Post COVID19 automotive industry in Mauritius

Everybody knows about the times we are living in, there is no need for me to dwell on it.

But what happens after that?

Being involved in the many facets of the automotive industry in Mauritius, I have tried to imagine work life after COVID19. COVID19 has not only been a sanitary and medical crisis, it is morphing into also becoming a lifestyle crisis, as let’s face it, we will not be able to go back to our old ways in the short to medium term.

One aspect of this lifestyle is the way, us Mauritians, transport ourselves. This I believe, is all about to change.

There are many aspects to this. Let me elaborate.

The initial thought is one of a grim future for all players in the car sales industry, whether new or second hand. In times of economic hardship, the first object to normally take a hit is the car. It is, after all, an issue of disposable income, with some job losses being forecasted and businesses becoming less profitable. Thus, they will drive the life of their fleet over and beyond their useful economic lives. Buying a shiny-new ride will not be on anybody’s mind, understandably so.

This is, however, half of the story. Disruptions to supply chains could deliver the final blow for a lot of us, especially so in the secondhand market. Suppliers and exporters of second-hand vehicles will not be willing to take on the same level of risk as the pre-COVID times. Expect payment terms and flexibility to be reduced, which will inevitably lead to huge cashflow pressures.

On the other hand, new car dealers are likely to face stock issues, as most car factories all over the world have shut their doors until lockdown measures in their respective countries are lifted. The backlog is likely to be huge and given Mauritius is a relatively small market, official dealers might struggle to get their orders through with minimum lead time.

To top it all off, exchange rates on the major import currencies are at the highest they have ever been, dragging prices up in a situation wherein fact the only way of making sales should be by running aggressive discounts? Oh, so difficult.

On the flip side, and being optimistic, there are a few ways in which demand may increase.

COVID-19 scares and possible government restrictions will deeply impact public transportation. It is clearly not the ideal time to be travelling in a packed bus, or on the metro, for your daily commute. Use of taxis should also reduce, as individuals will be apprehensive as to whether an infected person could have used the same taxi before them.

The sense of safety and security in owning your car will be greater than ever.

Furthermore, we are likely to witness some amazing deals from banks and finance houses on the most used type of car financing in Mauritius, the finance lease. As I write this blog, the Repo rate has been announced to be cut by 1 percentage point. Finance will be therefore cheaper and, since the sheer size of the finance market is to be reduced, banks and finance houses should, in principle, be more lenient on approving files. At least some good news!

We should also see new interest in certain hybrid vehicles, notably from corporations looking at slashing their fuel and maintenance bills. Whilst the barrel of crude oil is at an all-time low, petrol prices in Mauritius are stable and have not changed as Rs 4/L are being transferred to the COVID solidarity fund.

Whilst my analysis above is ‘internal’ to someone who works in the industry, what exactly does it mean for you?

For the end-user, i.e. you, reading this blog, it’s actually very beneficial! Whether you are going for your first car as a rejection of public transport or upgrading your existing car, better deals are around the corner. Difficult times increase competition (at least initially), and competition leads to more innovation.

Buying a car is not all about the price though, and you should in fact be careful of some dodgy dealers who will cut corners in response to cutting costs.

Contact us today to plan your next purchase, we would be happy to advise (we secretly love talking about cars). We sell peace of mind, and will not let you down.