The COVID-19 pandemic and the subsequent lockdown had an enormous impact on just about every corner of the economy. But the impact on the automotive industry was particularly spectacular. After all, when the public are prevented from leaving their homes, it stands to reason that their interest in driving would decline. In May, there was an 89% slump in car registration compared to the previous year. Were this to have continued, it would have represented an existential threat to the automotive industry.
But now that the lockdown has been lifted, the initial signs point to a fairly swift recovery – and perhaps even a period of prosperity. In June, the used car market rebounded swiftly to pre-COVID levels. According IDICATA, the first week of June saw used car sales grow at an impressive 13.3% compared to the previous year, which amounts to around twelve thousand used cars a day.
While this still represents a year-on-year slump in overall registrations of around 35%, the dial is heading in the right direction as far as the industry is concerned.
Do Dealers Have Enough Stock?
While cars are leaving dealerships more quickly, there has been some measurable caution on the part of the dealers themselves, who, concerned about the sustainability of the demand, are replenishing their stock more slowly. The fear is that this initial wave of post-lockdown purchases represents a release of buying decisions that would otherwise have been taken during lockdown – and that when these purchases have been made, broader economic uncertainty will begin to suppress demand.
This hesitancy could ultimately result in a rush to fill those spaces once the long-term outlook becomes more certain.
What kinds of vehicles are being sold?
More environmentally friendly vehicles have enjoyed a surge in sales, even while the lockdown was ongoing. Government incentives are being rolled out to favour electric vehicles, in order to battle inner-city pollution, and to meet the long-term emissions targets. Sales of diesel cars are recovering more slowly than those of their petrol counterparts.
Aren’t Cars Safer?
It’s likely that we’ll see a shift in commuting behaviour from trains and buses to cars. Their sealed nature means that cars are inherently safer, and thus commuters who might otherwise have chosen a packed underground carriage will suddenly see the sense in making the investment in a new car. This may prompt a surge in borrowing to fund new car purchases, or to pay for the deposit on a long-term lease. Fortunately, there are online lenders who specialise in finance for car purchases.