How widespread and how deep is the impact of the coronavirus pandemic is yet to be fully understood. The virus has disrupted many industries and heavily impacted all of mankind. The automotive sector is no different with heavy losses incurred for the three quarters of the 2020 financial year.
Almost all manufacturers had to halt their production for weeks. The dip in demand combined with heavy losses also hiked the price of everyday vehicles. For example, General Motors had to shut down their Arlington, Texas plant operations for weeks. This plant produces newly updated Chevy models like the 2021 Chevrolet Colorado, 2021 Chevrolet Tahoe, and 2021 Chevy Trailblazer.
All of which saw a drastic price hike in the coming days. Many of the launches were also delayed due to the pandemic like the highly anticipated Ford Bronco SUV. In this article, we will have a look at different aspects of the car market and how the pandemic has impacted them.
From a consumer point of view
With the car prices fluctuating due to the pandemic, you might be wondering whether it is a good time to buy a car right now. Car prices did see a jump but only momentarily. Auto sales fell drastically in March and April, but they did recover slowly over time. However, the total number of cars sold in 2020 is still below pre-pandemic levels.
Overall, car sales have drastically plummeted due to the lack of interest of the consumer when it comes to spending big money. Automakers are working hard to attract possible customers by offering generous incentives. If you have a stable job and can afford your desired car, now is an excellent time to bag a great deal.
You should compare pre-pandemic pricing and current pricing depending on your location to sort out the best deals. Many automakers have also expanded their offers catering to military and first responders like health care professionals. For example, Ford is offering a flat $500 discount in addition to whatever other incentives, if customers boast eligible medical professional identity.
On the other hand, if you work in a sector that is susceptible to the coronavirus-induced downturn, that could result in layoffs or reduced income. Thus, you should carefully consider while leasing or before paying that down-payment on that sweet deal that you came across. If this is the case, we suggest waiting for a few months to see if things settle down eventually. Missing out on deals is much better than eventually defaulting on payments and struggling to meet ends. Prioritize yourself and your health in these trying times.
What about the used car market?
The used car market has seen the opposite effect due to the pandemic. As consumer income reduced, their subsequent spending also reduced. Due to this, they are hoarding in as much as they can. Thus, demand for used cars has gone up drastically and so are used car prices. J.D. Power officials stated that used car prices have rebounded strongly and now are above their pre-pandemic levels.
Another factor that has been driving used car prices up is the restricted flow of new cars due to the supply chains being disrupted. Another big factor that is driving the used car market up is the virus itself. Due to the highly contagious nature of the virus, consumers are skipping public transit and shifting towards personalized means of transport. Even ride-sharing services like Uber and Lyft have seen dramatic declines due to the same.
Whether you are buying a used car or a new one, conduct thorough research from the comfort of your home through videos, articles, and reviews. Filling out loan applications and financing can also be done online.
Try looking for home delivery options as well. If in case you do need to go to the dealership and have a final look at your purchase, do so by taking utmost precautions and sanitize all the touchpoints before contact. Dealerships are taking measures on their side but you must also take adequate responsibility in these critical times.
Impact on the manufacturers
The United States auto industry came to a dead halt for nearly two months during the peak of the pandemic. And overall the production has been slow due to supply chain disruption across the globe. All new automobiles are drastically complex in nature from the automobiles of the past. Thousands of parts and components go into the modern car.
Most of which is often outsourced to different component manufacturers. Which could be located anywhere in the world. With global trade coming to a halt, so did these supply chains. According to an article posted on nbc news one-week shutdown of the automotive industry would result in an estimated annual loss of 94,400 jobs in the United States.
Along with $7.3 billion in overall earnings and $2 billion in lower government tax receipts from personal income taxes, contributions for social insurance programs, and current transfer payments. What puts these numbers into perspective is that much of the industry was shut down for eight whole weeks. According to Ford, the automotive industry is responsible for 6% of the U.S. gross domestic product. Facilities building the Ford F-Series trucks alone are directly responsible for 19,000 jobs and 2,000 suppliers.
Automakers also had to bear in mind corporate social responsibility during these trying times. Many of which started investing in the fight against the coronavirus. Ford announced a partnership with General Electric and 3M to produce ventilators, respirators, and face shields. According to Detroit News, Ford is producing respirators at its Flat Rock, Michigan facility.
These respirators use similar fans to those found in the 2021 Ford F-150’s ventilated seats. Across the globe, manufacturers are helping in the fight against the pandemic, In Europe, Fiat and Ferrari are working with medical equipment manufacturers to design, produce and deliver medical equipment and supplies at a larger scale. General Motors also rolled out their respirators with the help of medical manufacturer Ventec in April 2020.
Along with declining sales and their focus on the fight against the pandemic, Manufacturers also halted or delayed new models. All major auto shows across the country and across the world were canceled. Due to which many manufacturers decided to halt their new car releases as Ford did with the new Bronco. Lincoln also announced that the pandemic is the reason behind their cancellation of the planned joint venture with electric truck maker Rivian.
