Covid-19 Impact: Battered Car Industry Hopes to Recover Fast

The coronavirus pandemic started making its impact on the UK’s car industry by February. China is known for its manufacturing facilities including car spares around the world, and as the virus originated from China, the manufacturing facilities there, were suddenly closed, leading to disruption in the global supply chain and brought not only the UK but the global car industry to a sudden halt.

Later, when the lockdown was imposed on 23^rd March in the UK, the automobile industry was affected by several factors. Firstly, the supply of automotive spares parts was affected. Secondly, all high-street retail which came under the non-essential category was supposed to shut business operations. Thirdly, due to the rapid spread, the footfall in stores decreased drastically. In addition, the businesses were supposed to act responsibly for safeguarding the health of their employees amid the coronavirus crisis. All these factors together contributed to the mayhem in the car industry in the United Kingdom.

In the past some time, the economy of the United Kingdom has confronted various vulnerabilities. UK’s economy was tormented by the susceptibilities brought about by the Brexit, general elections and afterwards, the lethal coronavirus. The episode of the pandemic has left the car segment tottering like any other segment of the economy. Moreover, some of the vehicle producers were under added pressure to reduce zero carbon emissions by 2050 and produce cleaner vehicles. The consumers off late were shifting to cleaner fuel types vehicles from the conventional cars, and the vehicle retailers were at that point were already having a harsh time in the market.

The industry showing positive signs

The UK car industry seems to be recovering, as few car makers have resumed operations. According to some media reports, Japanese car maker, Toyota along with BMW and Bentley have resumed operations at their respective manufacturing facilities. The American and the British car makers are likely to follow suit by next week.

The carmakers can commence operations up to a certain extent, as in they can manufacture parts and assemble them, but due to lack of clarity on the conduct of business due to unclear exit strategies announced by the British government, it is hard to predict the reopening of showrooms. The car’s business is based on B to C (business to consumer) model, which is highly risky, given the current circumstances. Other neighbouring countries are likely to follow the trend.

However, the industry body SMMT (Society of Motor Manufacturers and Traders) has good news for car buyers in England. The car buyers in England would now get their car home delivered as the car retailers are accepting orders online. Even Toyota in some parts of Asia Pacific has started taking orders online and has ensured contactless delivery to the doorstep of the car buyers.

UK car sales fell to record low in April

As indicated by figures revealed by the SMMT (Society of Motor Manufacturers and Traders), the new vehicle enrolments in the United Kingdom plunged by 97.3 percent in April. Due to the Covid-19 outbreak, the country remained constrained into lockdown for the whole month, with showrooms shut and individuals requested to remain confined at home, the UK new vehicle deals recorded an extraordinary failure. This kind of sales numbers for new cars in the UK was last seen in February 1946, after the end of the second world war, when the sales in the country succumbed to 4,044 units.

The neighbouring countries of the United Kingdom exhibited similar trend, recorded a decline in sales figures by more than 85 per cent month on month. However, Tesla Model 3, Vauxhall Corsa and Jaguar I-Pace continued to rock the charts in April.

The Fleet orders stood at 3,090 units, which represented 71.5 per cent of the market share while the private buyers decreased by 98.7 per cent year on year to just 871 cars. The contribution of private vehicles to the market share was down by 50 per cent, from 42.1 per cent in 2019 to just 20.2 per cent in April 2020. The petrol-powered vehicles recorded a significant drop of 35.9 per cent in the market share in April 2020 from 62.8 per cent in April 2019, while the Diesel vehicles maintained their market share in the range of 25 to 28 per cent.

The light commercial vehicle (LCV) registrations recorded a plunge of 86.2 per cent in UK, amid the Covid-19 induced lockdown last month. However, due to support required in the key sectors, 3,387 vans, pickups and 4x4s were sold last month.

Due to the lockdown induced by the novel coronavirus, sales across all the segments and fuel types were impacted. In the United Kingdom, the new car registrations for conventional fuel types were down by nearly 98 per cent. The plug-in hybrid vehicles (PHEVs) were down by 95.1 per cent and hybrids (HEVs) were down by 99.3 per cent, as similar trend perpetuated across cleaner emission vehicles registration.

However, the battery electric vehicle (BEV) saw a decline of just 10 per cent in the sales figures as compared to conventional cars. The BEV’s market share rose from 0.9 per cent in April 2019 to 31.8 per cent in April 2020.

The car retailers figured out how to help key laborers, basic service providers, and its suppliers despite showrooms being shut in the last month due to the coronavirus emergency. The car industry has a noteworthy contribution in the UK’s economy. During the disaster prompted by the fatal infection, the industry extended it support in the maintenance for vehicles involved in essential services, and also came forward in helping NHS through the manufacture of ventilators.

The new vehicle registrations would be just over 1.5 million units by the end of 2020, which are far below the earlier forecast made by SMMT. It was 1992 (1.59 million units), when the previous low in new car registrations was recorded.

However, the BEV market is expected to double to 77,300 units in 2020 as the industry is showing recovery signs and newer models are expected to launch in this segment. The automotive sector calls for auto retail to be in first wave of re-openings amid lockdown easing roadmap still under the preliminary phase.