We asked our resident automobile media expert, Rick McGuire, about what happened to auto market trends in 2020. With all the ways Covid-19 affected the economy, we weren’t surprised at his response, but we were astounded to see the effects at every level of the business. Obviously, most industries were affected at every level of their business, but exactly what that means is sometimes a little nebulous. Rick does a great job of laying it all out here:
Auto Market Trends
The arrival of Covid-19 in early March 2020 did more to accelerate auto market trends than any single event in memory. It had an impact on the auto industry that changed the way people shop, negotiate, purchase, and receive new and used cars, almost overnight, and most likely the car business forever. If you were a local Auto Dealership, or an Auto Group of Dealerships, and you were not already two steps into digital media, you would most likely be left behind, or worse yet, struggling to survive. Unemployment soared, millions were furloughed, and the economy quickly went into a recession.
A two–month shut down of automobile manufacturing plants in combination with forced closings of local dealerships wreaked havoc on new car inventory. In addition, suppliers for the parts to make the cars shutdown as well. Original Equipment Manufacturer (OEM) Production plants such as Ford and General Motors were converted to producers of Personal Protection Equipment (PPE) amid the shortage of masks, hospital gowns, face shields and other equipment being used in the healthcare field while hospitals battled rising Covid-19 cases. Auto consumer habits took a drastic turn. People had no choice but to stay home, shop, and communicate with dealerships online, or buy a car completely online from one of the digital car companies such as Carvana, CarMax, AutoTrader, Vroom, or Shift. OEM’s and Dealerships were offering all kinds of incentives to get people to buy new cars, but with families struggling, the used-car market soared.
Fast forward to January 2021. Production plants were closed two months last Summer but are back at full capacity now. The challenge now lies with dealers getting parts from suppliers who still have not caught up in places where Covid-19 is prevalent again and effecting operations, such as parts of Asia and Europe. With a vaccine for Covid-19 now being administered and a new President in office, some believe policy changes will benefit the auto industry on imports and tax regulations.
Even with inventory continuing to be limited and the Dealers removing all those great incentives that existed at the onset of COVID 19, automobile sales are performing well today, after plunging by 15% in 2020, according to CNBC. People are visiting car dealerships, however, not before doing all the research, customizing options, negotiating price, and doing it all…. online! Bottom line, online auto purchasing has arrived 3-5 years faster than expected, and has become a mainstay in the U.S.