How Did the Car Industry Fare Amid the Pandemic? Check Out the 2020 Year-End Review

The COVID-19 pandemic has truly shaken the world, impacting people’s daily lives and disrupting the business landscape in more ways than one. Some industries, like travel and hospitality, have been hit particularly bad due to the need for limited face-to-face contact and interactions. As for most businesses, remote work has become the new normal, with many relying on online communication and collaboration tools.


Given that all business industries have been affected by the pandemic, it is no surprise that the car industry also saw changes in sales, consumer behavior, and general trends. The question, however, is how much the pandemic impacted car buying. As the year comes to a close, experts are now looking into how the industry performed compared to forecasts and projections made earlier. Get to know more about how the car industry fared in 2020 with this year-end review.


Car Sales Were Hit Hard, But Slowly Rebounding


Unsurprisingly, car sales dropped in 2020, especially since people have become more cautious about their spending, with most focusing on essential goods. The large unemployment rate and economic downturn have also lessened the number of people that could afford to get a car. Furthermore, given the quarantines, lockdowns, and mobility restrictions imposed worldwide, the thought of traveling or moving around by plane or public transportation has not been on top of people’s minds.


Without a doubt, the automotive industry took a hard hit from the pandemic, with many car dealerships closing down. Sales went down by 71% in China in February and 47% in the US in April. The first two quarters of the year proved to have the most substantial drops in sales, while the third quarter showed some improvement. Though sales were still lower than those from last year, the plunge was not as significant.


On the flip side, sales are slowly starting to rebound as the year comes to a close. Though it is still expected that the number of vehicles sold in 2020 will be 28% lower than in 2019, industry forecasts look slightly more optimistic. Sales in the third quarter were an encouraging improvement from the previous two, and a V-shaped recovery is expected as the year nears its end. In particular, trucks and SUVs were observed to increase in demand and take up a larger market share this year.


Shift in Consumer Perception and Behavior


The pandemic has led to major changes in consumer behavior and perception when it comes to buying cars. As of September, purchase intent was still down by 14% from pre-COVID levels, but this number is an improvement from the earlier months. Two of the most important findings include the increased emphasis on lower prices and digital sales.


Consumers worldwide are looking to spend less on their cars as they are now being more careful with their expenses. Quality, affordability, and longevity are some of the top characteristics sought today, with people looking at new and used cars. Due to the current economic situation, many have become more critical and discerning about making purchases, especially for investments like cars.


Moreover, the digital platform now serves as an important aspect of driving the purchase funnel. The majority of car buyers start their research with the Internet, emphasizing the importance of dealers having an online presence. ThinkWithGoogle noted that 92% of auto purchasers research online. To add to this, consumers now prefer contactless transactions over in-person transactions, with some willing to pay even more to limit face-to-face contact.


With restrictions becoming more flexible and easing, and people slowly starting to leave their houses, many urban dwellers are becoming first-time car owners to avoid riding public transportation. Given that many car dealers and sellers have adapted to the situation by making online car buying possible. These turn of events have proven to be beneficial for the car industry, with demand starting to pick up.


Overall, consumers are starting to find more comfort in vehicle ownership, especially with their increased focus on personal health and safety. Less are relying on public transportation, and more are using private cars. Thus, there is certainly potential for car dealers to get back on track and increase their sales with the boost in car demand.


Factors Influencing Car Buyers’ Purchase Intention


Due to the pandemic, consumers have become even more critical about car purchases. However, what is certain and similar for people in different parts of the world is that most of their focus has shifted to safety being the top priority. Safety and protection are now considered the primary motivators driving purchase interest and intention.


EY Global noted that 78% are more likely to use their car for travel, most likely due to the concern of potential congestion in public transit. Americans and Chinese consumers are optimistic about the post-pandemic world. One-third of Americans stating they are likely to purchase a vehicle after the outbreak, and over half of Chinese consumers have the same sentiments.

Another important factor influencing purchase intention is financial concerns. Due to the economic recession, loss of income, or increased expenses, consumers are less inclined to purchase cars during this time. However, automotive sellers can navigate this situation by offering 0% financing, deferred payments, and other protection benefits to give buyers more peace of mind.


Search volumes for car and truck deals have increased significantly this year, with most interested buyers being at home and relying on the Internet to get information. One notable finding is the increase in local searches made by consumers. People want to find dealerships near their location to avoid having to go to far places. However, thanks to the digital space evolution, there are now many alternatives to visiting dealerships. Digital showrooms, video conference meetings, and VR test drives are only some of the innovations introduced in the car industry to address this issue.


Critical Role of Online Space


Interestingly, most car dealers only started to open up to the online world due to the pandemic. Some consumers continue to be apprehensive about going fully online with car buying, especially since getting a car is a big investment. However, the universal consensus is that customers are embracing digitization in certain aspects of the car buying process. The online space has proven to play a critical role in car dealership sales and performance as consumers are adamant about limiting contact.


