As one of the most logistically complex industries in the world, with more than 10,000 suppliers involved in a vehicle’s value chain, it’s perhaps unsurprising that the automotive sector took such a hit
The coronavirus crisis has seen car sales plummet, with sales in China falling by a record 79 per cent in February and drastic drops in new car registrations in countries like the UK, Italy and Spain, which were hardest hit by the virus.
As one of the most logistically complex industries in the world, with more than 10,000 suppliers involved in a vehicle’s value chain, it’s perhaps unsurprising that the automotive sector took such a hit.
For many, the positive effect on the environment is a small silver lining of coronavirus, as we produce less, consume less, and make fewer journeys, if any, by car.
But for the auto industry, the silver lining is the idea that social distancing measures could encourage more people to own their own car, reversing recent car-sharing trends, according to economists at ING.
“We definitely do expect the crisis to leave its mark on mobility behaviour and some of the trends that have been going in the direction of ride-sharing and not owning a car might be reversed somewhat, if only temporarily,” ING’s Senior Economist Joanna Konings said.
“Demand to own a car has increased during the COVID-19 crisis so far. We can’t see that in vehicle sales obviously but we can see it in searches for vehicles and also in survey evidence,” Konings said.
“The evidence from the SARS outbreak was that the fear of risking infection lead to consumers avoiding public transportation and ultimately increased the demand for cars,” she added.
When car sales pick up, auto makers are betting that the crisis will help them accelerate towards electric cars, a shift that was already well underway before the coronavirus took hold.
Lower oil prices are unlikely to make petrol cars more attractive, not least because oil prices don’t translate directly into consumer fuel prices, ING said.
Electric vehicles are continuously improving and are reaching cost competitiveness, ING said, and regulatory pressure on vehicle emissions has not eased.
What’s more, policymakers could use the crisis as an opportunity to change the way we travel, announcing measures to support electric vehicles.