The coronavirus pandemic and the subsequent lockdown put the brakes on the growth of the Indian automobile industry. India’s automobile industry, the fourth largest in the world by volume, seems headed for another year of significant declines. Sales of passenger vehicles have been particularly hard hit, and recorded zero growth in April this year while a month earlier in March it was down 52 percent.
The news doesn’t get any better as India enters Unlock 1.0 and attempts to kick-start its economy. Counterpoint Research expects the nation’s auto industry to decline by at least 25 percent in all categories in 2020. A report by Fitch Solutions states that vehicle production in India is likely to contract by 8.3 percent in 2020, following an estimated 13.2 per cent decline in 2019. But, there’s a silver lining behind the COVID-19 cloud.
The pandemic has brought to the forefront an opportunity for rapid adoption of digitization in the passenger vehicle segment, putting the focus on a contactless environment.
Frost & Sullivan, in a recent note titled Changing Retail Strategy & Consumer Connect – Auto Industry Road Map, said, “With COVID-19 triggering an 80-100 percent drop in physical visits to showrooms and contactless transactions expected by customers, digitisation has emerged as key to survival. It is empowering automotive retail and after-sales, and enabling more meaningful customer engagement.”
The Indian automobile industry has been struggling for some time now, as passenger vehicle sales fell below three million in 2019 from the earlier level of over 3.3 million in 2018. The industry, which moves in sync with the country’s economy, has been fraught by idle capacity, low demand, and high cost of production. And, the coronavirus pandemic has pushed it further.