What does the longer term hold for the automotive industry ?

Jun 09 , 2021

Dodo Shoppers

What does the longer term hold for the automotive industry ?

The automotive industry has been one among the toughest hit by the pandemic. Cars have lain dormant in driveways for months as a results of lockdowns across the planet , and economic shutdowns hit supply chains, with reports of some manufacturers even resorting to flying parts across the planet in suitcases.

But as consumers emerge into a ‘new normal’, what does this mean for the automotive industry? What are the trends to observe – both within the short and therefore the long-term?

In this article, our auto experts across the united kingdom , Thailand and Indonesia, Bianca Abulafia, Digo Alanda and Kajornkiat Kiatsunthorn explore 3 key areas:

* Changing purchase patterns.
* the longer term of electrical .
* The digital path to get .

-Changing purchase patterns

Short term

In the short-term, we expect to ascertain growth within the second user and luxury end of the market especially.
The pandemic has resulted during a renewed specialise in the car as hygiene concerns have come to the fore. This has resulted in people who have previously shunned car ownership like urbanites and children re-evaluating their stance. In the US, a cars.com study showed that 20% of individuals who don’t own a car are thinking of shopping for one, and this figure rises once we hone in on children . A recent global Capgemini survey of under 35s shows that 45% are considering buying a car and this is often highest in countries that are hardest hit by the pandemic.
We have talked about the emergence of “revenge buying” in other sectors, and that we expect this to manifest within the automotive industry within the second-hand market as a cheaper option for younger buyers. “Revenge buying” is additionally relevant at the posh end of the market. As a results of having the ability to save lots of , the budget of some affluent buyers has increased, meaning that they’re now ready to trade up. Volvo’s Chief Executive notes this went on in China, where the corporate has seen a 20% increase in sales compared to 2019. “People are really uninterested in sitting reception locked and that they actually need to travel out and buy.” Outside of this, we expect sales to suffer, with existing car owners adjourning purchases within the midst of economic instability.

Looking at the long-term impact, it'll take a while until car sales return to pre-COVID levels. An ING report, looks back to the 2008 financial crisis for indicators, highlighting that it took 11 months for vehicle sales to recover during this instance. But if we consider that this pandemic has brought lifestyle and behavioural changes, additionally to economic instability, it’s much harder to predict.
In the long-term, will we see a permanent shift towards home working that encourages people to maneuver out of urban centres, necessitating the necessity for a car? Will increased domestic tourism end in a desire to possess access to a car for extended trips – introduction a chance for shared ownership of vehicles? The automotive industry doesn’t exist during a vacuum and it'll be vital for auto manufacturers to watch the broad trends to know where they will play a task .

-The digital path to get


Car manufacturers have had to rapidly adapt to a replacement sales environment, as they seek to suits social distancing measures and meet the requirements of the more cautious shopper. Capgemini’s COVID-19 and therefore the Automotive Consumer report indicates that 46% of consumers want to minimise visits to dealerships to match offers, instead preferring to try to to this online. We’ve seen many innovative responses to the present . In China, as an example , Volkswagen has trained 70,000 employees to speak with customers online, even livestreaming from dealerships via TikTok and Kuaishou.

In the long-term, we only expect this to continue. The impact of coronavirus has acted as a catalyst for the digital transformation of the many industries, sparking changes in consumer behaviour that were thought to require years. Automotive are going to be no exception as people seek the convenience that they’re experiencing in their interactions with other brands and industries. this may be particularly important within the research phase but we believe it'll also reach online purchase and residential delivery, with a recent Think with Google survey finding that 18% of individuals would buy a vehicle sooner if there was a web purchase option. the will for convenience could also impact the after sales experience with servicing being administered reception .

-The way forward for electric


In the immediate term, economic instability, plus the appeal of lower oil prices, could dissuade car buyers from making the move to electric. However, we don’t expect this to last long, with any savings from oil prices likely to be temporary, and not significant enough within the long-term to fundamentally influence decisions.

One area to observe is other electric transportation options beyond the car – like scooters and bikes. As people avoid conveyance and seek other routes round the city, governments are having to radically rethink how they will support this. the united kingdom has announced that improvements in cycling infrastructure and trials to permit rented e-scooters on the streets are fast-tracked, which could encourage people to start out exploring electric bikes and scooters as alternative options for commuting. Increased familiarity with electric powered means of transportation could end in a greater adoption of motorbikes or cars.

When we check out the long-term view, we don’t expect the shift towards electric to be significantly impacted. From the canals in Venice being clear enough to ascertain the fish to Nasa satellite images showing the dramatic drop into pollution levels in China, the upsides of the lockdown on the environment are well documented – with many consumers acknowledging benefits of this on their quality of life.
This could influence purchase behaviours within the long run , with consumers eager to do their bit for the environment at the purpose at which economic conditions become more favourable for them to try to to so. But more significantly, changing consumer sentiment towards the environment is additionally likely to extend pressure on governments to bolster schemes to incentivise electric ownership, making them a more financially attractive proposition to car buyers. In fact, this is often something that has already happened in China within the wake of the pandemic, with some cities announcing subsidies for brand spanking new electric vehicles, et al. upping their investment within the associated infrastructure.

We also shouldn’t forget the status symbol factor, particularly within the luxury segment. Our research has shown that owning an electrical car represents a replacement thanks to demonstrate wealth and standing , and that we don’t see this diminishing any time soon.