2020 was clearly a year to forget for the automotive market. The pandemic and subsequent lockdowns and restrictions took their toll with consumers unable to buy for large parts of the year and with confidence low even in times where restrictions were eased. So, how will the market perform this year?
A Year to Forget
First, it is important to analyse the year just gone. It was reported that new car sales slumped to their lowest levels since 1992 down a staggering 29.4% on 2019 – this was the biggest decline since 1943 when auto manufacturers switched to munitions manufacturing for WW2. The SMMT estimated that this resulted in a staggering £20 billion loss to the UK automotive industry, but they are more confident about the year ahead even though it begins in a national lockdown.
Reasons to be Optimistic
It is thought that there are reasons to be optimistic about the automotive industry in 2021 despite the pandemic continuing. Many motorists will have put off buying a new car due to the virus outbreak, but with the situation steadily improving and businesses better equipped to protect public health, consumer confidence should grow as the situation improves and people should be keen to get the necessary cover required so we’re able to go back to those enjoyable road trips we’ve all missed.
World leaders in information, analytics and solutions IHS Market predict that global auto sales will gain momentum this year and rise 9% with the UK predicted growth of 11% to 15.3 million units. Of course, the rollout of the vaccine and Brexit situation will inevitably play a key role in this.
EVs Driving Recovery
It is also thought that motorists making the switch to electric vehicles could play a key role in the industry’s recovery. With the proposed 2030 ban on the sale of petrol and diesel, an improving infrastructure and consumers becoming increasingly eco-conscious along with the cost benefits, 2021 could be a great year for the electric car market.
This was echoed by ex-Aston Martin Boss and CEO of Palmer Automotive Andy Palmer, who stated that “Automotive historians may look back on this time as the turning point away from the internal combustion engine (ICE) and towards the mass-adoption of electric vehicles (EVs) and other alternative clean-energy vehicles. The onus is on car manufacturers to adapt to these changes and seize the opportunity.”
2020 was a year to forget for the UK automotive industry and there are reasons to be optimistic despite the ongoing pandemic. 2021 will be a unique and challenging year, but it is predicted that some ground will be made up with the pandemic hopefully improving and consumers looking to spend particularly on electric vehicles in 2021.
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.