Auto Makers Slow Production as Coronavirus Dents Sales - WSJ

The coronavirus has hit the automotive market hard and made things stop for a while, but now that lockdown is over everything is kind of up in the air. While in quarantine a lot has changed like our employment status, workplace, and such. Many people started working from home if they were one of the lucky ones not laid off, and due to safety concerns and the comfort of being at home- some people will continue to work from home. This means less commuting and the reconsideration of another car. Couples might even downgrade to a single car instead of each having their own. This may be good for the environment, but not for the automotive market. There is also a possibility that used cars will gain more desirability than brand new cars due to the recession we are going through and the unemployment rate that has risen.


Before and After


During the months preceding the outbreak in the United States, business was booming and selling a lot of cars because it was the beginning of a new year. It was looking great for the rest of the year until an unexpected turn of events and the quarantine began. 36% of sales plummeted due to the coronavirus by May. People were stuck at home scared to go out into the world, but what they still could do was to shop online. Dealers slowly but surely began to adjust their marketing strategies and move to become fully digital. This brought customers and business back, but not as much as before quarantine began. 


Positive and Negative


All the time spent at home whether employed or not makes people reconsider the value of a car. Do I need an extra vehicle? Does it have to be brand new? Can I afford vehicular expenses right now? The quarantine led to cars being unused and just sitting there collecting dust, and now people are considering whether or not cars are “essential”. And if they do deem a car essential, they are most likely to purchase a used car or cheaper car instead because only long commutes need expensive and comfortable cars.


There is also the different side where the drop of gas prices and many sale incentives provided by dealerships that are encouraging people to buy SUVs and trucks instead of smaller vehicles. Or this is the perfect time to get a “fun” car that is used on occasion. People who are also leasing and need to return their vehicles are also considering to buy their leased car even more due to lower interest rates and 0 percent financing that is available. There are approximately 1.8 million leased cars that need to be returned, and dealers are expecting that most will not be returned due to the lessees wanting to change their contract and buy them.


New customers did emerge due to the coronavirus, and they are the people that used Uber and Lyft to commute everywhere. These customers emerged because they were afraid of using public transportation and riding in other people’s cars during the pandemic so they opted to finally purchase a new car.




There is always going to be both sides to a situation, especially like this pandemic we are experiencing. We finally get a break from work and spend time with family, but some people don’t have a job when this ends. Some people are finally graduating from high school and college, but will not get the proper graduation ceremony they deserve due to the coronavirus. The automotive industry took a pause from selling cars face-to-face, but ended up developing their websites to be more advanced and customers get a deal of a lifetime. All that matters is to always stay safe and make good choices.

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