The effects of Covid-19 have been so widespread and damaging that life may never return to the same level of normality that we were familiar with just 12 months ago.
Social distancing measures have forced the closure of countless businesses while others have needed to operate fully online with employees working remotely from their homes in a bid to stem the rate of infection across the world.
The emergence of lockdowns and the effects of isolation have carried significant ramifications for the motoring industry and drivers overall – with official figures suggesting motor usage in the UK fell by over 60% as the country fell into lockdown in March 2020.
While the arrival of the ‘new normal’ return to everyday life in the wake of a vaccine will undoubtedly see an increase in the number of cars on the road, it’s clear that WFH (Work From Home) has proved highly effective for many businesses that have been able to benefit from the productivity of workers while saving on the costs of running offices.
Here’s a deeper look into some of the various effects that Covid will have on the future of motoring as we look at entering the era of the ‘new normal’:
The Decline of Purchasing Power
Covid-19 has had a seismic effect on the UK’s new car market – with almost a 50% drop in new car registrations taking place in the first seven months of 2020 compared to that of 2019.
Although the figures related to registering new cars makes for worrying reading, it’s worth noting that lockdown forced the temporary closure of dealerships in the UK and the wider world. However, more evidence shows that there is a clear correlation between a fall in registrations in the UK and a significant drop in purchase intent.
Although purchase internet for new and used motor vehicles fell at a slower rate than that of new vehicle registrations, it remains clear that consumers are significantly less motivated in purchasing a vehicle following the arrival of Covid-19.
Ana Azofra, valuations and insights manager at Autovista, believes that the rise of WFH will lead to a significant change in the demand for cars: “This situation will break the barriers that many companies had against working from home. This could restructure the demand. A second car in the household would be needed less and this could also affect the current segment mix. However, this change will not necessarily result in vehicle ‘downsizing’ as a household’s single car would need to be practical and more oriented to other needs,” she explained.
Another significant factor that will influence how motorists buy cars in the near future will be the loss of spending power among consumers due to Covid-driven recessions around the world. However, while more would-be buyers may be more reluctant to buy cars outright, we could see the further rise of car finance platforms and more generous offers from popular manufacturers, where users can pay-off their vehicle on a monthly basis.
Alternative Mobility Solutions in Cities and Towns
Physical distancing measures are changing the ways in which city-dwellers are making themselves mobile in a permanent way. With significantly lower volumes of people using public transport to commute to work, the short term will see a widespread decrease in transportation needs among commuters.
Whereas, for those who are unable to work remotely, there may be a lasting shift away from shared-mobility systems like public transport within high population density areas due to travellers seeking to avoid the crowds of rush hour to limit their chances of infection.
This could give rise to a range of new mobility solutions within cities that could provide users with more cost-effective options to compete with the car. According to a McKinsey survey, both walking and cycling look set to become more popular in the wake of the pandemic, while brand new alternative mobility measures like e-scooters are being been rushed through in the UK to provide users with a form of transport that can ensure a greater level of social distancing.
However, the survey also notes that in more rural areas and smaller towns, most residents have no such plans to change their mobility options following Covid – which shows that the car can remain as prevalent as ever in certain areas.
Vans to Remain In-Demand
It’s also worth remembering that the pandemic hasn’t been all doom and gloom for the future of the automotive industry and that accelerating trends towards online shopping has led to haulage vehicles becoming more popular than ever.
The rise of home deliveries due to the closure of brick and mortar stores has meant that more companies are likely to be looking to lease and finance more light commercial vehicles (LCVs) and fewer cars in order to adhere to demand.
As we begin to understand what a ‘new normal’ future may look like, it’s likely that the trend of increased LCV sales will continue as more employees work from home and fewer shoppers take to the streets to make their purchases.
The automotive industry is undergoing a huge change following the arrival of Covid-19. As our use of motor vehicles, the way we use them, and how we pay for them looks set to change forever, the industry can take solace in knowing that the car remains as popular as ever in more rural areas, while vans and LCVs will continue to prop the industry up as it embarks into the chaotic world of the ‘new normal’.
Whether people want to use a shared car now or in the future, perhaps some of the safer money is in increasing the proportion of LCVs in leased fleets because they are getting used – and will continue to be.