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Automotive Market Report 2021: How the Car Industry Will Adapt Post-Covid

  • by: Conor McKeon
  • On: 16, Feb 2021
5 min read

Whilst the coronavirus pandemic has damaged all sectors and societies, and millions of businesses and families around the world, the Automotive industry saw particular devastation.

Major market leaders such as Tata Motors reported markedly reduced vehicle production and wholesale volume, and all major Chinese carmakers voted to delay production in the first few months of the pandemic. Global Automotive sales are estimated to have fallen to a 10-year low for 2020. New product launches such as the Mercedes-Benz GLA event, in addition to motor racing events like Formula One and the Grand Prix, saw numerous delays and cancellations.

However, Covid-19 has brought new opportunities for Automakers this year: social distancing, reassessing priorities and fundamental changes to the way we lives our lives will all spell new experiences and changing customer demand. Here are three ways that the Automotive market will change in 2021.

3 Ways the Automotive Market Will Change in 2021

1. Adaptation

Prior to Covid-19, industry experts predicted that 2020 would prove the year that the global Automotive market began to create real growth. After increased scrutiny around sustainability, greater environmental targets, tighter motor racing regulation and declining popularity with younger generations, car sales has dropped by 14% in India and 18% in China and Germany’s production had reduced by 12% in 2019 alone. The pandemic saw further cancellations to planned innovation and investment, as consumer demand dropped, sickness absences impacted on production and investor caution meant research and project development delays.

Although in general consumer demand dropped, interest in used vehicles skyrocketed following and throughout national lockdowns. Demand for second-hand cars grew by 15% on 2019 numbers, and continued to grow into the summer and Autumn of 2020.

CEO of AA Cars, James Fairclough comments, ‘The sustained increase in demand since the summer is positive news. The used car market continues to offer an enormous amount of choice to drivers at all price points, and changes in commuting habits may be leading more people to purchase a car so they can avoid public transport. The large range of affordable cars on the second-hand market means that drivers who need a new or replacement vehicle, but also have concerns about job security or the state of the economy, can easily find one to suit their budget.’

Rather than seen simply as an alternative to public transport or a nice-to-have luxury, cars have become reframed in the mind of the general public. Essential workers can feel confident in their health and safety when travelling to work, volunteers can efficiently carry food and medicine to those in need, and people of all ages and backgrounds can now access services they need without a high cost barrier. Automotive manufacturers and retailers are likely to capitalise on the opportunity to rebrand the car in 2021, connecting personal vehicles with safety and convenience, and adapting their messaging and positioning to capture new customers across demographics.

2. Sustainability

The coronavirus pandemic has spearheaded renewed appreciation for the environment around the world and across sectors. Under the Paris Agreement on climate change and emissions reduction, countries must work together to cut global emissions by 7.6% every year to reach 2030 temperature targets. As the Automotive industry generates over 10% of Europe’s total annual carbon dioxide emissions, manufacturers around the world are tasking their design and prototyping teams to innovate with sustainability in mind.

Tata Motors are leading the way in more environmentally friendly electric car manufacturing. The Automotive leader has committed publicly to making Jaguar Land Rover a net-zero carbon business by 2039 with future car models built only on electric architecture, and investment into clean hydrogen fuel-cell power as an alternative to oil. Volkswagen, Volvo, Tesla and Nissan are also continuing to pave the road ahead for high-performance electric cars.

Cutting fuel pollution through new materials will help the motorsport sector reach its own targets: in 2019, leadership executives committed to making Formula One championships completely carbon neutral in the next decade. Motor racing events alone are responsible for more than 250,000 tonnes of CO2 pollution every year. New car models with fuels created from used cooking oil and leftover farm crops are already in development.

3. Smart Technology

Already a fast-growing trend in recent years, smart design and manufacturing will be vital in helping the Automotive industry to bounce back after Covid-19. Smart car technology has already sprung up across areas of the market:

  • Self-Driving Commercial Vehicles – Social distancing is likely here to stay for the year ahead, and when combined with ever-increasing customer demand for fast and personalised services, self-driving taxis will transport vulnerable individuals without human contact, and high value goods can be delivered without compromising the safety of those working in logistics. Autonomous cars are predicted to become the standard transport method of choice for passengers and trade alike: the autonomous vehicle (AV) market is predicted to account for $7trillion of new economic activity by 2050 in the US market alone. Ford, Fiat Chrysler and Waymo are just a few of the brands battling it out to supercharge the mass introduction of autonomous cars.
  • Accident Reduction – Whilst all modes of transport have become rapidly safer in recent decades, the pressures of Covid-19 will necessitate even faster innovation in vehicle safety. Smart motorways are beginning to implement radar technology to detect and protect drivers who break down in live lanes, and create dynamic hard shoulders that can switch between being used for emergencies and traffic build-up depending on which is most urgent at the time. The UK Government has announced plans to roll out the smart technology across the UK’s entire 500-mile smart motorway network by the end of next year, ahead of its initial 2023 deadline.
  • Supporting Disabled Passengers – Auto manufacturers are increasingly prioritising drivers with disabilities. Electric vehicle charge points will be made more easily accessible, voice command will aid in driving and changes to steering wheel and handbrake design will make cars much more comfortable for those with additional needs. Mobility cars will provide relief during longer and difficult sections of each journey, and automatic merging into lanes and self-parking technologies will further take the stress of driving for disabled drivers.


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