The Coronavirus (COVID-19) outburst caused a health crisis and economic hardship for consumers, businesses, and communities across the world. School closures and travel bans were instituted in countries around the world to help stop the spread of the virus.
The ensuing lockdown stalled trade and business, and threw multiple industries into turmoil, including the automotive industry. While some of the most affected areas are the most critical car-making centres in the world and homes to key links in the industry’s worldwide supply chain, others like automakers in Nigeria also suffered a major setback. As a result, the global auto industry is adapting to Covid-19 using a variety of methods.
The auto industry, exemplified by carmakers like Ferrari was hard hit by Covid-19
America's first experience with an auto crisis
America had its main economic disaster in 2008. This crisis nearly wiped the American auto industry off the map. The “Big Three” would have more or less, without doubt, lurched into bankruptcy if not for the enormous public bailouts. This simply shows that a whole lot can happen in a specified period.
However, this virus that hit the world hard revealed that automakers, both foreign and domestic, had to evolve to become tougher and more responsive.
All over the world, the pandemic, which resulted in a lockdown across the globe, shut down production plants, boarded up the dealerships, and also compulsorily made buyers put off big purchases.
The auto industry in Nigeria
In Nigeria, the automotive industry and other transportation sectors faced a decline in the market in 2019. Furthermore, things got worse with the outbreak of novel COVID-19 disease as it had a severe impact on the industry.
Africa’s auto market is the smallest automobile market in the world. Apart from South Africa, Morocco, Egypt, and Algeria, the automotive market in the rest of the countries in the continent is much smaller in comparison to the big four.
The customary best months to sell cars in Nigeria have helped marginally to keep the industry afloat.
Business ground to a halt. No business, no cars
Innoson Motors during Covid-19
In Nigeria, the only passenger car manufacturing firm, Innoson Vehicles Motors (IVM), for the time being, shut down the production of vehicles and engines at its factory in Anambra state, Nigeria, due to the Coronavirus epidemic. This inventive was aimed at preserving the health and safety of the workers.
The closure of the factory by Innoson automobile manufacturing gave rise to economic loss due to reduced local automobile production, which in turn affected its income base and the manufacturing industry nationally.
As the plague crippled the economic activities of the manufacturing industries across the world, the management of Innoson thought out of the box. In their strategic responses, Innoson motors now broadened its horizons and diversified into the production of medical equipment such as ventilators.
These are of course used by health care workers in taking care of Covid-19 patients and in the intensive health care units of hospitals. IVM also prioritized the manufacturing of ambulances, above and more than any other type of car, as this was what was most needed.
Innoson went into the manufacture of ambulances
Rest of the industry responses
Ironically, brands like Toyota and Honda, because of the pandemic, had to raise their profit estimates considerably. Part of that unlikely change can be credited to the dynamics of the crisis itself. All the vacations people couldn’t go for because of the pandemic, and the restaurants they could not eat in, made many buyers have extra cash for cars down payments.
We give most of the praise, however, to the auto industry itself. Automakers and their suppliers not only adjusted to the pandemic, but they also progressed and advanced technologically, employing creative new ways to save themselves from disaster. They did so by adopting these strategies:
How the global auto industry is adapting to Covid-19?
1. They removed dealerships from the equation
Some companies were already gaining ground on eliminating dealerships before the pandemic closed sales area across the country. They include companies like Carvana and Vroom. When the pandemic came, the dealers had a choice, which was to either grow or die.
They had to get used to it by rolling out or improving online features like cybernetic shopping assistants, remote negotiation tools for acquisitions and part-exchange and digital platforms for safeguarding financing and completing accounts. The result of this is that online car sales increased up to 250% over last year industry-wide.
Dealers and manufacturers have had to innovate on using social media to sell cars online and the use of such devices like videos that help sell cars online.
Shopping online now includes car buying also
2. They brought the cars to the buyers
Dealers had to look for a way to sell cars to their customers. They were able, through buying cars online, to meet the buying demands of customers, but the cars were still at their showrooms and some of the buyers were too unwilling and some were not permitted to come to pick them up.
The automakers did not start widespread delivery until they saw Toyota/Lexus, GM, and Hyundai’s Genesis Luxury roll out. They were amongst the first to roll out widespread delivery. Many dealers stretched out the idea by conveying cars not only after buying but also for no-contact test drives to potential buyers.
When customers were ready to buy, many dealers volunteered to bring concluding paperwork to them to sign.
3. They sweetened the pot
Because the auto dealers had run at a loss due to the pandemic, it didn’t take long for them to insure against further losses by presenting deals that were too good to ignore. In most cases, those enticements involved cash back, low or zero-interest financing, or both.
Several brands sugarcoated the deal further by allowing late payments for one, two months, or even three months in a few cases.
4. They put empathy in services
The hardship strategies made by most automakers and their dealers were for two purposes: pushing anxious customers off the fence and placing their brands as sympathetic partners they could trust.
For hostile buyers, they offered freedom, and also for those who were worried they might run into financial trouble after buying the car, 90-days-payment support was offered by Volkswagen to customers who were or are affected by the pandemic.
Jaguar and others also offered agreement postponements and the Big Three and others offered payment adjournments. Payment deferment was offered by Nissan and quite a few others.
Dealers and automakers offered more incentives to car buyers
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5. They saw an opportunity in the used cars market
A golden opportunity was spotted by local dealers and online-only sellers in the formerly big-company-owned market. Financial plans were shaky, and buyers were doubtful about spending on new cars.
The overcrowded stations of public transportation were no-go-zones and closed factories were rolling out fewer and fewer cars. Some companies started concentrating on their used-car efforts with great success and they saw their stock values increase suddenly.
With in-person sales cancelled across the country, outmoded dealers began hoarding used inventory through digital sales. We can say that the auto industry has not yet recovered from its losses but it’s now selling more used cars than it was before the outbreak of the virus. One top Nigerian auto dealer that has excelled at this is naijauto.com.
Like other online auto sites, naijauto presents a safe, reliable alternative to physical car buying
6. They responded with anti-Covid-19 technology
Many car makers have developed safety technology such as automatic air filter systems in new cars that help to fight the spread of the virus, and boost customers confidence. This is also one way the industry tries to stay afloat.
A clean and safe car makes a happier customer is what dealers seem to be saying now
The video below will further enlighten you about how the auto industry is handling Covid-19.
Cars & COVID-19 | The Future of Automotive After the Pandemic
The COVID-19 pandemic has changed the world within the twinkling of an eye. The auto industry was affected by it but was able to create ways to adapt and we must say they are doing well. We can therefore conclude that the global auto industry is adapting to Covid-19, allowing it if not to thrive, at least to survive while waiting for better days.
>>> More Crononavirus updates on naijauto.com