The global auto industry eagerly moves past 2020, but there will be a lasting impact
2021 could not have come soon enough as we all looked to move past 2020 and the grip of a global pandemic. A new definition of disruption emerged last year with the spread of COVID-19 around the world, forcing significant challenges to society. And the automotive industry was no exception.
It is unlikely that 2020 will be remembered in a positive light, given the extent of the personal losses, financial stress and isolation faced by so many. But as the automotive industry, like so many others, found itself navigating uncharted waters, innovation and resilience began to surface from all the chaos.
Positive signals in 2020
- The process of employees being redeployed at home, leaving offices suddenly deserted, was virtually – and perhaps surprisingly – seamless.
- Vehicle manufacturing moved from various stages of shutdown in March and April back to assembly and new processes without any notable disruption, and vehicle inventory was rebuilt, despite the highly complex supply chain.
- Those selling vehicles were forced to find new ways to complete purchases during periods of lockdown; dealers and buyers alike quickly adapted to virtual transactions, with test drives, deliveries and closings all shifting from showrooms to private homes.
- Consumers’ willingness to continue to purchase vehicles was nothing short of astounding.
- Industry events, including LMC Automotive’s, moved online and one could argue that the flow of information was better than ever.
As attention shifts to 2021 and beyond, some of these changes and innovations will endure, but the industry will, nevertheless, face significant challenges. The recovery trend in the global Light Vehicle market is forecast to continue from the better-than-expected performance in 2020, with global sales set to increase by 11% to nearly 87 million units in 2021, from 78 million units in 2020. Volumes are projected to return to pre-pandemic levels as early as 2022.
While there is reason for optimism, several unknowns will continue to impact the pace of recovery and a return to normality.
Uncertainties facing 2021
- The level and amount of fiscal stimulus in various markets could skew how the global economy recovers.
- The effectiveness of vaccines and the timing of rollouts present risks to ongoing improvement.
- Changes emanating from a Biden administration are likely to impact the US economy, the pace of vehicle electrification in the US, as well as tariffs and global trade.
- A Brexit deal is no longer an uncertainty, but the full impact on trade and vehicle sourcing in the UK is still an unknown.
- Pent-up demand generated much of the 2020 recovery from April last year and will likely drive a degree of further growth in 2021 – and could even provide some upside potential if conditions are favourable.
- As demand recovers, component shortages and other supply chain disruptions could still be a reality.