MARKET INSIGHT
Philip Nothard
confidence, fleet rationalisation and shifting personal mobility preferences will make for an unpredictable remaiƒnder of 2020. But despite the inevitable impact on new and used vehicle sales, Cox Automotive does not think COVID-19 will wreak long-term destruction on the economy in the same way that the 2007-09 financial crisis did. Philip Nothard, Cox Automotive’s Customer Insight & Strategy Director comments: “COVID-19 has created a unique set of political, economic and social circumstances that will define a ‘new normal’. The automotive sector is very unlikely to return to what we knew before the pandemic but there are positives to be found. “Our informed consensus is that we’ll see a ‘W’ shaped recovery over the long-term, following the general path of the overall economy but with some notable deviations unique to our sector. Expect unusual things to happen with used prices as supply and demand imbalances work out. “The new vehicle market will not return to any form of normality for some time. It will take time for manufacturers to restart operations, and we may never see output return to where it was pre-coronavirus for a while. The financial impact of COVID-19 will inevitably see some OEMs change their strategy, with some projects stopped altogether and others accelerated to respond to new consumer needs. “We’ll also see consolidation amongst the dealer sector accelerate as liquidity issues take hold for some, and consumers switch to digital channels far more quickly than was otherwise anticipated. Used vehicles will be the dominant revenue opportunity for dealers and OEMs for the remainder of the year. “Looking further ahead, we believe we’ll see several factors having a bigger impact upon the sector including the clean air agenda, remote working and mobility. All will influence how consumers choose and use their vehicles.” “We will continue to support our manufacturer, fleet and dealer customers as they navigate their roads to recovery and evolve our analysis as new insights come to the fore in the coming months.”
Dealers will increasingly adopt a multi-channel approach to their stock acquisition (Use Pics 1 & 2 in this section)
Every month we conduct a survey to over 200 key automotive industry professionals asking them to report on the current state of the market and their opinion on hot industry topics. In the wake of COVID-19, the latest survey has revealed some interesting insight into dealers’ business plans for
the remainder of 2020 and beyond. Two-fifths of dealers say they have increased their use of digital auction platforms due to lockdown, with 49% of those indicating this will be a long-term change. Just 7% say they have no intention to buy digitally, while one in five say they’re going online in the short-term but will return to physical as soon as possible. Two-thirds of those surveyed say they expect their use of physical auctions to stay at pre-COVID-19 levels in the medium to long term, while 13% expect their usage to increase. Although 23% say they will either decrease or stop attending altogether in the short to medium term, that figure falls to 11% when asked about their medium to long term intentions.
Philip Nothard comments: “Half of the dealers who responded were using online platforms before COVID-19, but there’s no doubt the lockdown has accelerated adoption amongst those yet to embrace digital auctions. For a sizeable proportion, the survey indicates that this usage will continue to become the ‘new normal’. “However, it’s also evident that when auction halls can safely reopen, plenty will be keen to once again be back in the lanes. Despite the inherent efficiency and convenience of digital channels, social interaction, hands-on access, and pure theatre of the physical auction remain a powerful attraction. “As lockdown eases and the used market continues to build momentum, we advise dealers to maintain a flexible mindset and take advantage of the respective benefits of both channels. With demand expected to outstrip supply for the remainder of this year, dealers need to put themselves in a position to strike decisively on the vehicles they can retail successfully.”
Stock profile plans highlight the need for data and insight
Philip Nothard explores how dealers are changing their stock profiles and why accurate market data and insight is needed now more than ever. The moment all dealers have been waiting for has finally come. On 29 June, car dealerships across Scotland opened their doors and welcomed customers into their showrooms for the first time in over three months - providing they can meet the COVID-19 secure guidelines to keep workers and shoppers safe.
With most dealers unable to do any meaningful business since lockdown, this is undoubtedly a significant occasion and one that most in our industry have welcomed.
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