In the face of an unrelenting pandemic that continues to ravage the world, it doesn’t take a fortune teller to predict that urban mobility will change dramatically.
Concerns about hygiene and social distance are at an all-time high, especially in India’s densely populated metropolises. The concept of shared mobility and public transportation has been especially tarnished by the second wave. Uber and Ola, for example, are fighting back, with the former offering 9,000 free online medical consultations to drivers and their families. Uber also announced a decision to vaccinate 1,50,000 of its drivers in the next six months. Even automobile brands like Maruti Suzuki and Tata Motors have extended their warranty and service packages for newly purchased vehicles, ensuring that car ownership does not feel like a burden during lockdowns.
The need for personal transportation is obviously greater than it has ever been. However, economic uncertainty, as it was last year, is providing the same need, especially at the entry level, preventing buyers from securing funds for such a large purchase. Given that social distancing and passenger health will remain associated for the near future, the rise in fuel costs is also acting as a significant deterrent for first-time car buyers, a customer segment that should logically grow in size. So, how do both consumers and automakers break the impasse?
The ideal thing for brands, especially entry-level carmakers like Maruti Suzuki and Hyundai, is to offer customers more innovative financing options. But it isn’t just carmakers who must change their ways. Used vehicle portals, taxi aggregators, and electric two-wheeler startups, among others, all have the potential to offer novel solutions. For car companies, this begins with appealing subscription models that have the same advantages as private car ownership without the associated overall costs.
Leasing is not a new phenomenon, even in India, where car ownership is seen as a sign of upward mobility. Since most car buyers find the idea of making a down payment too overwhelming in these financially unstable times, leasing allows them to simply rent to a car for a set period of time. Maruti Suzuki and Hyundai, two of India’s top-selling car brands, offer attractive leasing options, especially for entry-level models like the Grand i10 Nios and Santro. Maruti Suzuki has partnered with Orix Auto Infrastructure Services India for a subscription programme that is gaining traction in the Delhi NCR and Bengaluru areas. There’s no down payment, no registration, insurance, or annual maintenance fees; all you have to pay is a monthly sum that’s equal to or less than your EMI costs.
The used car market remains the most disorganised of the bunch, with proper certification and websites providing legitimate price estimates previously serving as roadblocks. According to Statists, the size of the used car market in India in 2020 was greater than the size of the new car market (as reported by Hindustan Times). The market, which has increased by 50% year over year, is expected to continue even after we ride out the second wave and reopen. Greater clarity and better funding options, on the other hand, may help the segment.
With cab aggregators like Uber and Ola taking strong steps to alleviate our collective fear of entering a cab, it’s only natural that they build thoroughly sanitized compartments, separating not only the driver and the rider, but also any other co-passengers who might be sharing the journey. When the medical system isn’t overburdened, the aggregator may also display the driver’s vaccine credentials, as well as the outcomes and dates of regularly administered Covid-19 studies. A simple temperature check won’t suffice.
The rise of Electric Scooter
Electric two-wheeler startups have the ideal opportunity to revolutionize urban freight mobility, with the e-commerce industry projected to expand exponentially. Electric scooters and cycles are well positioned to replace the traditional modes of mobility used to make deliveries in geofenced urban confines, where long distances are not a major concern.
According to P&S Intelligence, the new Bharat VI norms have increased the prices of petrol-powered two-wheelers by 7-15 percent, further incentivizing e-commerce brands to adopt more sustainable modes of transportation. Since low-cost scooters are also low-speed, swappable battery options would be favored over charging batteries.
The growth of the electric two-wheeler market would help more than just e-commerce. According to a PRNewswire survey, demand for e-scooters and motorcycles in Tier I, II, and III cities is growing at the fastest rate in Karnataka and Uttar Pradesh. Ather Energy, a local brand, has already started manufacturing scooters in its new 4,000-square-foot factory in Hosur.
Though India’s public transportation infrastructure varies by city, a survey conducted by The Energy and Research Institute (TERI) India found that 35% of respondents are likely to switch modes of transportation after Covid19. Although this is good news for an ailing automotive industry that is expected to rise in the single digits in the future, it could exacerbate traffic and pollution in most Tier I and II cities. Although we don’t know how widely non-motorized modes of transportation would be adopted, it’s critical that cyclists and walkers be considered for short distances, as they could be much more preferable to public transport.