COVID-19: How consumers are buying cars and how the auto industry is responding.

mercedes benz parked in a row
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Covid-19: How consumers are buying cars and how the auto industry is responding.

COVID-19 has changed our lifestyles. It has changed the way we work, we travel, the places we eat at and also obviously the way we shop. And this change has drastically impacted businesses and the auto industry hasn’t been spared either.

After a good run in the first couple of months of 2020, auto sales tumbled for the rest of the year. While there was a steady demand for crossover SUVs. The Nissan Kicks and the Honda CR-V, didn’t sell out huge numbers compared to the previous year of 2019. The overall new car sales went down by about 15% compared to 2019. With lockdowns and shutdowns and low demand, the auto and allied industry had a very rough year. Many dealers shut their showrooms down and many people lost their jobs.

However, 2021 is showing completely reverse trends. The recovery has been tremendous and car sales have gone through the roof. A major reason for this being the fact that people have developed a phobia of public transport and ride-sharing services. Cars.com, an auto portal, recently conducted a survey wherein 43% of the respondents said that they feel using public transport has become riskier and have stopped using it. 

Around the same percentage of respondents said that they no longer trust the level of hygiene and safety and have stopped using ride-hailing services. Moreover, around 93% of people who took the survey said that in the post COVID times they prefer driving their own cars. More people are turning towards personal vehicles and that has stimulated the rampant rise in car sales.

And it is not just the new car sales that have gone up but there have also been record-breaking used car sales in 2021. According to a report published by J.D.Power, there were about 2.1 million used car sales in May and June. About 1.2 million used cars and trucks were sold in June 2021 alone and that is the highest figure for monthly used car sales since 2007. Used car sales were also triggered by shortages of new cars and low APR deals offered by automakers on used vehicles than on the new ones.

Now, the growth in sales in 2021 wasn’t exactly healing for automakers. With a shortage of microchips, semiconductors and other critical components, accompanied by mandatory shutdowns, the auto manufacturers had to face plenty of issues while coping up with the demand. Many factories had cars lying idle waiting for electronics items for months. Some automakers even took drastic measures and went on to delete features from their vehicles to manage the shortages. 

Moreover, automakers like Toyota emphasized pushing factory-certified pre-owned vehicles by offering better APR deals on them while the company didn’t offer any APR deals on some of its new cars. In some cases, dealers were buying back cars from their past customers to cope up with the demand for vehicles. The auto market is pretty crazy at the moment.

cars ahead on road
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On the flip side, the COVID-19 pandemic resulted in more and more buyers turning to a car buying website to make purchases and sales than visiting physical showrooms. Now that physical distancing is a norm, many buyers just find it comfortable, convenient, and safe to shop for cars online. CarGurus recently revealed that their survey found out around 55% of respondents no longer preferred shopping for cars at physical showrooms. Even Capgemini conducted a survey where they reported around 49% of people no longer wished to go to dealerships for car shopping.

A yet another survey revealed that buyers would like to take the delivery of their car outside the dealership, at their homes. This survey by KPMG states that about 75% of the respondents said that they would like the paperwork and other formalities of financing and registration to be done at their homes or online instead of the dealership. The survey also mentions that about half the respondents would like to test drive the cars at their homes but not at the dealership.

Long story short, the pandemic has disrupted the car sales model. People no longer wish to go to the showrooms, haggle for better deals and wait for long periods to get the paperwork done. Car buying websites have become extremely sophisticated and have simplified the entire car buying process and that’s the reason why more and more people find it convenient to shop for a car online.

What’s changed even more is the way automakers are marketing and rapidly employing new-age tech to sell their products. In the pre-COVID era, car websites were plain and bland that had just the specs listed out along with some photos of the car. However, with the trend of buying cars online kicking in, automakers realized the importance of giving the buyer a thorough ‘feel’ of the car just like they would have in a physical showroom. Brands like Jaguar, Land Rover, Hyundai, Audi, and a few others have employed augmented reality to give their buyers an in detailed view of the car. 

These AR-enabled car websites give the buyer a virtual tour of the car and allow the buyer to virtual tinker with almost all the features of the vehicle. Moreover, buyers can take a virtual test drive of the car, without having to step outside their homes. More and more automakers are adopting the virtual, AR-enabled showroom model and soon you could test drive any car without actually having to step outside and visit a physical showroom.

The demands of the buyers have changed quite a lot in the post-COVID-19 era. And it’s not just in terms of the products that they want but it’s in the ways that it comes to them. Even if the situation has improved a lot compared to what it was last year, people have become comfortable with shopping stuff from their safe abodes. And as they say, the customer is the king, automakers are working hard to tweak their methods to keep their buyers satisfied. 

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