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ADAPTING TO CHANGE
ADAPTING TO SURVIVE Major international markets have adopted a variety of measures in the face of lockdown
Digital showrooms, online customer service interaction and aggressive promotional activity are just some of the measures that have been implementing in the auto industry and aftermarket worldwide in reaction to the current COVID-19 pandemic, with greater emphasis placed on hygiene, safety and cost across major markets around the world.
With the pandemic expected to reduce new vehicle sales by around 20 million globally this year, and the aftermarket set for an estimated 16% contraction in the Financial Year 2020, the industry is taking a series of measures to mitigate the decreased demand. This has seen Original Equipment Manufacturers (OEMs), component manufacturers, distributors and retailers diversifying their business models in the top five auto markets in the world - the US, China, Germany, India and Japan.
Speaking at a webinar organised by Messe Frankfurt Middle East for Automechanika Dubai, the largest international automotive aftermarket trade show in the Middle East, Vishal Sanghavi, senior manager Business Research and Advisory at global research and analytics firm Aranca, said: “We have seen the impact of the COVID-19 virus across the ecosystem in the last three to four months, and it is encouraging to see a number of dynamic measures being taken.
“It is clear that players across the industry are not just sitting and watching the situation unfold. They are trying different measures to entice their customers and attempting to diversify and identify practical solutions that work with consumers.”
Despite a number of factors impacting the auto industry and the aftermarket, including decreased footfall in showrooms, a reduction of miles travelled and lower disposable income, there is already evidence that the industry has taken steps to adapt and recover across the top five auto markets in the world.
OEMs have seen a huge shift towards digital operations, with many exploring virtual showroom experiences and diversifying the platforms they sell on. Similarly, component manufacturers have capitalised on boosted online activity resulting in a 50% monthon-month increase in sales for the Japanese market and a 40% boost in April sales for e-commerce specialist US Auto Parts.
While a number brands including Audi, BMW and GM already offered digital experiences to encourage potential
sales pre-COVID-19, it is clear that the pandemic has catalysed brands into diversifying their e-commerce platforms and bolstering their digital presence.
Change in focus
Component manufactures have had to change their focus to adapt to the current situation with many taking advantage of on increased demand for hygienic products by cornering the market on products such as air filters and paints. Other avenues being explored include private labelling, 3D printing and online product training.
Efforts made by distributors and retailers include aggressive promotions, the offer of free warranty extensions and discounts on new and used cars. The digital space is also important in this sector with businesses exploring live streaming, and e-retailing coming into play with a demand for spare parts growing by 40% in the past three to four months.
The customer service space is also increasingly looking at the digital realm as it evolves operations. While some workshops were deemed essential services, they still had to hone customer serving techniques by conducting live after-sales interactions through different platforms such as WeChat and Weibo. Workshops are also offering free pick-up and drop-off of vehicles, and then pushing these tactics as promotion techniques to regain customers.
Sanghavi said: “Several factors will determine the recovery curve. On the macro level, although we have significant job losses in all markets, we have also seen the introduction of government stimulus packages in the range of 10-20% of GDP for most economies.
“While a significant reduction in new vehicle sales has already been seen due to prolonged stay-at-home measures, a shift in preference towards used cars is anticipated and this will drive the need for higher spend on repair and maintenance overall.
“Weaker consumer spending and reduced miles will have an impact, we will see an increase in preference for personal vehicles over public options, a behaviour which will drive maintenance and repair requirements and lead to increased ownership in the markets of India and China.”
Covid-19 hits event
Automechanika Dubai has once again been postponed and will now take place in June next year. The region’s largest trade fair for the automotive service industry
was planned to take its traditional annual slot in June earlier this year, but following the introduction of measures to control the spread of the Coronavirus in the UAE, it had been re-scheduled to take place in October.
A representative for the organiser Messe Frankfurt Middle East said the decision to effectively hold back the 18th edition for 12 months was a logical decision that was in the “best interests” of both exhibitors and visitors to the event. Commenting on the move to 7-9 June 2021, Automechanika Dubai’s show director said Messe Frankfurt Middle East had done its “very best” to hold Automechanika Dubai in October, “however we now have our sights set on 2021, when the show will take place just a few months ahead of the Dubai Expo.”
Automechanika Dubai remains a hugely influential event on the automotive calendar in the UAE. The three-day show in 2019 featured 1,880 exhibitors from 63 countries, with 32,750 trade visitors from 146 countries dropping into the Dubai World Trade Centre,
“We’ve been in regular contact with our customers, partners and supporting associations, and given the current situation, moving to June 2021 is the logical decision,” said show director Mahmut Gazi Bilikozen.
In the absence of the physical show, Automechanika Dubai is hosting a series of free-to-attend webinars. According to Messe Frankfurt Middle East the six events have brought in more than 2,200 attendees online
“While they cannot not replace the benefits of meeting face-to-face that a physical event provides, our webinars allow us to offer some means of business networking and knowledge sharing.”
AUTOMECHANIKA DUBAI DELAY
While Automechanika Dubai will not now return until 2021, a series of webinars have offered an insightful overview of the current aftermarket.
ORGANISER’S VIEW: “A HOST OF VALUEADDED EVENTS”
Automechanika Dubai covers the six major product sections of Parts & Components and Electronics & Systems; Accessories & Customizing; Tyres & Batteries; Repair & Maintenance; and Car Wash, Care & Reconditioning.
Next year’s event will showcase a number of exciting elements such as the Automechanika Academy, the Modern Workshop, and the Innovation Zone, which will keep the many thousands of trade buyers and industry professionals in tune with new market developments.
The Innovation Zone is a dedicated area at the centre of the show floor featuring presentations and product showcases from exhibitors that are steering the course for the regional and global automotive aftermarket.
Other features include the Truck, Agriculture, and Motorcycle Competence initiatives, dedicated to the entire value chain in the truck, motorbike, and agriculture sectors, from parts and accessories, to workshop equipment, body repair and care.
