It comes as little surprise that new car registrations in April have continued on a downward trend from March – falling to their lowest level since 1946. With the UK in lockdown for the whole month of April and manufacturers and dealers running minimal operations, the year on year reduction of 97.3% is understandable & expected.
Remember COVID is affecting the Globe
Other markets in Europe are also seeing similar reductions in April, ANFIA in Italy have reported a 97.6% reduction in new car sales, CCFA in France has reported a reduction of 88.8% and ANFAC in Spain reports sales declined 96.5%. On a positive trend, countries that were hit by COVID-19 before Europe are seeing a return to typical buying patterns. In China, where dealer’s resumption rate had reached 98.8% in April, GM sales had a double-digit increase year on year for April for example.
Online searches for new vehicles fall by more than half
During this period, one might expect interest and demand in new vehicles shifting from physical visits to online research. However, according to new research by EY Parthenon, online searches for new vehicles fell by more than half from March 8th to early April. While the data reveals that searches for used cars were on average five times higher than for new vehicles, online searches for used vehicles also fell by more than half over the same period.
All this may lead to dealers spending more of their time and effort on used cars – a trend the sector experienced post the 2008 financial crash.
The EY research supports the general consensus that many consumers are putting plans for large discretionary spend, such as new vehicles, very much on the back burner – as one might expect given increased levels uncertainty over many aspects of our lives.
Retail and service innovation
As time passes, and lockdown restrictions ease, consumer appetite and demand for new vehicles will increase but how they choose to conduct research and shop for vehicles may never be the same as they were pre-crisis. The demand is likely to be helped by the desire for personal mobility instead of shared vehicles and public transportation. The role & opportunity of used cars in this will be important.
The COVID-19 crisis is likely to drive a continued evolution of consumers attitudes towards digital channels. Many may find themselves buying products online or directly from manufacturers which they would have only considered purchasing from a retailer a few months ago. Dealers will continue to play a critical role but digital tools are likely to become further embedded through the whole sales funnel of awareness, consideration and purchase.
As we emerge from the lockdown and return to work safely over the coming weeks and months, the need to stimulate demand and find ways to fulfil customer orders will be crucial for dealers and OEMs. In the UK, we should continue to learn from other markets and develop innovative solutions that meets the evolving consumer demand.