The past two years have seen an exponential rise in the demand for compact and mid-sized Sport Utility Vehicles (SUVs). This is evident from the fact that three out of five top selling cars in India since last six months are SUVs. As a result, almost all automobile manufacturers in India have come up with some impressive launches in the SUV segment.

The bottom line

Overall, the year 2021 has seen the recovery of automobile industry of India, leaving behind the sluggishness of 2020. The market is currently going through a transition phase but is expected to expand rapidly in the upcoming years. The Indian automobile industry is projected to be among the world’s top three markets by the end of next year.

With the Government of India introducing scrappage policy for vehicles which are more than 20 years old, this sector has received an additional boost. The increased sales of vehicles will also result in a surge in demand for affordable car insurance policies.