In March it seemed like there might be no bottom to the freefall for automotive sales. In the first quarter of 2020, new car sales were down by a whopping 30%, the greatest drop since the recession of 2008. Starting in June, the path to recovery started to become clear with sales improving steadily in the 2nd and 3rd quarters of the year- though still far below pre-pandemic levels. Now, as automotive markets brace for the impact of a second wave as we enter the winter months, the future is far from certain. Many data points that are still unclear- like how many dealers will permanently shutter or the total amount of layoffs as a result of the pandemic. While the cold hard numbers are yet to be determined, some things have become abundantly clear. Today we’ll explore what we know so far about how 2020 has permanently changed the course of the future of the industry.
Consumer Sentiments
While car sales dwindled, consumer appreciation for personal use vehicles went the complete opposite direction. This year, cars became the safe bubble from which drivers could attend birthday parties and car parades or appreciate some quiet alone time away from the house. Even though new car sales were down, consumers showed this interest by creating a boom in used car sales and making 2020 the fastest rate of used inventory turnover since 2014. One thing we know for sure going forward the way people feel about cars has changed and the effect of that may be seen for decades ahead in car buying behaviors.
Dealer Impact
2020 made one thing abundantly clear for all dealers and operations: if you’re not selling online, you’re not selling. Technology has been the clear winner in profiting off the pandemic this year with demand for online everything skyrocketing. A CarGurus study found that 60% of respondents are open to buying a car online compared to only 35% before the pandemic. On the parts and service side of things, it appears there is a steady demand for maintenance making parts departments more important than ever.
What did your dealership experience in 2020? Leave a comment below!
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