Like many other industries, covid-19 has also impacted the auto industry, in fact, it is one of the most badly affected industries of all. With shrinking consumer buying power and across the board layoffs, people were forced to look for relatively affordable vehicles that are affordable as well as reliable. The high price tag of new cars has also increased the demand for used cars.
Covid-19 has proved to be a blessing in disguise for some businesses, one such business is the used car market. During the pandemic, people mostly preferred used or easier to maintain and affordable new cars. Used cars that have a reputation for being reliable and affordable have been the main choice of people during the pandemic. The sudden surge in demand for these cars caused their prices to rise and while the new car dealerships were going bankrupt, companies dealing in used cars benefitted from Covid-19.
Japanese manufacturers such as Toyota and Honda saw their sales of mid-size sedans such as Toyota Corolla and Honda Civic increase during this time. The companies also offered multiple incentives during the time such as slashed prices and extended payment plans. Manufacturers having only a luxury lineup of vehicles in their inventory faced the largest setbacks. Almost every company had to layoff some of their employees and the rest had to hire temporary workers in order to make up for ill employees.
Online deliveries and test drives of vehicles surged during the pandemic, because of lockdown imposed by the governments. Consumers generally choose to buy the vehicles which they are able to test drive, also the consumers preferred buying vehicles that were available to be delivered online. Tesla which already has such a system in place benefitted greatly during the pandemic. Other manufacturers also started to take online orders and offering doorstep test drives.
Since the pandemic drastically drove down the prices of gasoline, consumers also shifted towards older vehicles that are gas hogs but at the same time affordable. People are now able to afford such cars since the oil prices have nearly been at their all-time low price. The sale of inexpensive and used pickup trucks and SUVs also increased whereas the demand for hybrid cars decreased, in part due to their prices being higher than non-hybrid vehicles. Since hatchbacks tend to be cheaper than sedans and SUVs, they also saw a recent surge in their demand, while mid-level sedans and SUVs were usually not preferred by the consumers.
With the spread of covid-19 gradually slowing, the auto industry is also getting back to life. Still, it will take at least 2 years for the industry to fully stand on its feet and function properly. Until then, due to increased financial burden and slow economic activity, people are usually staying away from expenses such as cars and are mainly focusing on their health, food, and other essential necessities. But those who are really in need of a car, tend to focus on a used car, hatchback, or a cheaper sedan.