The shift to personal mobility will only get stronger as the country braces for more coronavirus outbreaks, say automakers who are buckling up for a rise in demand in the coming months.
The stringent restrictions put in place by more than 20 states to break the chain of infections may have crippled delivery of vehicles but with the vaccination drive gaining strength, manufacturers of cars, SUVs, motorcycles and scooters are preparing for a resurgence from the July-September quarter.
“The shift towards personal mobility might become even more stronger, given that the customers are expecting multiple waves of COVID-19," Speaking to analysts Shailesh Chandra, president (passenger vehicle business unit), Tata Motors, told analysts recently. "There is greater concern about the (personal) well-being and therefore, there might be a bigger personal mobility shift phenomenon. And therefore, whatever (volume) loss we are going to see in Q1 can still be recovered."
Only an estimated 20-30 percent of automotive showrooms are operational but as most of them are in non-urban areas, they do not generate significant volumes. Automakers, however, are confident that the loss in volumes can be swiftly recovered in the later months.
Tata Motors, India’s third-largest carmaker, witnessed a 40-45 percent drop in bookings in April and May is expected to be worse. “Demand is expected to be significantly subdued in the quarter one,” Chandra said.
The first Covid-19 wave pushed up the need for personal mobility across auto segments due to general reluctance to use public transport. This led to companies running their plants at full capacity and even announcing stock out of several models. Though the second wave has been much severe, auto companies are confident that first-time vehicle buyers will return with vigour once the lockdown eases.
“The fundamental drivers of demand would return. We do not see any underlying issue with any of the key factors that drive demand in two wheelers. There is a strong push for personal mobility and we are working on ways and means to help buyers achieve that,” said the chief financial officer of one of India’s top three motorcycle makers on condition of anonymity.
Maruti Suzuki’s data for the March quarter shows that first-time buyers made up 47 percent (up 3.5 percentage points from the same quarter last year) of its customer bouquet. The share of :additional car buyer”—a buyer who already has a vehicle—shot up to 33.7 percent from 30.1 percent. The share of replacement—replacing old car with a new one—slumped to 19.5 percent, a drop of 7 percentage points.
“Frequent lockdowns, high waiting periods and general uncertainty about life expectancy are making dramatic changes to the way cars are bought. Buyers are more aware than ever before and are not holding themselves back anymore when it comes to fulfilling their aspirations,” a senior executive of Volkswagen India said.