The Coronavirus outbreak has affected the world socially, politically, and economically. This has lead to many industries taking a fall within the first few months of this year, from retail to finance industries, everything has been put on hold. But what is the impact on the auto industry?
It was shown that auto sales in China fell by 80% in March, where the COVID-19 pandemic originated from. The U.S. was also affected by factory shut-downs as well as temporary or indefinite halting of rental and taxi services as they mainly depend on airport reservations/ pickups which have reduced due to certain countries shutting down their airports.
However, there is a certain way in which the auto industry is still active i.e. customers opting for rentals over public transport. Therefore there is a demand for rentals in certain parts of the world which means that one part of the auto industry can still survive. However, car manufacturers will be largely affected as there will now be a large flow of rental cars entering the used car market which means most people will opt for them over brand new cars.
Car manufacturers may still have hope if they use good marketing tactics to encourage customers to purchase their vehicles. Automakers in the U.S., such as Ford and Chrysler have introduced such incentives by reducing the purchase rate for new cars and offering 0% finance rates to customers during this time.
Many rental companies are even taking initiative to assure customers’ health safety like the German company Starcar which promises clients that the rental is disinfected after each ride. Other companies like Europcar are opting to promote their home delivery services (the rental is delivered to the customer’s home and collected after the renting period). Therefore, many solutions exist in which rental companies can contribute and still bring in revenue during a time like this.
As of April, it has been shown that auto retail sales in the U.S. are starting to recover since their decline in March. This may only keep improving but at a slow rate as in the immediate aftermath of the pandemic, it will take a while for people to go back to their normal lives. Health and safety would still be a priority therefore auto manufacturers and car rental businesses will have to keep operating with caution.