With the transition away from lockdowns and restrictions, the impact of so much sudden change is still making waves in settled industries across the world. Whether it is the change in consumer behaviour, reduction of manufacturing or the demands in shipping, the car industry is at the forefront of changing to a way it has never been before. We’ll take a closer look at the new and used car market before and after the pandemic.
In the years leading up to the global change caused by the coronavirus, the new & used car markets were firmly settled in a specific set of ways. Sales mostly happened in-person and the relationship of new to used cars was well established with “new car consumers” regularly upgrading and keeping the used car demand satisfied. A connection often underappreciated, without the steady flow of new cars entering the market, the used car industry is heavily reliant on consumers constantly switching vehicles to maintain their stock and sales. As a result of this, any changes in consumer preference or buyer behaviour will always be seen first in the new car space and then over time be reflected in the used car market. A great example of this was the increase in Luxury SUV and Electronic Vehicle interest up to and also throughout the pandemic. While changes in demand normally haven’t caused such ripples years down the line, the shift in customer demand mixed with the shutting down of supply lines are a major cause of shifting behaviour in the modern day markets.
The New Normal
Technology is at the forefront of all our thinking nowadays. From self-checkout, to self-driving cars, many have fully embraced the ability to have something done completely autonomously or without any unnecessary additional interactions.
For the car industry we see two major changes that are altering what was previously relatively unchanged for decades.
1. The move to online
Unsurprisingly, the online world has now turned its eyes towards one of the last truly “in-person” purchasing experiences. The idea even a few years ago that someone would purchase a new or used car totally online would be strange to hear. The shift from online being just a digital menu of sorts, to now consumers looking for an entirely online experience has seen the growth of large players such as Vroom, Carvana, eBay Motors and Shift Technologies
This market is still growing and has huge potential with many dealerships still remaining as physical first, however the move towards more technological solutions is driving the industry in this direction. Apps or websites that offer car rental, viewing or purchasing without additional interaction are being powered by companies empowering the consumer to act when it best suits them.
Whether online or in-person the desire for autonomy is reflected with the push for more control which is most accessible online.
2. The growth in battery powered vehicles
Technological advancements are something companies and people rightly highlight as something they are proud of. New safety features, latest navigation or display tech is all the rage. Each year, more and more vehicles become more and more reliant on the technology inside the car. The rise of hybrid and electric vehicles (EVs) is a perfect example of this shift from purely mechanical, to a true reliance on the chips and materials important to these technologically advanced vehicles.
These chips and lithium batteries however require great skill and a specific set of materials to be able to be created. With spikes in the demand on cars that require these materials, the shortage and backlog of demand is increasing month to month. Whilst the demand is growing, manufacturing cannot keep up and as a result, there is a shortage of these new vehicles entering the marketplace.
What does it all mean?
Due to the tight relationship between the used and new car markets, the decrease in new cars has a multiplying effect on the used market. Less users are ‘upgrading’ to the newest vehicle as it is possibly not available or is simply delayed. This in turn means that there are less used cars entering the growing demand of the used car market. Going against the market norms, the used car market during and since the pandemic has seen car values increase over time. Driven by a tightening of available vehicles and a push to be more autonomous, the used car market has seen record increases in prices with demand not slowing as the world recovers from the impact of coronavirus.
The new and used car markets have been heavily impacted in recent years and the lasting impact is still yet to be fully realised. The shifting in demand of certain cars, inventory shortages, a shift for more autonomous options and vehicles are just the tip of the iceberg. Soaring inflation and potential decreases in available money are also key factors for many car owners and play a huge role in the decision making process. It is undeniable that these two markets changed forever at the beginning of 2020, and we look forward to seeing how DriveX can be a part of the newly forming future.
To see how we help buyers to navigate in the used car market, see For Consumers page.