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A Blue-print of the Pandemic Hit Auto Industry in India

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24th Jul, 2020
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A Blue-print of the Pandemic Hit Auto Industry in India

“Halt!” said Coronavirus and the world came to a standstill. Everyone shut their doors and windows and the roads became empty. 

Speaking of empty roads, the automobile industry took a massive hit when the economic market began falling, globally. In the month of April, manufacturers in India reported nil sales following the stringent lockdown and an 80-90% dip in domestic sales in the month of May. The steep downward trajectory however took a positive turn in the month of June with auto giants like Maruti Suzuki and Hyundai Motors reporting a slowdown in the decline pace.

In the midst of this, the manufacturing and R&D departments in automobile companies bore the maximum impact at the onset of the pandemic. For R&D personnel, the incubation period to showcase results is comparatively longer than the manufacturing department. For this reason, this team had to bear the maximum professional uncertainty.

To understand the recovery trajectory of this sector, we will have to draw a comparison with China which is said to be the origin of the virus. Let us take a look at how Mercedes-Benz fared there, which is also incidentally their biggest market. Mercedes-Benz has had a consistent presence in the auto culture of China and is considered the most preferred luxury automobile brand for the past decade. If you look at the graph below, you’ll notice that the past two years have been particularly good for the company.

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Mercedes-Benz Vans set a new sales record once again in the FY2019, with an increase of 4% on the previous year’s figure resulting in a sale of 438,400 units. The Mercedes-Benz Cars division sold a total of 2,385,400 vehicles in 2019 and surpassed the record level of unit sales set in the previous year. However, during the pandemic phase in China, the luxury automobile sector in the region witnessed a drop of 14% in sales as compared to other countries across the globe.

Global v/s China Automobile Sales 


During the first quarter of 2020, a visible drop can be seen in automobile sales in all markets across the globe. However, as China entered its recovery phase from the pandemic, the region began to show an uptick in sales.

China’s Recovering Automotive Industry


If you refer to the graph above, the number of vehicles being sold in the China market began to pick up in the months of April and May. However, sales across the rest of the world continued to fall at an alarming rate in the same period.

To derive an estimated recovery graph of the automobile sectors in markets outside China, it is imperative to take a closer look at the number of COVID-19 cases in China in the past few months as compared to India and the rest of the world. The trajectory of these cases have a direct impact on how we can perceive the market health of the automobile industry across all markets.

China v/s India


Similar to the dip in the number of COVID-19 cases witnessed by China in February 2020, India is also expected to see a steady decline in the number of cases in the latter part of the year. This indicates that the market recovery phase of India will also have a similar graph as China.

Stemming from this, let us take a closer look at the current Indian economic scenario, specifically in the context of the luxury automotive industry. This sector has witnessed a dramatic drop in sales during the pandemic. For Mercedes-Benz, it has been the worst sales dip in the last 7 years.


The sales percentage in India in the past few years shows how important the Indian market is for Mercedes-Benz but now it looks dismal for not only Mercedes-Benz cars but other luxury vehicle companies as well. 


In a recent interview with Autocar Professional, Martin Schwenk, MD and CEO, Mercedes-Benz India, Pune, said, “We remain cautiously optimistic as we gradually ramp up our sales amidst the prevalent market challenges triggered by the pandemic. We are glad to witness a slow movement from previous months and we expect this trend to gather momentum. However, recovery will be slow and we currently expect customer sentiments to revive going forward, though the market conditions would continue to remain challenging. Our focus remains on generating demand and supporting the customer on their purchase decision with innovative financial solutions like WishBox 2.0.”

Even though some states in India are still under lockdown, it’s difficult for a company like Mercedes-Benz to sell their cars in the current scenario. Going by the recent sales figures and COVID-19 cases, the market situation is going to remain more or less stagnant for luxury vehicle companies like Mercedes-Benz for at least another couple of months. We draw this conclusion after looking at the trend in China a few months ago.

It was only after months of strict lockdown and safety measures that they were able to control the pandemic and the market slowly began to get back on track. Thus, a flipside to the situation is the sense of hope that the automobile sector can be derived from the China market’s recovery phase. 

Also Read: Data Science in Automotive Industry

Survival of the Quickest

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During the pre-pandemic phase, automobile companies in India looked at 10-15 year long vision goals. However, looking at the rapidly falling graph, it is critical for companies to think on their feet and concentrate on immediate solutions. To get cars back on the roads as soon as possible, solutions that are dynamic and with additional safety checks need to be added while balancing the rules and regulations.

Short term and long term ideas both have a very brief window of opportunity for automobile players. While self-driven cars may have a big market looking at the future, the dire need today is safety and features that will add to the new normal life experience. The players that act quickly and find a balance between short-term and long-term goals are the ones that will probably make it to the finish line.

If you are curious to learn about data analysis, the science behind finding patterns & calculations, check out IIIT-B & upGrad’s PG Diploma in Data Science which is created for working professionals and offers 10+ case studies & projects, practical hands-on workshops, mentorship with industry experts, 1-on-1 with industry mentors, 400+ hours of learning and job assistance with top firms.

Vishwesh graduated from BITS Pilani in Mechanical Engineering and since then has been working in the AI domain. He is currently working at Mercedes Benz R&D where he is responsible for camera functions in autonomous vehicles. You can reach him at
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Frequently Asked Questions (FAQs)

1Apart from the pandemic, what are the reasons for the downfall in the automobile industry?

The automobile industry was already facing challenges due to the slowing global economy and rising fuel prices, but now it is facing a bigger threat as the coronavirus pandemic disrupts production of all brands in the industry. The reasons for the downfall in car sales could be numerous. Some of the most likely are changes in the global economy, the increase in taxes, and the decline in consumer income. Another possibility is that new car buyers are no longer satisfied with their cars, and are opting to buy used ones instead because of the lower initial cost and/or lower operating costs.

2What are driverless cars?

A driverless car is a car that can drive itself. Instead of a driver, the car uses sensors and software to navigate roads, detect hazards, and stay within the speed limit. The technology has the potential to save thousands of lives, reduce driving time, and even reduce the cost of transportation. The latest technology in cars today includes features like cruise control, air conditioning, and automatic headlights. The same goes for many other features, like lane-keeping and emergency braking. The car industry is currently investing in and developing new technologies that are useful as well as pocket friendly. It sounds like a dream, but today we are one step closer to realizing that future.

3Why are luxury vehicles preferred more in China?

The automotive industry is one of the most lucrative industries in the world, and China is a major player in the global market. Over the last few decades, Chinese consumers have come to prefer luxury vehicles over basic transportation, and this has had a major impact on the industry. This is largely due to the growing affluence of the Chinese population and the increase in wealth that accompanied the country’s economic development. In China, luxury vehicles are more cost-effective than in other countries. This has helped to push up the production of luxury vehicles in the country.

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