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How Pandemic is Changing Auto Industry



                 At some point this pandemic is going to run its course. I, for one, can’t

                          wait to get back to whatever we’re going to call “normal.”
                        But I’m also pretty sure some things will never be the same.


                                                       By John McElroy

        When I was growing up as a kid, I always  home once the pandemic is over. They’re  ings and has cut his paperwork in half. He
        felt like I had missed the great turning  already dreaming of reducing the amount  says the pandemic has opened his eyes to
        points in history. I secretly wished I had  of office space they need.    new ways of working.
        lived  in  a  time  when  momentous  events
        were reshaping the world.            Working parents with young children who  Less business travel will translate into less
                                             pay for day care might jump at the oppor-  business for the daily rental companies,
        Well, as they say, be careful what you wish  tunity to work from home. In the U.S., the  and that could really hurt new-car sales.
        for.  Now  I know  I’m  living  through  one  typical family pays about $1,000 per child  Hertz is teetering on the brink of bank-
        of the most hair-raising events in history.  per month for day care. It’s not unusual  ruptcy.
        The COVID-19 pandemic is going to per-  for households with a couple of kids to be
        manently change the way we live and work,  forking out $20,000 a year. So working  Remember, in the U.S. market alone, the
        especially in the automotive industry.  from home actually could put more mon-  daily rental companies buy nearly 2 mil-
                                             ey in their pocket, even if they took a pay  lion new vehicles a year. If that business
        As the pandemic spread throughout the  cut.                               doesn’t come back, it’s going to leave a gap-
        world, automakers and suppliers kept pro-                                 ing hole in sales.
        duction  running  as  long  as  they  could.  Some jobs, of course, can’t be done from
        They had been through tough times before  home. Manufacturing, testing and even  Car dealers also are being forced to change
        and knew how to handle recessions.   clay modeling requires people to be phys-  their ways. They’re trying to salvage sales
                                             ically in the shop working with equip-  by getting quarantined customers to do
        But this pandemic caught them complete-  ment. But just about everything else can  all the paperwork online and are promis-
        ly off-guard when they had to shut ev-  be done remotely.                 ing them “contactless” car delivery right to
        erything down and send their employees                                    their driveway.
        home for months. How was any work go-  One of the big societal changes coming
        ing to get done when no one was coming  out of this pandemic has been the wide-  Many people already shop online for goods
        into the office?                     spread acceptance of online meetings.  and food with at-home delivery. They’ve
                                             People who never used video conferenc-  come  to  expect  it  and  wonder  why  they
        The auto industry is always working on fu-  ing before are now becoming old pros at  can’t buy cars this way. Online retailing
        ture products. Any time you see a new car  how to connect, adjust the camera and get  could become a permanent way of selling
        unveiled, you have to remember it was ac-  the lighting right.            cars. And if that happens, do retailers re-
        tually designed and developed several years                               ally need big, fancy showrooms on expen-
        ago. If you don’t have something new going  Akio Toyoda CES 2020.jpgThe face-to-  sive, primo real estate?
        into your showrooms every year, you start  face interaction is quite good and is so
        losing market share. It’s just that simple.  productive that executives want to see  Another long-lasting effect of the pandem-
                                             this continue even when the quarantines  ic could be a public aversion to mass tran-
        Automakers were deeply worried that fu-  are over.                        sit. Many people are not going to want to
        ture product development would grind to a                                 get onto crowded buses, subways or trains.
        halt amid the pandemic. But to everyone’s  Not only do they expect big increases in  And they may not want to get into a taxi
        surprise, it turned out working from home  productivity by eliminating a lot of travel,  or Uber car with the driver on board. This
        went better than anyone expected.    they  also  relish  the  opportunity  to  slash  could lead to more sales of personal cars,
                                             their travel budgets. One Tier 1 exec told  which could help offset the drop from the
        I’ve interviewed a number of OEM and Tier  me he already slashed his company’s travel  daily rentals.
        1 executives about working under quaran-  budget for the year by 90%.
        tine and each one said they were amazed at                                At some point this pandemic is going to
        how much work was getting done.      Akio Toyoda (pictured, left) recently told  run its course. I, for one, can’t wait to get
                                             investors and shareholders he’s cut Toyo-  back to whatever we’re going to call “nor-
        So much so, they are thinking about offer-  ta’s travel budget this year by 80%. He told  mal.” But I’m also pretty sure some things
        ing employees the option of working from  them he’s spending a lot less time in meet-  will never be the same. n


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