Most industries have taken a devastating hit because of the coronavirus pandemic, with some recovering at a faster pace than others. The auto industry was greatly impacted according to a July McKinsey report, which noted that car sales had tanked worldwide including a 47% drop in the U.S. and drops of 71% and 80% in China and Europe, respectively. This was in part due to decrease in demand but also short supply seeing as many countries that the U.S. relies on for parts temporarily shut down production and were not shipping anything into the U.S. pipeline. Thankfully, things are mostly back up and running so supply chains may stabilize soon.
The retail industry has undoubtedly also taken a dive, seeing as everything from overseas manufacturing to domestic deliveries has been disrupted in an almost unimaginable way. Despite the unfortunate spiral for retail, however, the industry is slowly creeping back, with National Retail Federation CEO Matthew Shay stating, “while August retail sales numbers were a bit mixed, we believe the consumer is resilient and is in good shape as we head into the holiday season.”
While retail recovery has been sluggish, the auto industry has fortunately been bouncing back a bit better due to many different factors. For example, as experts previously predicted, some consumers are fearful of COVID-19 and have decided to invest in their own vehicles to get from point A to point B without having to take public transportation or rideshare with someone else, especially a stranger such as an Uber or Lyft driver. This concept coupled with the Americans’ general need for vehicles means car sales have continued albeit being a little different and mostly through digital communication.
Related: Industry Expert Carla Bailo Predicts Two-Year Auto Recovery, Impact Not as Severe as Expected
Dealerships have worked diligently to move to digital options for consumers since missing out on all sales simply isn’t an option for them. Consumers flocked to online sales for other things such as clothes, food, medicine, electronics, and so much more, so the auto industry theoretically had no option but to follow suit. While state-to-state opening policies differed for a while, dealerships were eventually deemed essential businesses and remained open despite a lot of consumers’ fear regarding the virus and refusal to shop in person.
At this point, it seems that has ultimately been a good move and may set new standards in the car buying process. Dealerships have adapted well to the new way of selling cars through quickly figuring out what consumers want in their online shopping experience as well as what they are not looking for.
Car seekers also seem happy with online shopping because they may view it as an advantage seeing as they are not “hounded” by a salesperson but can reach one if needed. According to Car and Driver, a Cox Automotive study revealed that “car buyers are craving time with vehicles but not time with pushy salespeople,” so many shoppers feel much less pressured and rushed when making a decision. Artificial intelligence has also lessened the need for shoppers to interact with another human, and dealerships have come to the realization that online paperwork can be much easier and less stressful than sifting through and signing dozens of papers in the office. Curbside, contactless service and test drives have also been an attractive offering at this point.
Overall, the pandemic has also certainly changed consumers’ minds about the car buying process. Nick Carey of Yahoo! Finance detailed how in April, a CarGurus survey found that 61% of respondents would consider buying a car online, which is a relatively significant jump from the pre-pandemic willingness of 32%. Retail in other industries has unfortunately not been so lucky, with many small businesses being forced to close as opposed to implementing a high-tech online store.
John Possumato, the CEO of DriveItAway, Inc., told Wards Auto that despite many dealerships’ initial fear about transitioning to online sales, “Transactions happen online more quickly and with profit margins sustained.” He added that “online car buying is not going away” because consumers like being more in control during the car buying process.
As it has been since the pandemic started, the future is uncertain. While some expect the world to go back to its old ways when the COVID-19 crisis disappears, many others feel like things will remain at least semi-distanced and companies will continue to offer curbside and contactless service. Retail may bounce back seeing as people will be able to go out again and will be more in need of clothes and other goods, and the auto industry will hopefully continue to thrive once in-person customers start coming back.
Related: How AI Technology Can Help Dealers Boost Sales Recovery
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