When will car sales get back on track?
Just as Indias auto sector appeared to be recovering from the pandemic shock, the second wave has once again derailed auto sales, putting a question mark over the industrys recovery prospects. A recent online survey by YouGov India shows that the second wave has led many consumers to reconsider their car purchase plans. The silver lining is that there could be a recovery in the second half of this fiscal year. Mobility Plans  The survey of 1005 respondents spread across 137 cities and towns suggests that three in five urban Indians (62%) either had already bought or planned to buy a vehicle (four-wheeler or two-wheeler) this year when vaccinations were rolled out and the covid-19 situation in the country was believed to be under control. Among these, three in ten (29%) said they had planned or plan to buy a car this year while one in ten (12%) had already bought it. 22% were looking to buy a two-wheeler while one in ten (9%) had already bought it. The survey itself was conducted in late April but it asked respondents about their vehicle purchase plans before and after the second wave hit. The figures above relate to a question about their vehicle purchase plans prior to the second wave, before lockdowns and mobility restrictions were imposed. Plans Disrupted  The ferocity of the second wave and the consequent lockdowns led many to change their vehicle purchase plans, the survey shows. Among those who had planned to buy a car, only one in five (22%) respondents are likely to go ahead with their plan without any change while the rest have altered it in some form. About a third of those who had car purchase plans said they have postponed their plans to buy a car. More than a fourth said they had re-adjusted their initial budgets. About a fifth are planning to purchase a different car type. More than a fifth (23%) have either given up their plan completely or are now planning to buy a two-wheeler instead of a car. 19% of those who planned to buy new cars said they are likely to buy a pre-owned or second hand car now. As in the first wave, the demand for second hand cars could go up as mobility restrictions get relaxed. Timeline Changes  For new cars, it may take a while for demand to pick up. Most respondents who were planning to purchase a car in the next few months have deferred their plans. Some are looking to buy a car in the next 4-6 months. A slightly higher proportion said they would wait for 7-12 months. The data suggests that the latter half of the year could bring some cheer for carmakers after a tepid show in the past few months. Demand for cars could pick up by the time the festive season arrives, the survey data suggests. Much would depend on how soon lockdowns ease, the future trajectory of the pandemic, and the pick-up in vaccination rates in key car markets. The pick-up in the overall economy would also influence consumer sentiments. Several consumers have changed car purchase plans because of budget related considerations, and greater visibility on future incomes would help lift sentiments. Cost Calculations  There appears to be a conscious shift towards cost-effective car models after the second wave. Even as premium sedans (City, Ciaz, Verna etc.) are falling out of favour, entry-level sedans (Dzire, Amaze, Tigor, Altroz etc.) have seen a rise in demand, the survey data suggests. Hatchbacks continue to remain a popular choice as before but a fraction of respondents who were planning to buy one have now changed their plans. 21% of respondents said they were planning to buy a hatchback, down from 25% earlier. The share of respondents who wanted to buy an entry sedan now equals hatchback buyers. Overall, the data suggests a drive towards cost-effective models in the face of economic and pandemic-related uncertainties. The other categories that have seen a rise in demand are premium hatchbacks and multi utility vehicles (MUVs). Demand for sports utility vehicles (SUVs) remains largely unchanged, the survey data suggests. Looming Uncertainties  A large section of the survey respondents (43%) said they are waiting for the situation to improve before they firm up their car purchase plans. The scars of the second wave show up in the survey data. Over a quarter said they have suffered financially (because of income losses or health shocks in the family) and cant afford to buy a car now. A third said they wanted to save the money they had earmarked for a car purchase for unforeseen contingencies instead. A little less than a third of respondents blame mobility restrictions for their decision to delay buying a car. About a tenth said that the pandemic had made it difficult for them to take driving lessons, and hence they are postponing car purchase plans. Overall, both health and economic concerns seem to have led to a change of plans among Indian car-buyers. The second wave has hit sentiments sharply, the data show, and it may be a while before consumer sentiments recover. YouGov India is the Indian arm of the global market research firm, YouGov. Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.