The automotive industry suffered immense losses in the previous year. Much like other sectors, automakers and dealers were severely hit by the sudden outbreak of the global pandemic. They experienced the worst annual sales decline since the Great Recession.
Auto sales went down by 14.8% translating to 14.5 million vehicles sold in the previous year. Despite the challenges that they faced, leaders and experts alike are optimistic about what the coming year has in store. As the vaccine begins to roll out prompting the world’s recovery, several factors are expected to help drive the growth of the auto industry.
Transition to Online Retail
Consumer behavior changed drastically thanks to the pandemic. Now, several brands are looking for more innovative car marketing vehicles or strategies as the global e-commerce market continues to skyrocket. Car manufacturers and dealerships are now focusing to make purchases more convenient through online means.
While digital retail is nothing new in the automotive industry, the trend is expected to accelerate this year. In 2019, approximately 825,000 new vehicles were globally sold online. By 2025, at least 6 million vehicles are expected to be sold through online platforms.
Making transactions more personalized for online auto sales will be the next step in making this process become more feasible. Responsive communication online has been observed to lead 75% of customers to finalize car deals compared to more traditional means.
The Appeal of Going Digital
Simplicity and convenience have been the major factors in driving the growth of e-commerce. Consumers have found that the same holds true even for big-ticket items like vehicles. The ability to order, reserve, and pay for cars within the comforts of home are essential, especially in light of the recent pandemic.
More than this, the online markets effectively remove the additional costs that come with physical showrooms. This drives prices to become highly competitive among dealerships. However, prices are not all that matters to consumers.
Other factors come into the mix when customers are looking to buy cars. The proximity of the dealership to the customer is still essential, especially for delivery or curbside pick-ups. The reputation of the dealership is also a determining factor in online vehicle retail.
Physical Dealerships Are Here To Stay
The death of physical dealerships will not come sooner than people would think. Despite the digitalization of vehicle purchases, the significance of these establishments may even increase post-pandemic. The appropriate integration of dealerships into a customer’s journey can come in many forms.
Of course, it could serve as a place for consumers to pick up the vehicles they bought online. These could also become test drive centers or experience centers. Physical dealerships will allow for instances and interactions like these, which may also be crucial when closing deals.
Online sales platforms are becoming more dynamic now. Regardless, customers shouldn’t have to choose one alternative over the other. The seamless consolidation of both physical and digital processes is still to be maintained. Auto sales will surely rise if done so correctly.
Effects of the Pandemic Were Not as Bad
Despite the rapid fall of the auto industry in the previous year, many are in agreement that the damage could have been far worse. Although many auto plants and showrooms closed at the peak of the pandemic, sales made a surprising recovery towards the end of 2020 and the beginning of 2021.
This was largely due to the increase in demand for individual mobility. People did not want to risk riding in shared or public modes of transportation. This became more apparent when lockdowns began to ease thanks to the discovery of a vaccine.
The Coming Year Will Definitely Be Better
The same consumer demand is expected to carry over in the coming months whether for used or new vehicles. Industry leaders and experts strongly believe that there is a lot of disposable income out in the market. Particularly for professionals who were still able to collect paychecks while working from home.
People will prefer spending on vehicles rather than travel or other reasons for leisure. Many of them are mainly motivated to prepare for a return to the office, schools, and other daily operations. This definitely entails a strong recovery for the industry.
Sales may be slow during the first couple of months, but it’s expected to pick up later in the year. Early forecasts are already estimating new vehicle sales of somewhere between 15.6 to 16 million. That would already be an increase of 7.6% to 10.3% compared to 2020.
The rise of online vehicle retail is just among the many trends that are expected to help the auto industry get back on track. Other pandemic-induced changes may even lead automakers and dealers to new, innovative heights going forward.