One year on from the first lockdown, how automotive has changed forever
As we pass the 12-month milestone since the first lockdown, I wanted to take the opportunity to reflect on what has been a pivotal year for the automotive industry. There are few global events in our lifetime that have had such a profound impact on people’s lives and whole industries – not least the automotive sector.
As physical forecourts across the UK prepare for full re-opening, we can start to say a tentative farewell to the many aspects of lockdown that we will be glad to see the end of. The limitations on personal freedom, the impact on our businesses and the challenges of schools being closed. However, many changes will not return to the way they were. More than half of everything bought in the UK now has a digital experience. The number of consumers that want to complete more of the car buying journey online is now larger than those wanting a forecourt led experience. Those that offer this will gain market share and those that don’t may well find their potential customer base will decline.
You may hear some retailers suggesting that not everyone can keep pace with this shift but if the last 12 months has told us anything, it’s that you cannot underestimate the resilience, adaptability and sheer determination of the UK automotive industry. That is why I have absolute confidence that with your entrepreneurialism and our technology know-how you can build back better and emerge with more competitive and more profitable businesses than before the crisis.
What’s changed over the last year and what does this mean for the industry?
In March 2020 retailers were understandably worried, facing the real prospect of no revenues as forecourts were abruptly closed. Fast forward a year and the industry has risen to the challenge, fuelled by strong consumer demand that has seen many retailers achieve higher profits than they did pre-lockdown. This growth in demand is reflected in our used sales proxy data, which has proved to be a good indicator, showing that in March, on average, retailers have been trading at over 90% of typical volumes [1], significantly more than the 70% and 80% recorded in January and February. This is very much in line with the very strong audience performance on Auto Trader, with March visits and time on site all setting new records up 27.2% and 22% respectively over 2019 levels [2].
In addition to these metrics, several wider economic factors point to another period of strong retail demand. The Bank of England have seen that household finances are in better shape than they were pre-COVID, with savings around five times higher and consumer debt at all-time lows. This aligns with our own findings suggesting even stronger consumer confidence in being able to afford their next car. Not only is affordability strong but 27% of on-site consumers looking to buy a car in the next 12 months think that ownership is more important than it was before COVID-19 [3] and 11% are in market specifically to avoid public transport [4], and new audiences have flocked to Auto Trader in recent months with the 18-24 age bracket seeing our largest growth year on year5.
Moving from ‘adapting for survival’ to ‘adapting for growth’.
We’re at a critical moment now, where all of the learnings from adapting for survival in the last 12 months need to be channelled into adapting for growth in the next year. 2020 was the year that digital car retailing became unavoidable in the pursuit of sales, 2021 will be the year it becomes essential for growth.
Whilst the forecourt experience is still going to be relevant for many car buyers going forward, it will change dramatically. Buyers expect what they get from every other purchase; choice, value and convenience or more specifically speed. Together we can deliver this and that is why we have made it our mission to support retailers with this transition so that any dealer, regardless of their size can reach and meet the needs of the new car buyer.
This is a once in a generation opportunity to transform the buying journey – not because COVID has forced us to but because you can offer a better experience and a more efficient journey.
We’ll continue to share data and insights into how our industry is evolving and we’ll deliver the technology and capabilities for all of our retailers to succeed. If there’s other ways you think we can support, as always, then please do not hesitate to get in touch.
Data Sources
1 Sales proxy data based on the levels of stock removed from Auto Trader March 2021 vs March 2020.
2 Auto Trader internal analysis of Google Analytics data, average number of unique advert views daily and time on site, 1st–30th March 2021 vs 1st–30th March 2019 (inclusive).
3 Auto Trader On-site Survey 15th – 23rd March, n=1571
4 Auto Trader On-site Survey, January 2021, n=508
5 Auto Trader internal analysis of Google Analytics data, proportion of users aged 18-24, 1st – 30th March 2021 vs 1st – 30th March 2020 (inclusive). Demographic data looks at 20% of total users.