Few industries have been as greatly affected by COVID as the auto industry. Disruptions took place everywhere from manufacturing to the sales lot, and the pain could even be felt down at the local auto repair shop. Demand for automobiles has surged while the supply of new and used vehicles has struggled to keep up. At the same time, folks have relied on their cars more than ever and are eager to keep them running.
While the true impacts of COVID on the auto industry won’t be known for some time, its current effect on stakeholders such as car manufacturers, salespeople, drivers, and auto repair shops has become quite clear—and not all developments have been positive.
So be sure to read on, as we delve into all the details of COVID’s impact on the auto industry, below.
The Impact of COVID on Car Manufacturers
Car manufacturers have faced numerous challenges thanks to COVID, the first of which was a shutdown of production early on which caused a shortage of vehicles as demand rebounded.
Further challenges include supply chain disruptions of necessary parts, such as computer chips, that have delayed the manufacturer of many new models. Furthermore, competition for goods and services has increased which has bumped up the price of things like shipping cars and parts.
At the same time, the demand for new cars has rebounded from the constraints of 2020, with consumers flocking to personal transportation as offices have remained closed and public transit has struggled to attract drivers who don’t need to commute.
The Impact of COVID on Automobile Sales
Although car sales dropped from 2019 to 2020, the problem for most salespeople was having cars on the lot to sell! Many dealer groups have reported record profits, and many analysts see a shift in consumer habits that will lead to a durable gain in auto sales for the next several years. Because of this, many expect auto sales to rebound as the surrounding business environment improves, surpassing pre-pandemic levels within the next few years.
What this looks like in reality, however, can be puzzling, especially for used cars. Now, cars that were once considered clunkers have suddenly increased in value. And while this is good news for those in car sales, anyone looking for a cheap car is signing up for an arduous journey—often literally.
The Impact of COVID on Auto Shops
The story of COVID for the typical auto repair shop has been a mixed bag. While most establishments have seen unprecedented demand for their services, this has often come with other issues such as rising prices, unavailability of parts, and lack of capacity. The latter can be attributed, in part, due to a lack of skilled labor as auto shops have increasingly resorted to poaching workers from each other
In general, demand for services has risen as people look to hang on to the car that they already have, rather than risk the wilds of the current car sales marketplace. Additionally, many new practices have been put in place for the safety of both customers and workers. And one final positive to note is that, due to the current disinfectant frenzy, auto shops across the country have never been cleaner!
To combat the negative effects that COVID has had, many auto shops have looked to cut costs anywhere they can. This can include looking for alternative parts suppliers, changing marketing strategies, or even raising prices. However, one place that many shops have been able to find savings is in reassessing their businesses’ insurance needs. And as always in the auto industry, time is money, which is why finding fast auto repair shop insurance is so sought after. After all, who wants to be paying more for a policy they may not even be utilizing fully?
The Impact of COVID on Drivers
Often lost in the mix of COVID’s auto industry narrative is the impact that the virus has had on individual drivers. COVID has changed drivers’ habits, sometimes for the better, but worryingly, more often for the worse. Reports of risking driving behaviors have been on the rise and traffic fatalities and injuries have multiplied since a slight lull in overall numbers due to lockdown restrictions.
In short, drivers are more likely to be speeding or impaired and, in many places, they are traveling roads that are more crowded than they were even a few years ago—a recipe for disaster. Safety is jeopardized and defensive driving becomes mandatory. This means drivers should show extra caution on the road until things have returned to pre-pandemic levels.
It isn’t all bad news for drivers, however, as many will find that their car has retained more value when they go to trade it in—which has a pleasant impact on consumers’ wallets for once.
Measuring the True Impact of COVID Will Take Time
In all honesty, the total impact of COVID on the automobile industry won’t be known for some time. There are too many moving pieces and the data we currently have is incomplete at best. While it is clear that some stakeholders are doing well, others have been adversely impacted by the virus. Whether the overall benefit of COVID on the industry has been positive or negative, therefore, relies on one’s perspective.
Do you think we missed a key point about COVID and autos? Is there a stakeholder you’d like to dive into deeper? Please, don’t hesitate to reach out, we’re always here to help! We hope you’ve enjoyed reading about COVID’s impact on the auto industry and that you’ve learned something new along the way, as always, thanks for reading!