Automobile business under spell of Covid-19

Health crisis and economic uncertainty has disrupted the global economy. Sales of automobile have dropped sharply, to almost half of the sales than that of last year.

The uncertain economic scenario has created limitations on our decision for major purchases including automobiles.

Ranjana Pokharel, who is a secondary teacher, was planning to a buy a scooter at the beginning of this year . However, lockdown, which was imposed from March to contain the spread of coronavirus, ruined her plan. Pokharel’s salary has reduced to almost half and her husband, who runs a travel agency, has no source of income. “I can’t afford to buy a scooter this year,” she says.

Millions of people lost their jobs and had pay cuts. In such situation, the dealers say that inquiries have also gone down. The business of four-wheeler has reduced by 50 percent.

The lockdown imposed for around four months halted almost 90 percent economic activities in the country. The dealers say that though now the sales are fine during the festive season, the situation is unpredictable.

“We usually have 1/4^th of the annual sales during the Dashain and Tihar season,” says Krishna Prasad Dulal, president of Nepal Automobile Dealers Association (NADA).

Months of lockdown has resulted in 50 percent sales, says Siraj Pant, DGM Sales, Marketing and Strategies of CG Motocorp.  Pant says that the inquiries have reduced and the conversion rate is also very low.

For the two-wheelers, the situation is a bit positive than four-wheelers “The sales has gone down by 30 percent. So, we can say that we are in survival stage,” says Vikram Paudel, marketing head of Morang Auto Works.

The number of infection is rising rapidly, so the stakeholders are not sure about the near future. However, the trend of digital inquiry has gone up after the advent of coronavirus.

If we talk about global scenario, according to a report published by McKinsey on September 22, car purchasing intent is still 14 percent below pre-Covid 19 period.

According to McKinsey, digital medium has become more important along the entire purchase funnel. It says that the customers are even more interested in contactless service, approximately half of respondents willing to pay extra for this service.

In Nepal too, people who are willing to buy a two-wheeler or four-wheeler opt to check all the features and also inquire about the down-payment, EMIs and other charges through social media.

Sofiya Bhatta, Deputy Sales Manager of Ford Nepal, said that social media inquiry is quite good even at the time of pandemic.

Automotive dealers in Nepal have also started digital sales platform which allows the buyers to browse features, request test drive and explore other options as well. The users can also find all the price details on the site. All these digital facilities are helping to give good experience to the customers for the purchase of vehicle. It gives them enough time to understand which four-wheeler or two wheeler is right for them.

According to a survey by McKinsey, people generally don’t enjoy car-buying experience as they don’t like the negotiation process. With digitization moving into every space, especially after the emergence of Covid-19, Nepalis are adapting to online browsing and inquiry before they purchase any electronics, automobile or similar products.

Experts say that implementing digitization into the supply chain of automotive industry will give good experience to customers. However, due to 288 percent import tax on automobiles including two-wheelers and four-wheelers, having our own vehicle is considered as a luxury. Every year, the tax is increased, and it does not look like it will be lowered anytime soon.

“Now, most of the people cannot give 50 percent down payment. So, the only effort which may raise people’s spirit to purchase vehicle is lowering the down payment,” NADA President Dulal added “This will also help the dealers to at least keep up their business at this point.”