The year 2020 has been one hell of an experience. COVID-19 has brought the world to a standstill. Many businesses around the world have been subjected to the wrath of the deadly pandemic. As the coronavirus pandemic hit India, forcing a lockdown across the country in order to prevent the spread of the disease, almost all industries were impacted heavily in terms of demand and/or supply. This impact was associated with the change in consumer behavior and decisions, owing to availability & resource constraints, as well as the economic uncertainty ahead.
Understanding the consequences of the pandemic and the behavior patterns may as well be the best way to discern how the industry will function post-lockdown. To understand, one must study and observe. To do so, a study was conducted to throw light on the differences in consumer behavior with respect to the automotive industry.
The objective was to study this impact on the automotive industry, by comparing the search trends before, and during the Lockdown Phase in India. This includes how it affected the different four-wheeler segments, i.e variations among sedans, SUVs, hatchbacks, etc. It also hoped to determine if there is any correlation in the trends for user interest as well as purchase intent across the different four-wheeler segments.
For the purpose of this study, the data analyzed was for a group of car models of different brands under each car sub-segment. The study used Google search trends as an indication of user interest. These translate to interest in both the new & used cars available for that brand & model.
Google Trends provides indexed search query volumes that are relative to the comparison terms in the defined date range. The study also monitored the purchase intent for used cars of the same brand & model. This was measured via the buyer leads, as per Cars24’s internal data. The March YOY Sales Trends were also considered to explain certain outliers and variations
The study focused on two different periods that showed differences in intent and behavior. The periods considered for this analysis were divided into Pre-Lockdown, i.e 20 Jan 2020- 18 Feb 2020 and During Lockdown, i.e 20 Mar 2020- 18 Apr 2020. The percentage change reflected in the report is a comparison of the lockdown period with the pre-lockdown period.
The findings of the study showed some interesting patterns. The newer car models showed a comparatively higher decline in search trends compared to the other models of the same sub-segment.
As per the search trends, the hatchback segment was the most impacted car category during the lockdown. Also, the subsegments of hatchbacks like entry-level hatchback, compact hatchback, and premium hatchback witnessed a similar plight. The higher decline in the premium hatchback segment was primarily due to Tata Altroz, a premium hatchback that was launched in early 2020.
Among the sedans, the compact sedan segment was the most impacted, the impact was lesser as the affordability of the sub-segments decreased. Similarly, compact SUVs had the most impact and witnessed a trend of lower impact in its sub-segments with a decrease in affordability or an increase in the size of the SUV.
To compare the search trends to the purchase interest trends, the search trends for the newer car models were eliminated as those models wouldn’t be available yet in the used car market.
The result of the study saw a decline in both interests as well as purchase intent across almost all four-wheeler sub-segments,. However, the decline is higher for the entry-level sub-segments under each car category, namely hatchback, sedan, and SUV, which may be primarily attributed to the saving mentality in entry-level buyers in times of economic uncertainty. This may also be a result of limited car financing options, or limited consideration of them owing to the uncertainty of the future income in these times. Interestingly, Indians will likely buy more used cars than new one’s post the lockdown according to a research study
The decline in interest as well purchase intent is not of comparable magnitude for each sub-segment, however, decreasing impact amongst sub-segments of each category follows a similar trend for interest and purchase intent (except for hatchbacks) where the impact decreased as the price and size of the sub-segment increased.
Also, across all sub-segments, the impact on search queries was lower than the impact of buyer offers with the exceptions including
Compact Sedans – The impact of search query was higher than the impact on buyer offers by 10 percentage points. The higher impact in the search queries can be primarily attributed to Hyundai Aura/Xcent that witnessed a 40 percent growth in March YOY sales.
Premium Hatchback – Saw a gap of 22 percentage points in the impact on search query in comparison to buyer offers.
As with most studies, this too comes with certain limitations. The search trends data corresponds to specific search terms and volumes may vary across different combinations of make & model. For eg, cars like Maruti Wagon R vs WagonR may add to the setback of the report. Another factor to keep in mind is that though for the different combinations of the same model, percentage change during lockdown vs pre-lockdown won’t vary much, the percentage change at the sub-segment level may change with respect to variation in the relative volume of search queries of the different make-model combinations.
The industry is constantly evolving and even though the pandemic has brought on newer trends, the findings from this study may as well represent short-term trends. The long-term buying behaviors may or may not be affected and may vary depending on the kind of clarity gained with external factors like experience, economic growth, future incomes, and time.
References Mar’20 vs Mar’19 YOY Sales Decline: Autopandits