Automobile Industry Change After the COVID 19. The impact of Covid-19 on various sectors of the economy is a topic of debate these days. As the virus wreaks havoc across the globe, the sales in almost all industries plunged heavily.
Until a vaccine or a cure is invented, the uncertainty about the future will persist. As we speak, the curve is flattening in many parts of the world, and even successful containment is achieved in several countries.
Hence, it is about time that we shift our focus on how the economies will rebound.
The automobile industry, in particular, suffered a lot during the lockdown. According to the CounterPoint Research, the sales in the automotive sector were halved in the first few months of 2020, compared to the sales last year.
The decline in sales was due to various reasons. Firstly, strict lockdown measures were being implemented in countries across the world, with stay-at-home policies.
As the uncertainty loomed largely, consumers restricted themselves to buy only essential items can cut down on all luxury purchases. This heavily impacted the sales of automobiles.
The world is still dealing with the coronavirus, and we should realize that it will be a slow recovery for the automobile sector. The automobile industry depends heavily on large-scale productions and the global supply chain.
As long as the economic activities around the world remain disturbed, the automobile sector will face sales compression.
On the road to recovery
In May, some improvement was seen in the sales of automobiles, with Germany reporting a 10% increase in sales as compared to April.
This means that we must look ahead to the changes that the automobile industry is going to witness. Below are a few changes that could result in this industry after the world heals from the pandemic.
Less use of public transport in cities
To implement social distancing norms, people will try to avoid public transportation for a long time. Recently, the outbreak in New York had a lot to do with its poor transport infrastructure.
It will hurt commercial vehicle sales. One can avoid public transport for the daily commute, but cannot avoid work. So, as an alternative, more people will opt to buy cheaper cars for their commute.
The rise in the use of two-wheelers
Covid-19 came as a blow to many. Several people got laid-off from their jobs, while others saw their salaries being cut. This translates into a prolonged recession and low consumer spending power.
Not everyone can manage to afford a personal car. Thus, to solve the commute issues, the working-class will start using two-wheelers like motorbikes.
It won’t be surprising if you find people coming to work on their bicycles. It is even cheaper to use and maintain than a motorbike.
The surge in demand for fuel-efficient and classic cars
In the post-COVID world, people will increasingly seek fuel-efficient cars that also come with an economical price tag. They will prefer vehicles that offer the best value for money in terms of longevity and mileage.
One option for people will be classic cars, as they are affordable and low-maintenance as compared to brand new cars.
In this regard, more people will opt for dealerships like Tom Hartley Jnr, and others that sell old classic cars, to get the most reliable car at the lowest possible price.
One more reason the demand for classic vehicles will increase is the product development delays due to limited finances and disrupted supply chain in the automotive industry.
One can expect the launching of several new models of cars to be delayed due to these issues.
More health and safety features to be integrated into new cars
If there is one thing that this pandemic has managed to change for better, it is people’s seriousness towards their health and hygiene.
I see that phenomenon coming into the cars of the future as well. Manufacturers would start adding features such as heart rate monitoring, fatigue monitoring, and an N95 certified system to purify the air in the car.
Self-cleaning surfaces feature using UV light may also be integrated into car designs. People will look into these options before they decide to buy them.
Digital retailing will scale up
Online shopping witnessed a huge surge during the pandemic. As, even before the pandemic, people preferred to shop online, we can expect to see this trend gaining popularity even after the virus is contained.
In fact, automobile manufacturers have been taking proactive steps by focusing on digital marketing to boost their revenues. Though the customer’s wish to have a test drive before buying the car is a hurdle in online sales, it will still surge as measures of social distancing are here to stay.
With the use of efficient communication tools such as zoom, and the upgrade of online product showcasing by the dealers, we can expect a better buying experience.
Measures will be adopted to reduce dependency on China
According to Counterpoint Research, 85% of the world’s supplies are dependent on China in one way or another. Therefore, pandemic and lockdown in China impacted logistics and supply chains all over the world.
Thus, we can assume that after the pandemic, automobile industries will shift to localized production instead of globalized production. They will also try to relocate hubs to places other than China.
The popularity of ride-hailing services
In April 2020, the demand for ride-hailing services Uber and Lyft in the USA fell by 80%. Second Measure, an analytics firm, observed that there was an 83% drop in Uber ride spending in March.
However, post the recovery phase, we can expect an increased demand for ride-hailing services under strict SOPs. The reason being that people who cannot afford a car will use these services to travel while also avoiding public transport in the process.
Delayed experimentations on autonomous vehicles
We were anxiously waiting for the autonomous cars, aka robocars to become a reality, didn’t we?
It seems like this wish of ours will be put on hold. The funds used for research and experimentations on autonomous cars will most probably be directed towards other areas that need immediate attention after the pandemic.
In the distant future, the demand for electronic vehicles will rise as more car brands shift towards electric models.
Cancelation of automotive shows around the world
One source of revenue generation for the automobile industry is the auto shows that take place around the globe.
Car lovers used to flock events like the Grand Prix, Formula one, Geneva motor show, and the New York International Auto Show, etc.
However, due to pandemic, these events have either been canceled or postponed indefinitely as large gatherings seem improbable in the near future.
However, one can expect these shows taking place online, with new cars being unveiled in front of you on computer screens.
One cannot deny that the push back automobile industry has seen is severe. Therefore, we should brace to see the automobile industry undergo a massive shift.
The changes outlined in this blog are a few of them, and the whole situation will become clear once the economic activity around the world resumes.