The auto industry has always remained a strong market that featured steady growth and expansion, but due to the events of 2020 unfolding, its sales went down by a considerable margin. At the height of the pandemic and the world observing strict lockdown measures, the use of vehicles dropped by a lot as most people spent their time and did their jobs from the comfort of their homes.
Luckily, the auto industry did manage to end on a good note as the numbers were better than expected, and now that we’re past the year 2020, it’s starting to look like a great opportunity for the market to rebound and recover from the fall it experienced. So, today we’ll be looking at the potential for the industry to turn things around and acquire growth, citing key opportunities and potential barriers to their success.
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Number One Struggle: Inventory
Despite all the potential upside, we also have to note that the auto industry still faces one big struggle: inventory. The after-effects of the pandemic are still felt to this day, and there are still ongoing barriers that slow down the efficiency of supply chains all across industries. Sure, we could see an increase in demand, but the opportunity will be lost if the supply cannot keep up.
- Acquisition of Materials: From maintaining a steady supply of steel to sourcing special fibers, the acquisition of raw materials for production will prove to be one of the biggest hurdles to get over. Unless major car manufacturing companies can prepare for the growing demand, there is the risk of running short.
- Immediate Production: Although most of the auto industry has adopted automation in the manufacturing and production process, people are still necessary to oversee the entire operations. If efficiency and productivity can’t keep up with a skeletal workforce, then production will meet problems.
New Market Trends
One of the advantages of the year 2021 is new market trends appearing left and right for car manufacturing companies to utilize. Unlike the previous year that was heavily concerned with quarantining, we’ve reached a new normal where cities and entire populations strive to get things back up to speed while still following safety measures. Of course, there’s no guarantee of rapid growth reminiscent of pre-Covid 19, but any progress made will be good progress.
#1 Health & Safety
As evidenced by the need for face masks, face shields, sanitizers, and the practice of responsible social distancing, there is a need for health & safety to be observed. And as expected, travel is much stricter now than before due to the risk of infection and being exposed to carriers. In addition, there is also the looming threat of the new strain, all of which a private vehicle can avoid.
- Ridesharing: Recent years have shown the growth and expansion of the ridesharing industry, being seen as one of the more affordable and accessible methods of traveling without having to invest in a car. However, people are warier of ridesharing apps because they want to have little to no contact with people, which means getting a car will be worthwhile in the long-term.
- Need For Transportation: Places are opening up, and people need to get around, and if public transportation and ridesharing carry health risks, they’ll have no choice but to get a private vehicle. Plenty of households will consider purchasing an SUV to meet all transportation needs for the entire family.
#2 Economic Opportunities
Other than health & safety reasons, there are also economic opportunities available to the large population here in 2021. Yes, investing in a private vehicle will still require cash for a downpayment, but it’s starting to look like the opportunity cost and tradeoffs of purchasing one today will pay off in the long-term.
- Low-Interest Rates: Many car lots, display centers, and dealerships are offering low-interest rates to encourage people to buy and also help them stay in business. And when you consider the upcoming stimulus package to inject cash into the economy, the double whammy is a huge win for households who need to buy a car now.
#3 Future of Electric Vehicles
Last but not least, we’ve also seen the surge of electric vehicles into the mainstream as more car manufacturing companies adopt the all-electric mindset and reveal their EVs for the future. In fact, if you’re up to date on all things technology, then you’ll know that CES 2021 is happening this week, which many car manufacturing companies decided was the best event to host a keynote speech for their EVs. There was also the recent news of Elon Musk briefly overtaking Jeff Bezos as the richest man of the world when Tesla stock skyrocketed, and while it did come back down, this only proves the potential for growth in the electric vehicle market.
A Bright Year Ahead
Considering all of these aspects of the auto industry, 2021 is working up to be a bright year ahead filled with opportunities. While we can’t say for sure what will happen or forecast the chances of success with the current, let’s hope things take a turn for the better but not completely cross out the potential of failure.
