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Frost & Sullivan: Digital Retailing And Vehicle Leasing To Propel Automotive Recovery Path

Frost & Sullivan: Digital Retailing And Vehicle Leasing To Propel Automotive Recovery Path

Frost & Sullivan: Digital Retailing And Vehicle Leasing To Propel Automotive Recovery Path

Frost & Sullivan’s recent analysis, COVID-19 Growth Impact Assessment for the Automotive Industry, 2020, presents the impact of the pandemic on the automotive sector under three scenarios—gradual containment, severe pandemic, and global emergency—resulting in outcomes ranging from steady recovery to recession. Under the severe pandemic scenario, original equipment manufacturers (OEMs) will try to capitalise on China’s early recovery from the pandemic, while overall economic relief measures in the U.S., Germany, France, and the U.K. will provide the necessary boost to the market in the post-recovery period.

“Major Asian vehicle manufacturing countries such as China, Japan, and South Korea, which accounted for 40 percent of global vehicle production in 2019, are on the recovery curve. The other two major automotive manufacturing powerhouses, the U.S. and Germany, are expected to resume production partially by mid-June,” said Vigneshwaran Ramesh, Automotive & Transportation Senior Research Analyst at Frost & Sullivan.

“Additionally, risk mitigation strategies such as offering financial flexibility and support to the entire ecosystem, including to dealers, suppliers and customers, will help OEMs of the world to revive.”

Vignesh added: “The impact of the pandemic on the automotive sector will unlock new opportunities for other mobility verticals such as electric vehicles (EV), vehicle leasing, and connectivity solutions. EV sales will experience a medium impact as China will revive fastest from the pandemic with manufacturing plants returning to normal. Further, new vehicle leasing for the corporate segment is expected to sustain moderate growth, owing to the demand for greater flexibility and short-term contracts, whereas OEMs will emphasise connectivity services to enhance their revenue stream.”

To tap into opportunities in this COVID-19 recovery era, consider the following growth prospects:

  • OEMs and dealers should focus on digital retailing and empower customers on their online journeys.
  • With the rise of eCommerce, light commercial vehicle (LCV) leasing and rental solutions are gaining traction, especially during the pandemic.
  • With increasing epidemic outbreaks (SARS, MERS, and COVID), OEMs can ramp up connectivity services, emphasising the need for health, wellness and wellbeing services within the vehicle.
  • Contactless and touchless business concepts will leverage aftermarket opportunities, helping on-demand service models gain further momentum.


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