The events of 2020 could have never been predicted and impacted the automotive industry more than anyone could have realized. Auto sales dropped at alarming rates, manufacturing delays happened across Europe, and exports were disrupted for Chinese parts. However, the industry recovered remarkably well toward the end of the year, paving the way for auto trends going into 2021.
Dealerships continue to release online purchasing options, which helps launch the industry launch forward. Here are the most common auto trends to expect in 2021.
Auto Trends to Watch in 2021
A Push for Ownership
In the past, ownership has dropped as ride-share options gained popularity. However, COVID-19 flipped the narrative. The pandemic reduced the need for countless people to commute, but many still rely on transportation for shorter, more frequent trips during the day. Ride-sharing companies suffered from a fear of the pandemic spreading, and cities saw residents make the shift from public transport and shared bikes and scooters to vehicle ownership. Even as businesses reopen, many have become accustomed to their new commuting alternative. The pandemic triggered growth in first-time car-buyers, and these numbers will continue to rise.
With the push to purchase vehicles comes another concern – supply. The demand for cars grew seemingly overnight, and many dealerships don’t have the mass inventories to keep up. Keeping a lean inventory works when the buyer gets the vehicle they want, but it becomes an issue when they can’t find their dream car with the right trim, color, and other preferences.
The more expensive the vehicle costs, the lesser the inventory a dealership has on the lot. This is the case with pickup trucks and large SUVs – which are ironically driving vehicle sales.
Go Big, and Bigger
The demand for pickup trucks and SUVs only increases year to year. Regardless of if someone is buying new or used, the need for large vehicles is unwavering.
The demand for large vehicles is good for manufacturers, and their profitability, although this trend is not without risks. Expensive SUVs and trucks dominate the industry, reaching an all-time high right before COVID-19 prevented many Americans from having the option to take public transportation. A lot of buyers began looking for affordable options for transportation.
SUVs and large trucks increase the average selling price, which affects down payments and monthly payments – bringing affordability into question. With unemployment rates high and financial situations in dire conditions, auto manufacturers could be concerned.
But what is happening is frequently the opposite. Americans purchasing vehicles during the pandemic qualify for the lowest promotional rates and feel secure in their finances to put down more money to get the car they want. Edmunds reported that the average down payment increased 10% from a year ago, increasing the average monthly payment to $581.
Tesla has competition. Elon Musk’s success has driven many automakers to follow in his footsteps, bringing EV innovation to the market, including startups and mainstream automakers. Electric vehicles will be in the spotlight. The transition to making more vehicles electric and eco-friendly piggyback on environmental laxity and clean air regulations.
Not only that, but consumers are increasingly more trusting and comfortable with EVs. Manufacturers are producing models of all shapes and sizes to fit every lifestyle.
2021 will see the production of new EV automakers like Fisker, Lucid, or Rivian. And even brands that have low visibility like Xpeng and Nio are seeing growth in sales.
Now that EVs are becoming profitable, this segment in the industry is positioned to see growth and innovation this year.
Because of COVID-19, the whole world witnessed a shift into all things digital. Remote work, video conferencing, online shopping, and telemedicine all saw massive jumps in popularity out of necessity. And if there is one thing auto manufacturers and analysts agree on, a more significant number of vehicle sales will be conducted online.
This year will revolutionize the way vehicles are sold, purchased, and financed. Being able to see thousands of vehicles on your digital device without having to travel from dealership to dealership is appealing. Consumers can get the make, model, and trim options they want without leaving their couch.
Car and truck sales mentality has also shifted to accommodate – if the consumer wants it, the dealers will have it. It’s not selling a car these days. It’s a consumer buying a car. Selling vehicles to meet quotas isn’t the modern way of operating a business during these times, and many companies realize this. Many manufacturers have launched a digital car-buying experience, such as Nissan@Home.
Not only does purchasing online give the customer exactly what they want, but it allows the business to provide optimal customer service.
New vs. Used
The constant battle between new or used vehicles will continue, and yet again, will be influenced by factors that affect pricing. When manufacturing shutdowns took a toll on the automaking industry last spring, used car sales took the lead. The used car market saw the advantage as a new demand arose – affordable transportation.
The shift away from public transportation to privately owned vehicles increased while the number of people replacing vehicles due to normal wear-and-tear decreased. Since many Americans have not been commuting and putting miles on their car, the number of trade-ins and used vehicles available have diminished.
Financial worries and uncertainty also drove consumers to purchase more affordable, used vehicles instead of new vehicles with hefty price tags. These auto trends will continue well into 2021.