Post-COVID-19 business: Auto dealerships reopen after more than 40 days of lockdown

Vinod Aggarwal, Managing Director and CEO, VE Commercial Vehicles (VECV) said, “In some areas dealerships have started opening but dealerships in the metros are in lockdown. But in smaller cities dealerships are opening. About 30-35 percent of our dealerships are open”.

More than 25,000 automotive dealerships across the country had downed shutters following a call for a lockdown made by Prime Minister Narendra Modi in March in the hope of arresting the spread of coronavirus.

While several vehicle-making companies are pushing for online sales wherein the entire process of buying a vehicle is made digital, this medium is not entirely feasible throughout the country for several reasons.

For a high-ticket purchase especially of an aspirational product like a car, consumers do desire to walk in to showrooms and experience the touch and feel of the product especially if it’s the first car in the family.

Secondly, the digital drive is more prevalent in urban centres and its adoption is lesser in semi-rural or rural pockets. Buying vehicles online needs coordination from banks for vehicle loans and from insurance companies too.

Ashish Kale, President, FADA said, "As per the latest MHA guidelines and subsequent to state guidelines, auto dealerships are opening in Karnataka, Goa, Delhi and a few northeastern states. Some showrooms have opened to complete deliveries of booked/ sold vehicles. Mostly service workshops will open in green and orange zone and a few showrooms with limited staff to check customer response. We expect the dealership networks to completely open only after the national lockdown is revoked."

Guidelines

Honda Cars India has given guidelines in line with government norms on safety and social distancing along with its own measures that dealers must follow before restarting operations.

Rajesh Goel, Senior VP and Director, Marketing and Sales, Honda Cars India, said, "Each of the dealerships is in the process of getting necessary approvals from the local authorities to resume operations and opening accordingly.  As of today, quite a few of the dealerships have opened across north, east, west and south. The dealerships will open sequentially during the month and can focus on servicing vehicles being used by essential services staff like doctors, etc. as also for breakdown vehicles."

After the implementation of standard operating procedures and based on approvals from the state governments, Maruti Suzuki dealerships have started to open and deliver the cars to waiting customers.

In a statement, Kenichi Ayukawa, Managing Director and CEO, Maruti Suzuki India, said, “All our dealerships have put in place steps to ensure complete safety, hygiene and sanitisation of all touchpoints. I would like to assure our customers that your car buying experience with Maruti Suzuki is completely safe”.

Maruti Suzuki has started the online booking of its cars. The company is allowing consumers to choose a time for showroom visit, purchase accessories online and submit documents digitally. Fully sanitised and disinfected cars will be delivered to the doorsteps of consumers, the company has claimed.

Even luxury car making companies like Mercedes-Benz and BMW have jumped on the online bandwagon. Products priced between Rs 30 lakh and Rs 2.5 crore are transacted fully online with a promise of delivery of the vehicle upon lifting of the lockdown.

As per a report by brokerage Anand Rathi, two in every five passenger vehicle bookings done in March have been cancelled citing budget constraints, job uncertainty and greater expense. Several dealers are reworking cost reductions, renegotiating rents, reducing staff, inventories, salaries and incentives to ensure continuity in operations.