The New Car market is down more than 20% and the Used Car market is down 6% in January 2021, but with restrictions continuing until Easter and a slow re-opening predicted is there any cause for optimism in the Motor Trade?
COVID Car Sales
The fact dealers have managed to keep their businesses going and achieve that level of sales, largely in an online capacity, is impressive and shows that the Motor Trade is not lacking in resilience and innovation. However, with restrictions set to continue for the time being and re-opening set to be a slow process, do the Motor Trade have any reason to be optimistic about about new and used car sales in 2021?
In our business at MotorCheck we interact with dealers, manufacturers and other members of the trade on a daily basis and even though they all agree that it’s a very tough environment for their business right now, there are some reasons to maintain an optimistic outlook for the remainder of the year and especially when restrictions begin to lift.
Hindsight is 20-20 vision
Whilst 2020 was a tough year for many, lessons were learned and we have the hindsight of prior lockdowns and how the market reacted firmly in our rear-view mirror. The market recovered well after lockdown 1.0 and much of the inactivity over March-April-May 2020 was recovered in June-July-August 2020, especially in the Used Car sector. Car dealers have also learned how to operate effectively during lockdown and adapted quickly. Online sales are increasingly popular and becoming second nature to customers. New digital tools are being adopted quickly and when restrictions are lifted many in the trade will expect a rapid recovery and they will be in position to make the most of both online and face-to-face opportunities.
Foreign holidays are out for another year
One of the biggest industries to suffer badly at the hands of COVID is undoubtedly the travel industry and based on Dr. Tony Holohan’s recent predictions foreign holidays will again be off the table for the summer of 2021. With little or no chance of the family holiday to sunnier climes this year many may opt for a new car this year. Anecdotally we are also hearing that the Camper Van market is already booming in anticipation of “the staycation”.
Opting out of public transport
The public have been avoiding public transport and even when restrictions begin to loosen many will not feel as safe going back to public transport as they previously did. COVID has instilled panic in many but will also ensure that people will be rightly cautious about returning to normal behaviour especially when it involves crowded public spaces. We already have seen evidence of many first-time buyers entering the car market after lockdown 1.0. This trend is set to continue.
Disposable income and savings
The is no doubt that multiple lockdowns have wreaked havoc on the jobs market and many have lost their jobs. However, what lockdown 1.0 has taught us is that most will return to fulltime employment when restrictions lift. Those who have been lucky enough to retain their employment have had little opportunity to spend, so savings levels are at an all-time high and there will undoubtedly be a glut of disposable income waiting to be spent one the economy reopens. Who would not be tempted by that “feel-good factor” of upgrading your car?
Interest rates are at an all time low
Combined with the fact that savings are at an all-time high is the fact that interest rates are at an all-time low. That means one thing, when the restrictions are lifted there will be great finance deals on offer in all sectors of the Motor Trade.
Revenge buying will become popular
The term “revenge buying” has been coined to describe making oneself feel better by engaging in retail therapy. After this pandemic ends and restrictions are lifted people will want to lift their spirits with a frivolous, feel good purchase. There is little doubt that one of the top contenders for that purchase will be a buying a brand new car or upgrading a used car.