Vehicle Purchases Shift Online
The spread of the coronavirus (COVID-19) has had a negative impact on auto sales. The choices made by automakers and OEMs alike have been influenced by supply chain bottlenecks. The industry has been forced to limit production due to a lack of critical raw materials and parts. Fewer new and secondhand cars are available, which raises pricing. E-commerce has also been highlighted by the pandemic as a potential remedy. According to a recent survey of global automotive executives, many of them believe that by 2030, most car purchases would take place online.
How the pandemic impacted the auto industry
According to an international survey of international automotive executives, there will likely be a sizable transition to online automobile sales by the year 2030. According to reports, 46% of these executives foresee a significant increase in automakers' direct-to-consumer sales as opposed to sales through conventional franchised dealerships. According to the survey, 78% of these executives predict that by 2030, most new car sales will take place online.
Starting with worker and consumer safety amid this global crisis, the pandemic caused various issues. It also resulted in supply chain problems, labor, and part shortages. As a result, there were fewer new and used cars available, and costs rose significantly.
The continuing shortage of semiconductor chips has particularly hurt the automotive industry. The issue extends beyond the lack of new cars being sold, claims Car & Driver. Particular automakers shut down whole production lines for some vehicles when the supply became scarce. Others saw production continue while non-essential technological aspects requiring chips were eliminated. It kept people employed and lines moving.
Factory-direct car sales
Because of the coronavirus, unconventional business models have swiftly evolved out of necessity. A decade ago, factory-direct auto sales were unheard of. Online vehicle sales, however, are nothing new, thanks to the growth of electric vehicle start-up firms like Rivian and Tesla. A growing number of people are accepting them. These executives all agree that consumers are tired of the vehicle dealership experience. Businesses that can give customers simple, hassle-free experiences will be most successful.
In August 2021, KPMG surveyed 1,118 worldwide CEOs to learn their predictions for the future of the car industry. According to 84% of them, traditional buys and leases will face competition from automobile subscription services. They claim that as crucial a factor in their purchasing decisions as car branding and amenities will be the assurance of a flawless experience.
According to Gary Silberg, global head of automotive at KPMG International, as more and more people shop online, new companies will enter the market with fresh approaches. Franchised dealers will have no choice but to make an investment in data and analytics in order to comprehend their target market and maintain any semblance of competitiveness.
What it means for the future of the industry
As online vehicle sales grow more commonplace, Silberg predicted that the market would undergo significant consolidation. Larger dealers with financial resources and strong digital capabilities will take the lead very fast. According to the report, most CEOs were optimistic about the future viability of the sector and the shift to electric vehicles (EVs). In a KPMG survey, 53% of car executives expressed confidence in the industry's capacity to expand over the following five years. 38% of those polled expressed worry about the future.
The source of the concern is uncertainty regarding supply chain concerns involving semiconductors and other commodities including lithium, aluminum, and battery-related parts. The contemporary contradiction in the automotive sector, according to Silbert, was depicted by the two points. Long-term hope is compared to immediate concerns.