The pandemic may have thrown the private car a lifeline, says GlobalData

As the UK marks a year since its first population lockdown and the auto industry – among many industries – reflects on a year of unprecedented turmoil caused by the COVID-19 pandemic;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“For the global auto industry, it has been a tumultuous year like no other. Companies had to react quickly to rapidly changing circumstances – whether it was collapsed markets, new health protocols in factories and dealerships, or fragile supply chains exposed by the worldwide impact of the public health crisis and government responses to it.

“Let’s also not forget the contribution of many companies in rapidly repurposing manufacturing facilities to make PPE and ventilators for health service provision.

“Overall, it was a picture of considerable resilience all along the automotive value chain, from small parts suppliers, to the much larger Tier 1s, the vehicle makers and of course the retailers. Many companies also had to quickly learn lessons on cash management and review their operational strategies.

“There was much for the industry’s participants to contend with, but they are still standing and making profits.

“Are there going to be permanent legacies as recovery from the pandemic sets in and markets slowly return to near normal levels? Undoubtedly. Assumptions on the future of urban mobility have been brought firmly into question. For example, more working from home for white collar workers will change transportation needs.

“GlobalData’s survey of nearly 5,000 people showed that only 27% of people want a return to the office permanently. The majority – at 45% – want some form of hybrid solution that splits time between home and office, while the remainder want to carry on working from home permanently. That suggests much lower demand for transport – by whatever mode – in the future.

“And yet, private transport – including the car – may well find a more fertile niche in the new urban transport mix. Indeed, if more people abandon the daily suburban commute to the city center and opt to move out of cities to less densely populated locations, the private car perhaps becomes an even more essential household utility.

“The eventual demise of the privately owned car in urban areas has long been predicted. However, as ride-hail firms stutter and some city dwellers opt to use public transport less often, the pandemic may well have thrown the car – and the auto industry’s long established business model – a lifeline.”

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