What COVID has taught the resilient auto retail industry

In this special Guest Column, Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA), shares his observations and views on how the Indian automotive retail sector has weathered the COVID storm and the key learnings and takeaways from the experience

- Vinkesh Gulati

What started as a small fire in September 2018—a dip in sales of CVs after the regulatory change in the axle-load norms—turned into a full-blown conflagration at a scale not experienced in the last two decades, as fundamental economic challenges roiled the Indian automotive industry. Credit availability fell, demand slowed (especially in infrastructure and mining), and discretionary spending dropped, all of which contributed to a decline in auto sales. Towards the end of 2019 when the industry was trying to once again get back on its feet, the biggest catastrophe of its kind, the pandemic, hit the world.

This coupled with BS-IV to BS-VI transition broke the back of the industry as the virus kept us grounded. But as the lockdown was removed, the auto industry witnessed one of the best V-shaped recoveries when compared to any other industry in India. However, once again when things were just starting to look good, the second wave of the pandemic halted auto sales. But as they say, good habits are formed in bad times and looking back, the auto dealership business has discovered a lot of good habits born out of necessity.

With more than 26,500 touch points in urban and rural India, the Indian auto dealer community is one of the key contributors to the national economy. It generates over five million direct and indirect jobs including automobile engineers, technicians, sales representatives, managers, customer relations officials and support staff. The auto dealer community has persevered through many downturns before but clearly no one was prepared for the pandemic and the ensuing lockdowns. No economic activities were conducted and for the first time in the history of the automotive industry, dealerships were locked down for around two months in two consecutive years without sales.