Did COVID-19 disrupt the automotive industry? How the pandemic changed people's behavior in terms of mobility and vehicle purchasing

Notable challenges lie ahead for all industries, and the automotive one makes no exception.

A freeze in mobility and buying was the first visible sign of the global pandemic. But now that economies are opening again worldwide, should we expect to see any changes in people's behavior regarding the two trends?

And also, we cannot stop but wonder, will the automotive industry restart at its full power? When repairing a vehicle, getting the engine to work is just the first step. Making the other parts function as well is equally important in getting the vehicle back on the road. It's the best analogy we can use to describe the current situation of the global automotive sector.

Organizations up and down the value chain are experiencing the pressure of supply and demand interruption and measures governments worldwide adopted to stop the virus's spread. Even if some countries are laying the groundwork to reopen, vital questions remain around the steps automotive brands have to make to face the new realities of a disrupted industry.

The pandemic hit multiple areas, but the mobility and automotive ones seem to be the most affected because as people try to handle severe health and financial issues, mobility remains restricted in most countries. Also, most businesses are closed, and the retail sector focuses mainly online, making it challenging for dealerships to convince clients to buy because they cannot see the items they purchase in person. Mobility behavior also changed staggeringly as many people work remotely and stay away from public transportation trying to prevent virus exposure.

With some economies reopened, car dealers and automakers try to determine how long the recovery will take and the new automotive environment. We see signs of recovery in all areas worldwide. This article overviews the most important automotive markets globally, focusing on the USA to understand how mobility and behavior around buying and using cars are evolving.

Vehicle purchasing trends

Sadly, but not surprisingly, the vehicle purchase intent is under 14% below pre-pandemic levels. But the global automotive market experiences geographical differences, as people from particular areas have responded differently to the pandemic.

  • Except for people from China, everyone else wants to spend less on purchasing and caring for a car than last year's trends. But planned spending on cars improved worldwide in contrast with pre-COVID-19 times because people consider traveling in their personal cars safer than using public transport.

  • New and used car purchase intent increased by 10% since the beginning of the pandemic, the value representing the higher value since the virus outbreak. Purchase intent grew worldwide, but the increase is more significant in communities with higher income.

  • Buyers from the USA, UK, and Japan are less worried about ADAS and EV/PHEV features (while Chinese purchasers are looking for quite the opposite).

  • Higher number of buyers in the USA are looking for discounts than in the past, while Asia and Europe recorded a decrease in this trend.

  • Digital became essential along the entire buying funnel, as more people prefer conducting car purchasing outside the dealership. Purchasers prefer contactless services and are willing to pay extra if the dealer offers them this option.

What method do buyers prefer when it comes to re-engaging with the automotive sector?

The automotive industry has to assume demand will return to previous levels. Still, manufacturers need to predict the public's expectations regarding the method they prefer to use to engage with the market. Experiencing various levels of home quarantine and lockdown, some got used to using digital tools to purchase a diverse set of products and services, from food and clothes to medical services. Naturally, the automotive market expects this behavior to continue even after the pandemic ends, and people to continue to use the Internet even for large purchases like a car. In fact, during the time economies worldwide shut down, the dealerships and automakers that manage to use Internet-based solutions to reach their public could stand out and relevant on the market.

The journey, however, isn't free of bumps, as one study suggests that older people aren't looking to buy their next car online because the process doesn't allow them to test it. Therefore, retailers must deploy digital tools that address the audience's pain points.

How do people view mobility?

The pandemic also changed the way people view mobility. The need to maintain a social distance from other people led many people to conclude that vehicle ownership is essential (74% of consumers in the USA, 69% in the UK, 79% in France, and 63% in South Korea). Vehicle owners are also more confident in the way they care and maintain hygiene in their cars than public transportation. As 56% of Americans plan to limit their use of public transport and more are buying vehicles to respect social distancing measures, the number of insurance policies is also rising. But as everyone is more financially conscious than before, they often consult online directories like the Insuranks.com's car insurance shopping guide because they want to make sure they get the best coverage for their particular needs. Before purchasing a car, they use online resources to estimate how much the insurance policy costs, what it covers, and if the insurance agency is licensed.

People are likely to return to their previous habits like hiking, walking, and micro-mobility in a post-pandemic era. The shift from public transport to personal vehicles will be more clearly visible worldwide as people would prefer to travel together with someone they know than accompanied by strangers. A third of them consider the value of full access to a private car more important than they did before the pandemic. But for the automotive industry, this preference may not necessarily mean a boost in revenue because most drivers would downgrade to a more affordable vehicle line due to financial reasons.

The conclusion

It's becoming quite clear that the automotive industry players need to identify the market's needs and plan actions that allow them to deal with present issues and get the global automotive engine starting again.