Experts highlight judicious inventory management key to industry growth
Concerns about inventory build-up once the festive season ends continues to be a niggling worry for industry stakeholder.
Even as the two-wheeler segment is seeing an uptick amidst the just-begun festive season, day two of the Autocar Professional’s Two-Wheeler Virtual Conclave focussed on the challenges of managing business amidst the new normal in play. While the festive boost may help maintain sales momentum, the question is how does this translate into long-term growth? Cautious optimism is the buzzword here.
Taking forward the discussion of ‘Business during 2020 and The Road Ahead’, a panel of top industry experts brought in a 360-degree perspective on the overall gameplan. The speakers included:
- YS Guleria, Director, Honda Motorcycle& Scooter India
- Aniruddha Haldar, VP (Marketing) – scooters, commuter motorcycles & corporate brand, TVS Motor Co
- K Srinivas, Founder & MD, Wheels EMI
- Vinkesh Gulati, President, FADA
The discussion was moderated by auto industry veteran, Arun Malhotra.
HMSI’s YS Guleria: ‘Trustworthy, responsive and problem-solving approach key solution to tackle inventory challenges’
YS Guleria, Director, Honda Motorcycle & Scooter India, set the wheels of the discussion moving with his opening observation that, “The festive season has lent a positive outlook to the industry; customers are coming in and footfalls have increased.” But will that suffice?
Guleria punned on the recent buzzwords of digitisation and says, “We prefer to describe the festive season as 4D: Durga Puja, Dussehra, Dhanteras and Diwali. Things are looking up for the industry. When compared to the last year sale of Durga Puja and Dussehra we are quite positive this year. Even though it is in the low single-digit positive and we should be looking for more in the remaining two festive. Also, the financials have taken a step forward to support the auto industry.”
However, that said, concerns about inventory build-up once the festive season ends continue to be a niggling worry. Guleria yet again used a popular topic of discussion in news channels and brought in an automotive spin to it. He said that the OEMs and dealers must focus on a new TRP - Trustworthy, Responsive and Problem-solving approach, to be more successful in the new normal. According to him, “It is time for the manufacturers and dealers to focus on the inventory levels. The TRP approach is key to tackle it. Also, the customers now have a better knowledge of the vehicle. Both the OEMs and dealers should focus on taking the TRP to the end person who represents the brand. How trustworthy, responsive about customer query and problem-solving they are, matters. And, the brand which has the highest TRP will win the game.”
TVS Motor’s Aniruddha Haldar: ‘The point-to-sale experience needs to be adapt to changes.’
TVS Motor’s VP (Marketing) – scooters, commuter motorcycles & corporate brand, Airuddha Haldar has a slightly different take on the inventory issue. He feels the pandemic has also made buyers more value-conscious and they come to the store equipped with significant research.
“Accelerating the knowledge graph and the point-to-sale experience needs to be adapted. The two-wheeler industry needs to drive on the online experience for the consumers and as the mobile penetration increases in the hinterland, how evolved we are in its handling is going to be a critical differentiator. I expect replacement buyers to come back over the long-term and foresee growth with significant digital overhang,” Haldar added.
He emphasised on the need to take into account the entire value chain and is optimistic that “replacement buyers will come back over the long-term. I expect a shift to urban and foresee broad-based growth over long-term with significant digital overhang.”
He added that the two-wheeler industry needs to drive a frictionless online experience for consumers.
Wheels EMI’s K Srinivas: ‘The first major change in the last four months is the absolute shortage of used vehicles.’
The role of the replacement buyer in the entire eco-system was well borne out when K Srinivas, founder and MD, Wheels EMI said “The first major change in the last four months is the absolute shortage of used vehicles. People are not selling their vehicles, replacement demand has not come up hence the prices have gone up. BS IV- BS VI transition also added to the price hike. I see a huge demand for financing as a result of all these factors.”
Further elaborating on the growing role of financing in automotive buys, Srinivas explained, "But, if you take the time span of two years, the price change is around 40%. So, financing has become more important now. On one hand, the financing has a huge demand, but on the other hand, they are not that much aggressive. There is a growing demand and the financing segment needs to be aggressive. Many manufacturers are getting into organised two-wheeler sale outlets and we expect vehicle lease to gain importance over the next two years."
FADA’s Vinkesh Gulati: ‘Push for personal mobility has revved up sales but they yet to reach pre-Covid levels.’
Taking forward the point that he made on day one of Two-wheeler conclave, Vinkesh Gulati, President, FADA sounded a note of caution to OEMs and dealers on the inventory as even a slight dampness would affect them, “Push for personal mobility and pent-up demand have boosted sales but they are yet to reach pre-Covid levels. I see aggressive financing lately and hope this adds momentum to Diwali sales. We need to be conservative and cautious on the inventory front.”
Elaborating on the challenging times for two-wheeler sales and how the rural market has been a key driver thus far, Vinkesh highlighted the silver lining amidst the clouds of concern. “Covid has ‘benefited’ the OEM- dealer relationship, which has hugely improved. Regular discussions are underway and there is greater support from OEMs now. I am thankful to OEMs for handholding dealers – no one could have thought this would have happened,” he stated.
The discussion ended on a positive note with all stakeholders highlighting the need to adapt to the changing norms of the automotive industry.
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