The auto industry survived the pandemic. That is what the future holds in store
Bustling factories closed, workers worked from home, glitzy new vehicles parked in empty parking lots.
Now it’s as usual.
“In April we expected a complete collapse in the auto business,” Rory Carroll, editor-in-chief of Jalopnik, told ABC News. “That really wasn’t the case. I’m very surprised at the demand for cars.”
Analysts such as Jeff Schuster, president of LMC Automotive’s Americas and Global Vehicle Forecasts division, are forecasting US vehicle sales of 14.5 million units in 2020 compared to 17 million a year earlier, a decline of 15%. But the damage could have been much worse.
“The industry and consumers have been resilient,” Schuster told ABC News. “Society has adapted to the pandemic much faster than expected. For the most part, the industry has been in full swing since the shutdowns.”
The unexpected sales recovery was one of the greatest automotive stories this year. Automakers reported 40% monthly declines in the spring, sparking speculation about who would survive – or succumb to the pandemic. Then the tide changed. Consumers grabbed available inventory and spent their money not on exotic vacations but on this trip that they had postponed for months or years.
“The stock market has made some consumers wealthier and this summer was the perfect time to get a new vehicle,” Tyson Jominy, vice president of data and analytics for JD Power, told ABC News. “We still have a lot of catching up to do that we have to work through.”
What’s coming in 2021? There are a few trends worth watching.
Bigger is better
The craze for large trucks and full-size SUVs is likely to accelerate in the coming months as consumers grapple with a post-pandemic world.
“A truck makes people feel safer – they’re sturdy, big, and can drive off-road,” Karl Brauer, senior analyst at iSeeCars.com, told ABC News.
Even premium trucks in the $ 50,000 to $ 80,000 range are selling quickly, stressed Brauer.
Carroll expects more Americans to take up off-road adventures, which will mean big sales for the Ford Bronco, Jeep Wrangler, Land Rover Defender, and other 4X4’s.
“There were some people who got the ‘COVID maniacs’ and dreamed of outdoor recreation,” he said. “The Bronco is the right product at the right time. People attract cars that can be an escape pod in times of uncertainty.”
Trucks and SUVs may break records, but Jominy has picked up more winners this year: high-entry-price sports cars and opulent British brands. The “premium sports car” and “super premium” segments rose by 9% and 10%, respectively, according to Jominy. Enthusiasts are crying out for Porsche’s enviable 911 sports car and redesigned mid-engined Corvette, he said. The heavenly new Continental GT and lavish Rolls-Royce Cullinan ute are behind the surge in sales at these two loyal followers, which are on their way to gaining 60% and 20% respectively.
Brauer said muscle cars like the Challenger, Camaro, and Mustang are seeing newfound interest. “They have all increased in value in the used car market,” he said, adding that the reality of the pandemic has changed consumer attitudes towards “frivolous” toys.
“2020 was the year of no fun,” he said. “People buy their dream cars.”
2021 will be electric
Electric vehicles will still be a priority for automakers, with nearly 100 models available in 2021. But the more pressing question is: will consumers want them in the next 12 months?
“It’s a wait and see,” said Carroll. “Electric vehicles don’t sell, consumers don’t beg for them. Is this massive investment in electric vehicles paying off? Especially without regulatory pressure? No. It’s the biggest bet I’ve ever seen in the auto industry. “
Electric vehicles make up 1.7% of the US vehicle market. Traditional automakers hoping to capture Tesla’s stronghold have stepped up their efforts to compete in the emerging market. General Motors announced in November that it would spend $ 27 billion on battery-powered and autonomous vehicles and launch 30 new electric vehicles globally by 2025, selling in four years. Ford began delivering its all-electric Mustang Mach-E SUV to customers this month, which has already exceeded sales expectations.
Schuster predicts that electric vehicle sales will steadily increase as automakers produce vehicles that Americans actually drive: pickup trucks and crossover SUVs, not compact sedans and hatchbacks.
“Electric vehicle sales in the US in October were slightly better than the industry as a whole,” he said.
Jonathan Goodman, chief operating officer at Polestar, the Swedish electric performance brand owned by Volvo, said that once they get behind the wheel, consumers’ attitudes towards these quiet vehicles like his company’s minimalist, avant-garde Polestar 2 will change to sit.
“I have a feeling that there is more diversity in the market, the evolution of charging infrastructure and the next wave of electric vehicle technology will drive a lot more people to go electric in the years to come,” he told ABC News.
Car buying is shifting online
The (sometimes uncomfortable?) Experience of buying a car from a dealer may never be the same again. More and more consumers are buying their vehicles online with little or no help from real salespeople. The pandemic forced traders to be creative, such as giving interested buyers 24-hour auto loans.
“COVID really accelerated these digital buying patterns,” Chris Sutton, vice president of automotive retail at JD Power, told ABC News. “The consumers who the [online] Process made good experience. “
Sutton said 50% of car buyers were selected from online inventory in April, up from 31% in January. Twenty percent received loan approval online in April, compared to 9% in January.
Brauer expects online sales to multiply and possibly even replace tedious personal bargaining and bargaining.
“It will continue like this. Consumers will no longer want to go to dealers,” he said.
Schuster agreed. “You can coordinate purchasing without leaving your home. That is attractive to many people. Consumers have become more adept in the purchasing process in recent years.”
For example, Nissan recently launched Nissan @ Home, an online shopping program that gives customers “the ability to buy a vehicle on their terms,” said Dan Mohnke, vice president of Nissan eCommerce.
“A customer can plan and take a test drive, manage the purchase process, receive delivery and complete service requests from a computer, tablet or mobile phone,” says the Japanese automaker.
The changes that gripped the industry in 2020 will continue, said Schuster. Plus, the coronavirus vaccines, additional inventory, and new administration are likely to continue to benefit the industry next year, minus some bumps along the way, he noted.
“I’m looking for an industry that continues to recover in 2021,” he said. “The overall market should grow by 8% in 2021 compared to 2020.”