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Assessing the Covid impact on car market sales

Reopening of car showrooms may see uptick in sales

The pandemic changed the traditional car sales process. Photograph: iStock

The pandemic changed the traditional car sales process. Photograph: iStock

 

The most obvious effect of Covid-19 on the car market has been a quite dramatic fall in sales of new vehicles. “The new car market for last year and this year has fallen through the floor,” says Deloitte director Andrew Byrne.

“It’s 24 or 25 per cent down on 2019 which is the realistic base year to use. That’s the equivalent of 16,000 cars not sold this year alone. Car use has changed during Covid. A lot of people haven’t used their cars at all except to drive to the shops for the past year. They’ve got used to that and don’t see a reason to change their car.”

The pandemic has also had an upstream supply chain impact which is affecting car sales in certain segments of the market. “There has been a global microchip shortage, and this is affecting sales of high-end vehicles,” Byrne notes. “You can order the car, but you might wait months for it to arrive.”

Both consumer confidence and likelihood to purchase sentiment scores are growing as we exit lockdown

The reopening of the car showrooms may see an uptick in sales according to Richard Molloy, head of marketing and product marketing with Audi Ireland. “There is a significant amount of money on deposit,” he points out.

“Customers have been reassessing their lifestyle needs during the pandemic. Both consumer confidence and likelihood to purchase sentiment scores are growing as we exit lockdown. Car purchases remain one of the major purchase considerations.

“We believe our new model range including the Audi A3, Audi Q4 e-tron and the e-tron GT will tempt potential customers who are willing to spend their savings. There is pent-up demand from customers who have been delaying purchasing until retail opens up.”

Society of the Irish Motor Industry (SIMI) director general Brian Cooke is optimistic. “We would be hopeful that pent up demand and the increased consumer savings during 2020 would be released back into the economy in 2021 and 2022 which may see people investing in a new or newer vehicle.”

The other effect which can be attributed to the pandemic is the growth in online car sales. “It’s accelerated certain trends towards more online buying and customers have gained confidence in purchasing virtually,” says David Thomas, managing director of Volvo Car Ireland. “The importance of the customer trusting the retailer has increased particularly with used cars. Our Selekt approved used programme has been particularly effective.”

“The pandemic changed the traditional car sales process, with several lock-downs and restrictions, showrooms were closed for considerable periods of time which resulted in car sales operating primarily in an online space,” Brian Cooke notes.

“Dealerships increased their investments in digital platforms, which became their sales window, and they embraced new ways of communicating and selling to customers online. While the Industry has been using personalised video for a number of years, the importance of tools such as online chat and other forms of communication were of greater significance.

“The ability to offer a click and deliver service to car buyers has been a lifeline to the Industry during this difficult time in advance of the move to click and collect.”

While the industry adapted well, the response from consumers was also positive.

“Customers have responded well and many were happy to purchase online and have their vehicle delivered to them directly during the restrictions,” Cooke adds.

“With many people working remotely, far more of the population have become accustomed to purchasing online and deliveries. Click and delivery could potentially be a new service that retailers continue to offer their customers.

Even with full retail opening, there is no doubt customers will continue to research our cars, financial products, service plans online

“Many of our members are finding that consumers will have already undertaken their research online and know what they want before contacting the dealership.”

But the showroom isn’t dead by any means, Cooke points out. “While some may be more comfortable with completing the entire sale online others still prefer to visit the showroom, test drive and then make the purchase.”

The online trend has been in evidence for some time, according to Andrew Byrne. “That’s one of the main changes that we have seen over the past 24 months.

“The DoneDeal Motor Industry Review 2020 and Outlook For 2021 published in January showed the majority of people are now happy to shop for cars online and either click and collect or get the vehicle delivered. Tesla sell all their vehicles online. Click and deliver is certainly the way of the future.”

The relationship between dealer and customer has changed during the pandemic, says Richard Molloy. “Our dealers have worked extremely hard all year communicating with our customers; offering them personalised solutions for click and collect or click and deliver.

“However, we welcome the complete opening of retail. Even with full retail opening, there is no doubt customers will continue to research our cars, financial products, service plans and so on online.

We expect our electric car model share to grow substantiality for the rest of 2021 and in 2022

“Dealer feedback highlights there is pent-up demand from customers waiting to make appointments to physically visit the showrooms to test drive our fully electric, plug-in-hybrid and diesel and petrol products.”

2021 has seen a significant increase in sales of electric and hybrid models but Covid is probably not responsible.

“Our plug-in hybrid sales have increased from 22 per cent of our volume in 2020 to 56 per cent for the year to date in 2021,” says David Thomas. “Our forward orders are tracking even higher. I don’t think Covid has had a specific impact here. New car customers are following a clear direction supported by government and preparing for the future.”

Audi’s electric car share has doubled in the past 12 months since the company launched the new variants of the Audi e-tron model. “We are launching two new electric models during the summer: the new Q4 e-tron and our flagship e-tron GT,” says Molloy.

“We expect our electric car model share to grow substantiality for the rest of 2021 and in 2022. We launched our plug-in hybrid range to market this year. For the July registration period, customers will have a choice of eight Audi plug-in models, many of them availing of the government grants.”

Internal combustion isn’t about to disappear overnight, Molloy explains. “Our clean petrol and diesel adhere to the strict EU6 emission standards. Petrol and diesel models will remain the core models for Irish customers over the coming years as we transition gradually towards greater e-mobility by 2030.”