2020 was a year that led to the disruption of many industries, such as commercial vehicles and automotive as a whole. The year saw a devastating decrease in both manufacturing and purchase of commercial vehicles. For example, in the UK the number of new car sales went down by 46% in March and reached 97% in April. Due to the COVID19 pandemic, most vehicle customers experienced a sift in their preferences, expectations, and behavior.
Entering 2021 commercial vehicles will face numerous challenges since they will have to accommodate the shifts in customer preference and expectations. Below are some of the challenges that commercial vehicles will face.
Vehicle dealership remains an integral part of the automotive retail process. However, restrictions due to COVID19 have accelerated the need for fully-digitized purchase options. Adoption of this online sales system will pause a challenge due to several reasons.
The first reason is that purchasing a vehicle online won’t be as easy and as quick as other e-commerce purchases. Cars are expensive and, in most cases, not returnable.
The second reason is that digital platforms will complicate the interactions between sales and traditional attribution structures. In most cases, customers engage in a multi-channel purchase process involving visiting a dealership and taking a test drive. This poses a challenge since digital purchase platforms can’t account for such procedures.
Remote Working and Network Contractions
Network contractions have been underway even before the COVID19 pandemic. For example, the brand Honda had made plans to contract its 106 dealerships in Australia due to decreased profits. In the United Kingdom, Ford has plans to cut down its 400 showrooms by half by the year 2025.
Due to the pandemic, several networks have had to shut down while the rest have resorted to working remotely. Entering 2021, companies that have adopted remote working will experience challenges in managing their remote employees and maintaining quality automotive retail.
New Ownership Concepts and New Technologies
Another challenge that commercial vehicles will face in 2021 is figuring out how autonomous vehicles and car-sharing will affect their businesses. According to some experts, car sales will dip as a result of these challenges. However, according to a report by Mckinsey, the impact might be very minimal due to the following reasons;
- Shared cars have higher utilization. This aspect will make their replacement more frequent, and this will create more business for dealerships.
- More customers will desire to have cars to drive themselves.
- 67% of customers across the US are not interested in any shared mobility.
This report also showed that the COVID pandemic reversed some of the challenges in that;
- 33% of people say that they value their cars more than before.
- 93% of people quoted that they now use their vehicles more than before.
However, the fact remains that the changes in technology and ownership may pose a challenge.
Alternative Fuel Vehicles
Entering 2021, automotive companies will have to face the challenge of the production of alternative fuel vehicles. In recent years this has been the main discussion around the globe. The pandemic has only served to accelerate the debate. Therefore, engineers and automotive brands will have to increase their efforts to create better alternative fuel technologies. Brands that will not cope with these changes will become faced out as biodiesel, solar, ethanol, and electric-powered vehicles continue to become mainstream.
Reconnecting with Customers
2020 saw the relationship between customers and brands disrupted. Most brands resulted in remote working and closed down their dealerships and showrooms. Customers also experienced curfews and lockdown that lasted for months. All these measures resulted in strained relationships between automotive brands and their customers.
Due to these reasons, 2021 will pose the challenge of reconnecting with customers. Brands will have to engage in more advertisements and promotions. They will also have to introduce new measures to help them bridge this gap. Otherwise, they risk being face out and losing their customers to other brands.
It is clear that as we progress through 2021, the automotive industry will face many challenges. Vehicle brands will have a hard time navigating the market and adapting to the changes. It is the ability to tackle the above challenges that will determine a brand’s success in the industry.