Aren’t most industries hit by the pandemic? Yes, industries all over the world have been impacted since the pandemic a year back, but people have moved on too. By now, most of the industry leaders have found new ways to operate and have implemented innovative solutions to sustain their business. People across the globe have spent months working remotely, celebrated their birthdays’ and anniversaries virtually while their cars are parked in their garages running out of batteries and nitrogen overtime. So, it is time to discuss what we have learnt, gained and experienced during these difficult times.
The automotive market is one that has faced the severe brunt of the pandemic. The disruption in Chinese parts exports, large scale manufacturing interruptions across Europe, and the closure of assembly plants in the United States are some examples of the most concerning effects on the automotive sector across the globe. Some experts also state that the drop in GDP across markets could drop two times greater than the last recession.
Despite a number of factors impacting the auto and aftermarket industry, including decreased footfall in showrooms, a reduction of miles travelled and lower disposable income; players in the market have introduced digital showrooms, online customer service engagement, and aggressive promotional activity in response to the pandemic indicating that the industry has begun to take steps to adapt and recover, with greater focus put on health, protection, and cost across the world.
With the cars being parked in the garages for longer than usual, the demand for vehicles diminished during the early months of lockdowns; and the UAE itself has witnessed a 48.4 per cent decline in the car sales of 2020 as compared to the previous year. In addition, vehicles that are left idle for too long could face many issues down the line. The most common mechanical issues include the corrosion of car parts such as brakes; drainage of batteries due to vehicles being left unattended for prolonged periods; drying out of fluids and engine oil run off the surfaces inside an engine , among many others.
In response to the current scenario, leading players in the aftermarket industry have invested in technologies to provide ultra-high-performance parts that last longer such as batteries to satisfy the tougher requirements of today’s transportation condition. Like every other industry advancing digitisation, automotive aftermarket players also use specific software and mobile applications instead of turnkey solutions which helps workshop technicians to find a suitable resolution for exact and highly sophisticated technical problems on customer vehicles. Availability of advanced software literally look over the workshop employee’s shoulder, develop a detailed technical report and provide a step by step guide to the technicians to arrive at a satisfactory solution; 50 per cent faster than before leading to reduced time of vehicle servicing and costs.
Athough automotive players might be focused on the immediate crisis, it is important to realise the long-term implications and possible benefits for the market. It is expected that the average age of vehicles is likely to increase due to economic pressures ruling consumers to postpone their new-car purchases for the next few years ; a positive gain for the aftermarket industry. Moreover, opportunities for expansion of the target market could be realised, with several customers preferring to use private vehicles over public transportation over threats of contagion in the current climate. The UAE’s automobile sector is steadily shifting gears and the industry executives anticipate the UAE car sales to reach 2019 level in 2022-23.
The pandemic has changed the world forever whether we like it or not. Limiting the spread of the virus, revisiting the rule of quarantines due to the roll out of vaccines and lifting travel bans will not instantly restore aftermarket demand to pre-pandemic levels. The lives of people have changed drastically in the last one year but with the roll out of aggressive campaigns by the governments to vaccinate people, there is a positive hope of a successful new normal in the years to come. With every industry evolving rapidly, it is important for the companies to acknowledge that the road to recovery not only takes a different strategy than prior crises but will also succeed better and faster than others especially if you are an early adopter. Act now and adopt first, the new mantra of success for any and every business today!
- The author is Vice President, Automotive Aftermarket at Robert Bosch Turkey, Iran and Middle East