How Covid Changed the Automotive Industry

How did the Covid pandemic impact the automotive industry? COVID-19 hit hard in 2020, shutting down nearly every industry and taking millions of lives.

For several weeks, the entire world shut down; we all sat at home and watched the news for some glimmer of hope that we could get our lives back to normal. Covid struck hard and led to several social uproars that took place throughout the summer of 2020. The halting of travel, shipping, and physical connection put an unprecedented strain on the automotive industry.

Let’s explore how this pandemic impacted the auto industry for good.

Supply Chain Changes

The automotive supply chain was greatly impacted by the COVID-19 pandemic. Automakers and dealers anticipated a complete halt to car sales, which caused many companies to cancel orders for semiconductor chips. These little computer chips became a conversation topic that never ended but was only one part of the supply chain issues. Some automakers have invested in semiconductor plants while others worked to change their supply systems to ensure more parts are readily available at all times.

Localization of Goods and Materials

International travel was halted for longer than the quarantine was in effect in 2020. This meant bringing necessary materials to manufacturing plants could be nearly impossible if those materials were coming from foreign lands. This caused many automakers to begin finding local resources, which is a major change in the automotive industry caused by Covid. The localization of manufacturing has been part of this industry for years, but now, more materials than ever are locally sourced.

Unlikely Partnerships

Whether it was caused by the pandemic or simply a smart choice by many automotive brands, we now see more brands partner together than ever before. Ford and Volkswagen have recently partnered to develop autonomous driving software, Honda and GM are paired together to bring new EVs to the market, and BMW partnered with Toyota to give us the latest Supra and Z4 models. As we move forward, we’ll see more partnerships with companies that are often thought of as rivals. This could give us some of the best vehicles ever made as each brand adds elements that we admire to the resulting vehicles.

More Remote Functionality

The automotive industry was impacted by Covid in much the same way as every other industry on the planet. Instead of hopping on flights to attend meetings, produce launches, or testing events, automotive designers, engineers, and executives were stuck at home. This didn’t stop the forward movement of progress. Automakers found more remote functionality by adding collaborative software that allowed employees to work from home on many ongoing projects. In many cases, those who didn’t need to go back to the office to get the job done have not.

Versatile Sales Techniques

Stay home, they said. Don’t go anywhere, they said. But car dealerships had to find ways to sell cars to customers during a global lockdown. Although the shutdown meant staying at home, once lifted, many dealers had to learn how to sell vehicles utilizing social distancing and remote connections with customers. Some turned to online sales with virtual test drives and deliveries. Car dealers found ways to sell cars entirely online and without physical customer contact. Some of these techniques are still being used.

A Step Away From Globalization

Some automakers build specific models in only one location, which means many vehicles have to be loaded on ships and sent across oceans to various markets. Although the automotive industry can’t get entirely away from this process, Covid allowed many companies to analyze their manufacturing process. Some automakers changed their global products into more localized manufacturing processes. Some automakers have also begun building EV battery facilities near manufacturing plants, enabling a much larger step away from globalization.

Price Levels Increased

The most unfortunate result of the pandemic is the increased price of vehicles. This price increase was a ripple effect caused by the lack of semiconductor chips and other necessary supplies. Automakers couldn’t keep up with the demand for new cars, which caused consumers to turn to the used car market.

In 2021, we saw some used vehicles priced higher than when they were new, which is a complete topple of the industry. Although the supply of new vehicles has increased and used car prices are dropping, it would be naïve to think that vehicle prices will ever return to pre-pandemic levels.

Covid changed the automotive industry for good. In some ways, it made it better, but it also had a lasting damaging impact on this global industry.