The transition to digital means has resulted in a more convenient buying process with less pressure. Customers can negotiate prices online, do solo test drives, course questions through email. Observably, the purchase journey happens more frequently online, but the actual purchase is still done offline.


A survey conducted by ThinkWithGoogle has generated interesting insights on how the digitization of car buying can impact sales for dealers. For instance, 64% of potential buyers who watch online videos stated that they are willing to purchase a car without a test drive with new video formats like 360 videos. The watching time for test drive videos on YouTube has also grown by 65% in the past two years, highlighting the trend with these videos to influence customer purchase behavior.

As a result, brands can benefit from investing in higher-quality and longer content, allowing customers to experience what it is like to ride the car being featured. The key is to make the video real to capture their interest and convince them to purchase a model. All in all, creating videos can get people talking about a particular brand and help them gain recognition. With the hit taken by the industry in the pandemic, this type of traction is precisely what companies need to rebound.


Spike in Prices in Used Car Market


One of the interesting and surprising turns in the automotive industry during the pandemic would be the increase in the used car market prices. Analysts call it a seller’s market today, as car shoppers are gravitating towards user cars for lower prices and favorable interest rates. With the demand increasing significantly, buyers have less negotiating power, and dealers are less flexible with price adjustments.


Though consumers can now find a larger inventory of used cars online, the spike in demand has led to prices turning into a premium. Used car sales started to show promising growth in April and May but ultimately boomed in August and September, when sellers registered the highest inventory turnover rates. The change was so big and unexpected that used car sales today are even higher than they were in the pre-COVID era. Sports cars and trucks, in particular, were found to have some of the highest sales.


With this major shift in buyer’s preferences, car dealers can benefit from selling used vehicles at higher prices. As for consumers, doing research will be more critical than ever. Since it is now harder to get lower prices, it is important to ensure certainty before purchasing.


Electric and Hybrid Cars in the Pandemic


While the demand for new cars has overall decreased due to the pandemic, the electric vehicle segment noticeably did not plummet as much as other car segments. Naturally, sales growth still slowed down, but the projection for the next decade is looking optimistic. Though consumers are more interested in affordability than sustainability, there is still much interest in renewable energy sources.


Over time, electric and hybrid cars have grown considerably in design and features, with many new models resembling most drivers’ ideal needs. Electric car manufacturers have also made it clear that more commercial models will be released in the market in the coming decade. That said, the recovery for sales in this segment is expected to be slower in the US as consumers are currently taking advantage of lower oil prices.


Ride Sharing in the Post-Pandemic World


The ride-sharing service industry is closely related to the automotive industry, and like the latter, this industry has also been severely affected by the pandemic. The public reception on ride-sharing can be viewed in two ways. On the one hand, some people may prefer private rides over public transportation, resulting in an increase in rides. However, on the other hand, some people may generally avoid commute trips for safety reasons, resulting in a decrease in rides.


According to Deloitte, 57% of Canadians plan to limit their use of these services, while 62% plan to reduce public transportation use. Other statistics show that 40% of people in the US have started to use less ride-sharing services since the COVID-19 outbreak, while 28% of them noted their distrust in the cleanliness of other people’s cars.


Evidently, ride-hailing companies’ main challenge is gaining the consumers’ trust and showing them their adherence to safety standards. Now that quarantines and lockdowns are being lifted in some parts of the world, people are also slowly returning to work or doing other essential activities. As a result, the demand for rides may start to pick up, but the growth may be slow as consumers are now extra cautious of their health and safety.


The future of ride-sharing is still not set in stone as there are still many uncertainties. The need for social distancing raises the question of whether the “sharing” concept may still be feasible. Likewise, companies may also turn to additional revenue streams to make up for the expected drop in booked rides. These alternatives may include food delivery services, express delivery of items, and many other similar concepts.


Outlook for the Car Industry


While car sales are gradually rising and the overall industry performance is getting better, the car buying industry has yet to bounce back to its pre-COVID state. Naturally, the world is trying to transition into the new normal, so it is not only the car industry that is recovering from the effects of the pandemic. However, if there is one thing that is more certain during this time, it is the fact that car sales are transitioning into an online future.


Though many customers will still want to see a car in person before finalizing the purchase, several surveys and studies have shown that many aspects of the purchasing journey will likely be digitized in the future. This change is brought about by the heightened awareness for social distancing and limited contact, as well as the convenience of doing car deals online.




COVID-19 has disrupted all industries, and the car industry is no exception. Buyer behaviors have evidently shifted into new priorities, with consumers becoming hyper-aware of their health and safety. While sales plummeted early in the year, they are slowly rising back up as restrictions are starting to ease and mobility is once again increasing. As such, the car industry is expected to make a recovery as the fourth quarter of this year comes to a close.


2020 has been a year of massive transitions. For car dealers and sellers, venturing into the digital space is one of the biggest changes, and one that is expected to stay. Even in the pre-pandemic era, consumers have already turned to online means to research about cars and help them make purchase decisions. Now that people are more cautious about face-to-face contact, it is no doubt that the car industry will be seeing digitization in its future.