The auto category normally ranks among the top five in adex and H2 (July to Dec) forms the bigger chunk of contributions, especially for the festive spends.
But this year’s overall spends has come down as many launches have been postponed and the spends on mainstream are also down to the threshold level from the peak operating level.
In spite of all this, brands told BestMediaInfo.com that the festive season is going to be a big opportunity for the auto industry as everyone is looking forward to it, given that the brands will be looking to recover from last year’s economic slowdown as well.
Shashi Sinha, CEO, IPG Mediabrands, said he can’t predict whether the festive season will be same as last year but adex is coming back. “I think it is far better than what was expected. We can witness an upswing in demand post August 15in the auto sector,” he said.
Despite the slowdown caused by the pandemic, this year’s festive season began on a positive note for Tata Motors.
Vivek Srivatsa, Head, Marketing, Passenger Vehicle Business Unit, Tata Motors, said the brand’s market share has already doubled after the first quarter of this financial year to 9.5%, as compared to the same period last year.
“We look forward to further improving this as well as our overall performance. During the festive season, we anticipate an increase in demand for our New Forever product range due to its unrivalled safety, stunning design and exhilarating driving performance. This festive season, we will focus more on safety along with the positivity of festivals as a theme to communicate with our customers,” he said.
The industry is witnessing relaxations in terms of movement and commercial activities after regulations were eased in unlock 3.0.
Additionally, festivals in general are auspicious occasions for customers and serve as an opportunity for them to make big-ticket purchases such as a car.
With easing of restrictions and the gradual resumption of economic activity, the company is anticipating that the sentiments will definitely be positive this festive season.
Vijay Kaul, Deputy General Manager, Marketing Communication, Yamaha India, said, “For our category, we have started seeing traction from June. Given the Covid-19 situation and everyone’s focus towards personal mobility due to pandemic concerns, we foresee an upward demand for new and used vehicles across markets. But having said that, this festival season will have an impact on sales compared to last year same period.”
Shashank Srivastava, Executive Director (Marketing and Sales), Maruti Suzuki, said the positive sentiments this year is entirely dependent on the Covid-19 situation and if everything remains the same, there will be a positive growth.
“In July, the wholesale and retail industry has now roughly come to the same level as last year. But the caveat is that last year also wasn’t such a great year for this industry; H1 of last year was very bad. This time, month on month, there has been a very good recovery. For wholesale in May the number was 36K, in June it was about 116K and in July it was about 198K. However, there seems to be a good bounce-back, better than expected, especially in rural areas and this gives hope for the future. August will go at similar levels as July and we have to be cautiously optimistic of this festive season. Car-buying is a big ticket and discretionary purchase that requires not only higher disposable income but also positive sentiments,” he added.
Sohinder Gill, CEO, Hero Electric, said the company is confident of bouncing back to healthy volumes in the ensuing festive season on the back of its recently launched schemes.
Speaking on behalf of the pre-owned car segment, Jatin Ahuja, MD and Founder, Big Boy Toyz (BBT), said the segment remains unaffected during the festive season. In fact, the customers who would otherwise go for brand new mid-segment cars end up buying pre-owned luxury cars due to the price variation.
He said the number of inquiries is on the rise for pre-owned cars, even from Tier 2 and 3 cities.
Impact on adex:
Sinha believes the overall spends are down but companies are definitely shifting to different mediums. And as they are keeping it down for now, festive spends will grow but not dramatically.
According to Srivastava, established brands with a large brand consideration would rationalise their expenditure and investments in ads this year.
However, he said there is a class of manufacturers such as Kia or MG that are entering the market in a big way. Such brands have new products to new launch and there will be a jump in spending from their end.
Kaul said the operating levels of brands will go down compared to last year and focus will be more on ROI mediums.
Various factors such as low sentiments, cut in bonus, cash flow crunch and closes-door festival celebration will impact sales to some degree. Thus, he said, there will be a significant shift from building top of the funnel to bottom of the funnel.
Brands increase spends in digital:
This year’s communication will be different from that of the previous year, considering customers are more reluctant to venture out due to the Covid threat and thus assurance of their safety and promoting Vocal for Local are the key communication elements, said Srivatsa.
For Tata Motors, the focus in these times is on digital for the festive season. While it continues to engage with other mediums as well, digital is what is leading the way for all.
The brand is also adopting a more regional approach for its local customers apart from regular campaigns, while enabling customers with easy finance schemes. Apart from digital outreach, it is also focusing on content creation while promoting safety.
Maruti Suzuki, which keeps 35% of all spends for digital, now plans to increase the investment for the festive season.
“There is a shift in media from traditional to digital. For us, the spending on digital is 35% against 15% a few years back. Plus, sports has a great affinity for auto buyers and since no live sports is happening, there is a shift in spends from there as well. Digital now will be across the funnel, TV will be on top of the funnel and print will be for conversion and at the bottom of funnel. For festive season, our digital spends will increase,” said Srivastava.
Kaul said, “We foresee TV and print to slow down. Print will get more tactical and smart size ads to align with ROI. TV will be more threshold than peak operating levels. Digital will be maintained or will increase given consumer addiction and high stickiness to the platform.”
Yamaha will focus more on digital and performance campaign will play a vital role and converting the intent audience for it. It is betting big on its new 125CC FI scooter series and curating some finance schemes in select markets to push scooters. Besides this, it will focus on the newly launched FZ25.
Cashing more on the digital transformation, it recently started online sales of its two wheelers in select cities and very soon will expand to across India.
The role of technology and internet during the lockdown has driven a shift in customer behaviour towards buying a car.
“Since, we have already seen inquiries coming from our digital mode, including the website and social media, we find this mode to be steady and on an upward trajectory, driving a large number of millennials toward our segment,” said Ahuja.
However, he said that while companies will reconsider their ad expenditure budget, the positive customer sentiment will keep them from not spending at all. Keeping the growing demand in mind, brands are re-allocating their budget to areas with higher value proposition. The money spent across print, television and radio might differ from previous years as customers are not willing to leave their homes due to the Covid-19 scare.
BBT is also now launching a mobile application so that the customers will practically be able to buy a car without having to leave their homes and is eyeing on increased inquiries and sales online and making the most of this opportunity.
Investment in IPL:
Sinha said IPL is going to be a big help to revive the adex, given that it is a big-ticket property.
“I think mainstream companies like auto will definitely try to advertise more in this because they incurred good sales,” he said.
Kaul believes that nothing can be bigger than IPL at any given point. Also, with no sporting moment for the last few months, this will surely give a good reason for the audience to hook to appointment viewing on larger screens.
“Our TG has strong affinity towards cricket. So, this is a big opportunity but it depends how brands use this platform smartly given the clutter since the entry cost is big and there are many options. It is imperative to have a holistic approach for IPL to drive business outcome. But, on the other hand, other networks will continue to deliver like every year except few big match days,” he said.
Maruti Suzuki had earlier planned to invest in IPL when it had its two launches planned around March. Now since the launches have already happened, Srivastava said it will be more interesting for brands that have launches planned or companies looking brands to build more awareness to invest in this opportunity.