In Covid-19 times, is worst over for Indian auto industry? Pause before play

The Indian automotive industry was navigating through choppy waters even before the Covid-19 pandemic came as a tsunami to struck unprecedented blows. And while almost every major industry in almost every part of the world took a severe beating, the pain may have been felt more by the Indian automotive industry, in relative terms of course. But while the pandemic remains an omnipresent threat and while there still is still a high degree of unpredictability, the proverbial choppy waters may be calming down.

The pace of vaccination, the upcoming festive period and the relaxation of most lockdown and restrictions in the country augers well for most and this includes the Indian automotive world. Most OEMs agree though that adopting a cautious approach is the best way forward at present.

A number of studies have shown that the consumer spending sentiment is reviving and that with more and more people returning to offices, players in the business of mobility are likely to benefit. As per an analysis done by Deloitte Touche Tohmatsu India, for instance, 84% consumers feel it is safe to return to a workplace and that just 30% were concerned about physically interacting with a salesperson at a store which reflects increased customer confidence.

Then there is some degree of cheer because of the festivities around the bend. Several manufacturers have already started announcing schemes and offers in a bid to attract new customers. A number of new launches this calendar year and this despite the challenges brought about by the second wave of the pandemic, may mean increased interest in a new purchase.

All good then and time to play? Well, not quite.

While the third wave of the pandemic remains an omnipresent threat, there are also other challenges that have nothing much to do with viruses. A global shortage in semiconductor has emerged as one of the biggest obstacles ever faced by the automotive world. Production hits are evident the world over with even some of the biggest brands recognizing the problem at hand. Here in India, companies like Maruti Suzuki and Mahindra announced cuts in production due to the challenge while many others are learnt to have weighed in their options too. At the launch of the Tigor EV, for instance, Tata Motors underlined that it is not demand but supply that needs to be sorted. (Read more here)

Then there is the problem of rising input costs cited by many OEMs as the reason for hikes in their respective products. This has affected players across the spectrum - from those in passenger vehicle category to two-wheelers and beyond. What would it then mean for the festive discounts? It remains to be seen.

As such, it could be a case of cautious pauses before flamboyant play in the foreseeable future.