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How Has COVID-19 Affected the Car Industry?

How Has COVID-19 Affected the Car Industry?

While the full impact of COVID-19 won’t be known for many years, it’s fair to say every sector of the economy has been impacted, and the car industry is no different. From Nissan dealers in Northern Ireland, to manufacturers in England, every part of the car industry has seen disruption.

Despite dealerships beginning to reopen, and people starting to buy cars again, the months of no sales and no car production will have long term repercussions on the industry. Sorting out the logistical issues with social distancing within the dealerships has also come with it’s own expenses as well.

No production, no open sales rooms, no appetite amongst would-be buyers who were now focused on tightening their budgets through a period of unknown. A crescendo of industry specific and general issues around the pandemic arrived to create a damaging trickle-down effect across all facets of the auto sales world.

New and Used Car Sales

When lockdown was announced by the government back in March, no-one could have anticipated that businesses would remain closed for a further ten weeks. This unexpected closure had a devastating impact on the car industry. Many new cars bought following the release of January plates were unable to be delivered to customers– leading to a backlog at many dealerships across the country. This backlog, along with social distancing guidelines has meant that many dealerships are unable to attend to the number of potential new customers.

Not only that, but it’s estimated that some people who purchased a new car, either out-right or using hire purchase at the start of the year, faced furlough, and even redundancy. With one in four UK workers furloughed during the pandemic, and fears for more widespread job losses later in the year, it could be that people who were financially secure, are now unable to afford the new car they had previously ordered.

In fact, new car registrations fell by 44% in March. This drop is steeper than the recession of 2008 and is the worst since 1999. Second-hand car sales on the other hand, while seeing a dramatic down-turn in previous years, are faring slightly better than new car sales.  Following the easing of lockdown, sales of second-hand cars have been steadily on the rise, which is great for all the new learner drives that have turned seventeen in the past six months.

Car Usage

Perhaps more worryingly for the car industry as a whole is that the pandemic had many of us working from home. This lack of commute left cars sitting unused on driveways and roads for weeks on end. There was also an uptick in home delivery services for the weekly shop, suggesting that fewer people were even taking their cars out once a week to the local supermarket.

While this new found car-free way of life might be catastrophic for car manufacturers, the fact that many cars have been left underused for so long, could mean that over the next few months mechanics could see a major boost in business with customers looking for some major car maintenance. It’s also had an affect on the environment with less emissions and a positive impact on commuting with people spending less time in their cars or on public transport. Many people have gone from spending at least an hour a day in traffic to spending that time with their family.

Ultimately, like all businesses, the car industry must diversify and adapt to survive and changing the viewpoint to “how can we change for the future” can lead businesses into new era of business. All dealerships will have had to deal with the same issues in the coming months, and how they adapt and move forwards will help to prove which ones are the readiest for the future.

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by Brian Perry // Brian Perry is a contributor to Businessing Magazine.

Opinions expressed by contributors are their own.