How Coronavirus COVID-19 is Impacting the Automotive Industry

May 1, 2020News

With consumers across America staying in their homes, the automotive market has become a scarce, uncertain place. The number of new cases are growing in the US, but the pace of increase has slowed down even as the rate of testing has increased, which is extremely positive. Furthermore, with many auto dealers keeping their doors open, sales advisors are on hand to support their customers, whilst putting up a fair fight against a struggling market.

What does COVID-19 mean for car sales?

In March, the US witnessed a 37.9% year-on-year decline in new car sales, with dealers essentially losing half a month’s sales due to the Stay Home government initiative.

Meanwhile, it’s not just new car sales that have been affected. Certified pre-owned vehicle sales are down by 9% in comparison to the same month last year. The Used Vehicle Value Index, which measures used vehicle prices across a database of over 5 million vehicles, shows a total value decrease of 9.8%. Midsize cars were most affected, whilst unsurprisingly, luxury cars were least affected.

Cox Automotive’s Senior Data Analyst, Michell Krebs commented “The three things that most determine car sales are credit, employment and consumer confidence.” She added: “All are working against car sales.”

How are manufacturers being impacted?

Of course, the challenges brought on by COVID-19 inevitably travel up the chain to the manufacturers. Many OEMs have paused production, due to being unable to implement social distancing, both in the factories and HeadQuarters.

A large number of plants ceased production throughout March and April, including Ford, General Motors, Fiat Chrysler Automobiles. A further 23 manufacturers around the world have been affected, with some closing completely and others halting production for just a select number of plants. Ford recently announced plans to start ventilator production from the 20th April and hope to open for vehicle production as soon as May 4; an extremely positive step for the industry.

What help is out there for dealerships and consumers?

A number of automakers, including Ford and Hyundai, announced mid March that its US customers will have the option of deferring payment for 90 days, in a bid to support both consumers and dealers with the sale of new vehicles. General Motors and Toyota are also offering payment relief and are doing so on a case-by-case basis. 

How can dealers help themselves?

The demand for new vehicles, services and repairs isn’t going away, and it’s likely that the industry will witness a boom once the Stay Home initiative has been lifted. This is the perfect time to strategize for the coming months, so ensure your online presence is strong and explore the world of online vehicle sales. Those stuck at home are turning to the internet more to buy goods online, plan a future vacation or research their next car. Build a digital marketing strategy that ensures you stay in front of your customers, offering words of empathy, hope and special deals.

If you choose to open, abide by government rules. Social distancing is an absolute must to keep the nation and industry safe. And don’t forget; the government has pledged support for the economy and automotive industry, so rest assured that support will be available during this global pandemic and unprecedented national emergency.

 

Sources:

https://www.coxautoinc.com/learning-center/cox-automotive-industry-update-report-april-2020/