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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
8 | MIADA MISSISSIPPI DEALER Q2 2020