Blogs

The US Car Industry After COVID-19: What’s in Store?

JoeWirija

Whichever way you look at it, the global COVID-19 pandemic has changed our lives and our world, at least in the short term. Many supposed that the pandemic would spell the doom of many industries and regions. Hawaii, for example, has been economically sucker-punched after losing its crucial tourism trade during the year.

One industry that continues to be full of surprises, however, is the automotive industry, which continues to show strength despite recent history’s most deadly pandemic continuing to ravage the health of the entire world. In today’s piece, CarBevy, an exciting automotive startup, examined the factors behind this, and what the future might have in store for one of America’s most important industries.

 

US Car Sales Remain Strong

Given the extent and seriousness of the current COVID situation in the US and around the world, you might expect with good reason that car sales in the US would fall off a cliff. In fact, while sales numbers year-to-date are down from 2019, it is by no means a large margin. Figures published on goodcarbadcar.net indicate that the 2020 year-to-date sales number around 10.4 million. At the same point in 2019, they were sitting at 12.7 million.

In an ordinary year, this may be cause for concern, but given that there’s a virus ripping through global populations causing travel bans, emergency lockdowns, and deteriorating international relationships, it’s cause for some celebration. Among the brands listed in the goodcarbadcar.net numbers, many have been celebrating better monthly results between August and September. Tesla, however, has more reason to celebrate since its YTD numbers are sitting 65 percent higher than in 2019 — unique among all the listed brands in these numbers. Ford remains top of the pile overall in sales, selling 1.4 million units to date, but Toyota and Chevrolet are in close second and third respectively.

 

How Might this Crisis Create Many More New-Car Buyers

Given the extent and seriousness of the current COVID situation in the US and around the world, you might expect with good reason that car sales in the US would fall off a cliff. In fact, while sales numbers year-to-date are down from 2019, it is by no means a large margin. Figures published on goodcarbadcar.net indicate that the 2020 year-to-date sales number around 10.4 million. At the same point in 2019, they were sitting at 12.7 million.

In an ordinary year, this may be cause for concern, but given that there’s a virus ripping through global populations causing travel bans, emergency lockdowns, and deteriorating international relationships, it’s cause for some celebration. Among the brands listed in the goodcarbadcar.net numbers, many have been celebrating better monthly results between August and September. Tesla, however, has more reason to celebrate since its YTD numbers are sitting 65 percent higher than in 2019 — unique among all the listed brands in these numbers. Ford remains top of the pile overall in sales, selling 1.4 million units to date, but Toyota and Chevrolet are in close second and third respectively.

When times are tough, it seems logical that more people would turn to cheaper used cars when looking for replacements. Once again, the wider effects of COVID-19 continue to disrupt common logic and prove opposites to be true. For several reasons, the pandemic is actually creating an entirely new generation of enthusiastic new-car buyers.

The main reason is hygiene. Given reports that the novel coronavirus (SARS-CoV-2) can survive on various surfaces for much longer than people suppose, we are all of us being increasingly careful. The National Institutes of Health published information on March 17, 2020, detailing how the virus remains active and detectable on different surfaces:

• l Aerosols – up to 3 hours

• l Copper – up to 4 hours

• l Cardboard – up to 24 hours

• l Plastic and stainless steel – up to 2-3 days

Purchasing a new car from a well-established and reputable dealership removes the threat of previous owners’ various contaminants building up on fabric and surfaces. It also means we don’t have to rely on private sellers and rideshare company drivers from Uber, Lyft, and others to follow CDC guidelines to the letter. Uber was estimated to lose 28.3% of its user business in 2020, and Lyft 32.3%. Just one skipped step could mean dangerous contamination. For many drivers, it seems that remaining in control of the vehicle from new is the only option.

Another factor behind increasing new-car buyers is financial incentives. Automakers like GM, Ford, and Fiat Chrysler were offering incredible deals on car loans, such as zero percent interest for up to 84 months on all vehicles. While such extreme deals will undoubtedly start to wane, they have helped to spur the strength of new car sales.

 

Myth: Millennials Are the Least Likely Adult Group to Buy Cars

While the media spins a tale of environmentalist anti-business millennials spurning modernity and shunning any kind of corporate product, reality tells a different story. CDK Global, who is deeply involved in supporting vehicle dealerships with technology solutions, published a report back in 2015 which stated the remarkable statistic that 80 percent of millennials (defined as people born between 1980 and 2000) plan to purchase a vehicle in the next five years. This brings us neatly to 2020, and even in the troubled times of a global pandemic, it seems that millennials are taking advantage of the situation. A piece in The Atlantic from August 17, 2020, shows an interview in which Millennial Robinson Meyer discusses his “COVID car.” According to Meyer, cars are the “ultimate form of [personal protective equipment]….”

 

Even if we try to explain this away with the extreme situation of COVID-19, there’s further evidence to support CDK’s findings. A piece on wardsauto.com from November 2019 explained how Millennials “have transitioned from a group originally deemed as uninterested in vehicle ownership to a generation that’s expected to account for 40% of all new-vehicle purchases [in 2020].”

 

Going Forward: Reasons to Remain Optimistic

Whatever the state of the pandemic, it seems that the market for new cars has a lot of reason to be (cautiously) optimistic for the future. We add the ‘cautiously’ because a widespread second wave could do more harm than the first, with stricter lockdowns and other prohibitive measures.

So far, we have mentioned pleasing sales figures, a refreshed desire for new cars, and the upcoming millennial “Gen-Y” generation who are, it seems, avid fans of new cars. One final reason for optimism could be the growing power of the shift to all-electric cars. 2021 and 2022 are promising some very exciting additions to the EV world, including former gas guzzlers in all-new electric form like the Hummer EV (unveiling in October 2020, ready for sale in 2022).

Above we mentioned how Tesla is the only brand to show overall growth in sales in 2019, and that’s a reflection of a growing desire for electric cars in the marketplace. Given how new cars are, finding pre-owned ones is far less likely than conventional models, and so the coming few years should continue to see pleasing growth in sales of new cars.

It’s a bright, electrified future ahead!

 

Join thousands of savvy car buyers and receive car buying tips and exclusive insights.
Only one guide every week. No Spam ever.