This week in Auto: Coronavirus casts a shadow over new launches

Even during the worst of slowdowns the car industry did not go slow on new model launches. Companies enticed the buyers with new models to break the trend of gloom and depression.

But it couldn't match up to the launches seen in the earlier periods in the face of the challenges for the industry.

Yet companies haven't given up hope. More on this later in the copy but here is the complete round up of all the major events in the auto space this week.

Maruti Suzuki, the country's largest car manufacturer, on May 13 declared its March quarter profit of Rs 1,291.7 crore, down by 28.1 percent YoY dented by lower sales during the lockdown.

Hit by severe external market disturbances, Maruti Suzuki, India’s largest carmaker, has cut back on capital expenditure substantially for the current year as certain projects stand to get delayed.

Tata Motors on Friday said it is planning to raise Rs 1,000 crore through issuance of securities. The company is desirous of offering rated, listed, secured,  redeemable, non-convertible debentures (NCDs) aggregating Rs 1,000 crore, Tata Motors said in a regulatory filing.

Tata Motors on Wednesday said it has commenced operations at its Pantnagar (Uttarakhand) and Sanand (Gujarat) facilities after getting approvals from relevant government authorities.

Car-buying experience will nowhere be close to being as exciting as it was, thanks to all the precautionary and compulsory measures adopted by the dealers to keep COVID-19 at bay. Dealers across the country have agreed to open showrooms maintaining a strict vigil on social conduct.

Carmakers are offering test drives only against prior appointment. Only one person will get to drive the vehicle while a dealer staff member will sit in the rear seat. During pre-COVID-19 days it was normal for more than one person of a family to enjoy the first drive.

Maruti Suzuki is set to restart more production lines at its Haryana factories over the next seven days, but restrictions imposed on free movement of manpower will become a challenge for the company.

The maker of Swift and Baleno will reopen plants in Gurugram on May 18-19 after restarting the second production line at the Manesar plant next week. Only one production line is operational for the company based in Manesar that started the vehicle roll out on May 12

Weighed down by debt coupled with a negative outlook for the passenger vehicle business Tata Motors' worth nothing without its luxury car business of Jaguar Land Rover, according to a report by CLSA.

The Mumbai-headquartered company has run up a debt of Rs 19,150 crore, which is almost at par against CLSA’s enterprise valuation of Rs 19,200 crore comprising Tata Motors' India business.

Coronavirus has slowed down the automotive market quite considerably forcing automakers to rethink new product launch plans. More than a dozen new models, upgrades and variant launches were scheduled over the next 6-7 months before the pandemic hit the market.

The original launch schedule has surely been disrupted because of the coronavirus pandemic considering the delay in dispatches of a handful of models. Maruti S-Cross petrol, Audi e-tron, Mahindra eKUV, Volkswagen T-Roc and Skoda Karoq were a few of the known models that were due for launch before May.

Compact SUV by Renault, automatic version the Renault Triber,  new models Stonic and Sonet from Kia, premium SUV Gloster and the seven-seater Hector from MG Motor, Mercedes A-Class Limo and the fully electric EQC, the all-new Honda City were some of the launches planned since April this year.

While Isuzu postponed launch of its BS-VI compliant models by a quarter European brand Citroen has postponed their launch to 2021 from end-2020. This year was also to see the debut of Citroen in India.

The pace of new launches has been affected. But manufacturers are keen to ‘get on with it’. Mercedes-Benz, India’s largest luxury car maker for instance, is launching the C 63 AMG and the AMG GT R on May 27. Volkswagen has already launched the TSI edition of the Polo and Vento.

As against the usual bells-n-whistles involving a grand launch ceremony followed by consumer engagement programs at dealerships in most of the big cities carmakers would be forced to have a rather quiet affair using the internet.

Launching cars through an online platform will become the norm for most part of the year given the restrictions on gatherings for public and private events. Such events were usually done at a luxury hotel or at a large outdoor location taken on rent.

Even before the lockdown the car industry was beginning to cut down on its marketing and promotion budget which includes events earmarked for the press and prospective consumers.

A day-long event conducted at a five star hotel would cost the company anywhere between Rs 50 lakh to Rs 1 crore that would include food and beverage costs, rent charges of ballroom and separate meeting rooms, payments to event management companies, accommodation of senior executives of the hosting company.

The costs do not include transport and accommodation charges of personnel flying in from other cities for the event and local conveyance costs.

No doubt most market surveys reveal that research done online by prospective consumers about their next purchase has grown manifold over the years. At least 70 percent of the buyers have researched their choice of vehicles online before they enter the showrooms.

Though coronavirus-induced lockdown cannot stop people from buying cars it will certainly change the experience of buying cars.