We’re getting to 2020’s end, and there are hardly any industries the pandemic has not impacted this year. It has hit the restaurant industry hard and retail providers who have not been able to get online. Air travel is way down, and education is in turmoil, as some colleges can only offer online classes.
The automotive industry is one area that the pandemic has hit harder than many others. We’ll take a few moments to examine how the industry is doing as we approach the end of 2020’s fourth quarter.
There Are Fewer Accidents this Year
Before we get into how the auto industry is doing, we must mention how people’s driving habits have changed in 2020. We don’t have all the accident stats for the year yet, but many individuals report driving less. They can do that because:
- They are working from home in many instances
- If they are not essential workers, they are still in lockdown, so they’re only leaving the house for essentials
Fewer cars on the road mean less accidents, and that might be one pandemic silver lining. The Federal Motor Carrier Safety Administration states that large truck crashes cause about 100,000 injuries every year.
That number is probably going to be way down this year because, while trucks are still on the road making deliveries, there are nowhere near as many people commuting. Some of these eighteen-wheelers practically have the streets all to themselves.
Fewer People Are Buying New Cars
Now for the bad news: many car companies report that fewer people are buying new vehicles this year. That is most likely because:
- Many people have lost their jobs
- Lots of individuals are dipping into their savings to cover rent, mortgage payments, utilities, and food while they’re out of work
Many families are in dire financial straits. They are looking for work, but the economy is at a standstill, just when Covid-19 death numbers are spiking again. The US seems to be well on its way toward 300,000 deaths, with no end in sight.
Even individuals who still have their jobs are not buying new cars as much. If they were planning on doing it this year, they are tightening their belts, and they are liable to try and keep their old vehicle unless it’s on the verge of falling apart.
Households with teenagers might have bought new cars for the parents so the teen could get their hand-me-down vehicles. That’s not likely to happen now.
More People Are Buying Used and Certified Pre-Owned Cars
The numbers for 2020 are not totally in yet, but early reports indicate that if people are getting vehicles this year, they are more likely to opt for a used or certified preowned car.
That’s not surprising. If you need a new car, but you’re worried about your financial situation, you will probably get a certified preowned or a used vehicle rather than a brand new one. You can often save multiple thousands of dollars that way.
What is the Auto Industry Doing to Combat This?
The auto industry often makes a lot of its money in Q4 each year. Many prominent car companies are hoping there will be some end of the year buying. They are running their usual holiday-themed commercials, trying to entice people to open their wallets.
It may work in some instances, but probably not that much. The commercials seem incongruous, with the rising Covid-19 death numbers and all the unemployment.
The best many of these companies can do is to offer previously unheard-of deals on new cars. They might offer zero money down and no interest for several years.
If you do have money and want a brand-new car, now is undoubtedly the time to buy. You have to assume that by this time next year, we will have the pandemic much more under control, and you will not see deals like those that are available right now.
How Does 2021 Look?
The auto industry is much like the airline industry or the movie industry. To some extent, these niches are in a holding pattern for now. They know that vaccines are coming and should be here soon, but for now, they can’t count on much spending.
Every one of these industries will experience a massive decline in 2020, and 2021 might not be much better. It’s all about how fast the vaccines can come out and how quickly the job market can rebound.
The airline industry and automotive industries have better prospects than something like Hollywood. People still need to get around, and those who need new vehicles will find a way to get them. Some people might live in cities where there is at least some public transportation, but they may be reluctant to take it for as long as Covid-19 remains a threat.
Some experts theorize that what has happened this year will lead to fewer people buying vehicles, period. If they can work from their homes, and their jobs will continue to allow them to do so, they might forego car ownership and look at some other possibilities.
Some individuals can get away with not owning cars if they work from home, plus there are plenty of public transportation options. Additionally, great services have established themselves over time like the one available at VanInBlack.com, Uber, or Lyft whenever they need to get somewhere. These services have customer satisfaction in mind, and as such they make for a great option. Those that opt for this method of getting around don’t have to worry about the initial vehicle price tag, gas costs, upkeep, as well as insurance costs.
That’s pure speculation, though. Many people feel like car ownership is a part of their identity. As soon as they have some financial security again, they might go right back to buying brand-new cars, and the industry could recover.
For now, though, these are tough times for automotive industry executives, just as they are for so many other sector employees. Maybe they will see a turnaround in 2021, but for now, don’t expect to see anywhere near as many new cars on the roads as is usually the case around the holidays.