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Top "8" Trends of the Auto Industry to watch out for in 2021.

Automotive Industry in the throes of the Pandemic Woes; but hoping for a Rainbow in 2021.

2018 and 2019 were two consecutive years of despair for Automotive Industry.

The gloomy factors:

  • A big slowdown especially in the BRIC economies

  • High-interest rates, and lending norms

  • Increasing Fuel Price

  • And an overall shrinking of economies across the world, affected demand adversely.

And then in late 2019 and early 2020 came the dreaded Covid 19 pandemic. Within no time the pandemic had spread itself, invisibly and destructively; and without any vaccine across the World. The World economy had never seen anything like this before.

Economic depression set in everywhere. The Major economies including the United States, Germany, India, Brazil, Russia, UK, Italy, France, Spain were affected the most. They collapsed.

Lockdown and restrictions were imposed to minimize the spread of the virus, for almost the entire first half of Calendar Year 2020. It also saw HUGE MIGRATIONS of the skilled and unskilled labor across the major urban centers on a scale never imagined, especially in India. Almost emptied the big urban centers, for some period of time.

The most affected industries were those of Hospitality/Travel/Retail/Realty and Entertainment. Manufacturing and Services too took a huge dip. Employment across sectors has taken a big hit, with joblessness and loss of livelihoods everywhere.

And when the economies opened, albeit cautiously and slowly, people were still not ready; and scared, to get back to the normal times.

Work from Home has become the most preferred and practiced norm across the World geographies – affecting travel and hence Automotive Industry directly. Aviation was closed, in many countries, as late as 30 September 2020; and is even today restricted across the World.

While Public Transport is opening slowly, Personal Transport has become the cautious way to go about things. However, there are challenges of continually increasing fuel prices, affordability, and convenience of Personal Transport over Public Transport.

However, the shift to Personal Transport has possibly helped in creating a demand for Automotive Industry, a demand that would not have been created but for the fear of the Pandemic. A demand that is now helping the Industry to come out of the red.

In the light of the above, major research agencies have projected an encouraging picture for FY 2020-21 and beyond.

Frost & Sullivan has revised its Light Vehicle Forecast for 2020 to 77 million: earlier 73.6 million for the World. This will however will still be a decline of 15.1% YoY. 2021 is anticipated to grow at 8% YOY; and industry will be at the same level as that in 2019, by 2023. However, the caution is that the recovery may not be uniform across key markets.

Amongst the major markets, China has recovered the fastest. The US too, since Q3 2020, has shown encouraging growth. Europe could, however, show slower recovery due to the Pandemic’s second wave wreaking havoc; and extended lockdown and restrictions in place even in 2021.

India is expected to come out of this faster than Europe due to its large captive market size.

What will be the Top Trends in 2021

1. There will be the shift to Computing Power from Horsepower

In 2021, every Auto major would need to reinforce and reinvent itself in the digital space. There would be an explosion in the Electric and Connected Car services.

Auto majors would need to make substantial investments in Android Automotive OS and Mobility. Else, they could become obsolete.

2. Showroom visits, for purchase, will come down appreciably.

The Pandemic and its fears necessitated a shift to Digital Experience for both the buyer and the seller. Auto majors have tried to recreate the actual buying experience, as close as possible to the real-life experience, as possible.

While it is not the “Real Deal” it is almost there. Customers too, by necessity and convenience, seem to have accepted this new normal.

This Sales Transformation could see significant changes made in the Marketing Approach. Social Media, Digital Advertising, e-Platforms could corner the larger slice of the Sales and Marketing budget.

The Automajors and their Channel Partners too could see a huge reduction in the investment for a Physical Showroom and the Showroom Experience. Establishment costs in terms of Infrastructure and Human Resources could see a huge saving.

Maybe, a lot of Dealership Jobs will see a reinvention and, maybe, save jobs too.

The shortfall, in hindsight, could be … lack of a Real Deal interaction between the Buyer and Seller.

3. IoT platforms and personalization of Cars

IoT platforms could become the norm and see huge development and innovations.

You could do so many things in your car, rather than … just drive.

A Car will now become more personalized than ever. An extension of the personality of the driver in a truly comprehensive manner.

This could also open up collaborative models for additional revenue streams for Automajors and the IoT platforms.

4. A huge increase in Aggregator Model of Drive a Car without Owning it

The evolving concept of Aggregators offering Self Drive Cars at a nominal cost, without the Customer buying the Car, could finally take off.

This could get driven by easy and flexible leasing options and short contract durations. The challenge will be to have well-maintained and fresh cars across the various ranges and segments always while also keeping them affordable and attractive to the users.

5. Used Cars will gain a faster acceptance

The new car industry could suffer due to the slowdown in economies and the reduced disposable income in the hand s of the Buyers.

This could drive the Used Car Industry.

Buyers could prefer to buy a dated model of their specification choice at a fraction of the original cost and/or upgrade to dated cars with higher specifications at the same price.

The challenge will be the largely unorganized structure of the Used Car Industry and the availability of easy and attractive finance options to the buyer. It could also drive the shift to alternative technologies like Hybrid and Electric Vehicles.

6. Preference for Personal Cars over shared/public transport

The Pandemic has created a fear psychosis amongst populations due to its scope of spreading through infections.

This could make the populations shift very largely from public transport/shared platforms to Personal vehicles. This has been already seen in the Low End/Hatchback segments and also Two Wheelers sales. The hitch will be affordability to buyers, and will the present infrastructure able to cope with this huge disturbance.

7. The New Buzz Word will be … Go Electric, Go Green

Electric Vehicles are seeing increased traction since the pandemic. The continually increasing fuel prices are only serving as a further incentive for this shift.

Many Governments, at both and the central level, have announced their mission plans for accelerating the shift to Green Electric Vehicles. Many subsidies and incentives too are being offered. Electric vehicles (EVs) will be rolled out in big numbers.

Huge investments too are being done by Automajors in developing efficient batteries and Reuse technologies. Fuel Cell Electric Vehicles (FCEVs) will find increasing acceptance over the BEV (Battery Electric Vehicle). The performance of the EVs too is being improved to match that of the conventional IC engine vehicles.

Major influencers, like F1, too have defined their mission to reduce Carbon Footprint at their events. With the eco-system for EV’s developing very fast, expect an exponential increase in EVs in the coming decade.

8. Tightening Pollution Norms for the Industry :

The UN and national Governments have defined very clear mission statements regarding reducing Carbon Foot Print and Temperature across the World. BS6 norms have been implemented strictly in India. A new scrappage policy too has been rolled out, with stringent norms for fitness of the vehicle.

This will see the Auto Majors invest in major innovations and technology developments to reduce carbon footprint. Indeed Auto Majors like VW, Skoda, Volvo, Toyota, and even the Indian Auto Majors, have planned a slew of new launches and upgrades with a significant reduction in Carbon Footprint.

The decade of 2021-30 will truly an epoch-making one for the Automobile Industry.

And it will all start … with hope, energy, and promise of growth in… 2021.


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