Who could have predicted that one of the industries that would benefit most from a global pandemic would be automotive?
The ability to keep a distance from others was a make-or-break factor in keeping our loved ones and us safe in 2020. Not only did our cars preserve our health this year, but they also preserved our sanity by giving us access to drive-through activities and socially distant experiences that offered brief respite in an otherwise bleak few months.
The auto industry underwent just as much of a roller coaster this year as the rest of us. While in the end it fared better than most lines of business, it also came face to face with some important lessons that will permanently change the way it operates for the foreseeable future.
Here’s a look at some of the industry’s key takeaways after a tumultuous year none of us will soon forget.
We can buy cars online after all – but it turns out we might not want to. It’s been buzzed about for years, but it took a global pandemic to spur the auto industry into action in figuring out how to take the vehicle purchase process online. Today, it doesn’t take a lot of Google gymnastics to find a dealership that will provide video walk-arounds, answer your questions via text message or email, and let you do a lot of the necessary paperwork from home.
But what’s most interesting about this shift is that it seems not very many of us actually want it to stick. According to a survey completed among Ontario residents by Deloitte this summer, 78 per cent of car buyers prefer to visit a dealership in person as part of their purchase process. In interviews with auto executives this year, I’ve been told more than once that buying a car is unlikely to become like having kitty litter delivered by Amazon. People still like to see, touch, and drive their vehicles before they commit to them for years.
What does this mean for 2021 and beyond? Every individual buyer is going to have a different idea of what the ideal car purchase process looks like, and automakers will be thrashing in the coming months and years trying to find the perfect balance that makes the majority of customers happy.
A lot more of us have cars now, and that’s good news for dealerships. Through the summer and into the autumn, dealerships sold as many cars as they could get their hands on, especially in urban centres where public transit and ride hailing services lost their lustre amid a need for social distancing. That’s good news for the long-term prospects of those dealerships if they play their cards right: those cars are going to need maintenance and repairs over the next few years, even if they are being driven less than they once were because people are working from home more often. This should mean dealership service departments see more business than they would have, provided they can find the magic formula for giving urban and tech-savvy drivers their ideal customer service experience.
This could also mean there’s a serious and looming traffic problem coming as more workers are called back to the office who decide they’d rather bring their vehicles with them. You thought pre-COVID rush hour traffic in Toronto was bad? Brace yourself.
Electrification is getting more important, and it’s going to need help to catch on. Climate change isn’t slowing down for any pandemic, yet a lot of the vehicles that hit the road this year were chosen for their affordability rather than for fuel efficiency. This is a problem that will come to roost over the next few years as governments try to implement zero-emission policies and targets and find that many newer cars are incompatible with their goals – and that drivers aren’t necessarily in a hurry to part with them.
Different automakers are taking different approaches to this problem. Toyota, for example, is focused on getting more conventional and plug-in hybrids into the market, technologies that let vehicles use less fuel without demanding lifestyle changes from their owners. Kia Canada, on the other hand, recently conducted a study that suggests Canadians’ biggest barriers to battery electric vehicle adoption are misconceptions about range and charging infrastructure, so the company is embarking on education campaigns to convince more drivers to consider its Soul EV and Niro EV zero-emission vehicles.
There’s no question that a seismic shift is coming on this front in the next few years. But what we’ve seen in 2020 is that consumers will buy the cars that are put in front of them with the best price and payment terms irrespective of fuel efficiency. Automakers will sell what will sell, so they’ll need to be compelled by governments to push fuel-efficient vehicles if they truly want to alter consumer behaviour.