2020 was one of the worst performing years for sales of passenger cars, with a severe drop of 29% in sales. This was also an impediment to the growth and development of in-car entertainment.
COVID-19 has led to a significant shift in consumer behaviour, with one major trend being decreasing mobility, as consumers have been forced to or have chosen to stay at home more due to health and safety issues or have shifted to working from home. With less need for long commutes, whether work-related, or for leisure, such as travelling, buying a first car or upgrading an existing car has become less of a priority, also affecting sales of in-car entertainment products.
Pure economic growth, such as that expected for Brazilian GDP in 2021, of 14% in current prices, will not necessarily translate directly into employment growth, as the country’s development post-COVID-19 will heavily rely on the agrobusiness, which does not employ an extensive workforce. This means that in 2021 the share of the unemployed population will hit nearly 15%, and the decrease from then will be slow, falling under 10% only in 2025.
Although GDP is expected to start to recover as soon as 2021, the inflation rate is also expected to grow starting in 2021 and continuing in the forecast period, which will erode the buying power of the average consumer. Align this situation with the slow recuperation of employment levels, which are expected to hit less than 10% only in 2025, and consumers will not regain their spending confidence and will consider a more rational approach to purchasing, prioritising essential items and expenses.
The electronics industry has been suffering from a global shortage of components, such as microprocessors, LCD screens and sound and memory cards, which directly affects the supply chain within in-car entertainment. This situation is expected to continue to prevail in the short-term at least, so players are putting effort into advanced supply chain strategies.
The share growth of e-commerce within in-car entertainment during 2020 came as no surprise, but its momentum and increased importance has continued in 2021, which is creating new pressure on companies. The first point that should be addressed by companies is online share of shelf.
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This report originates from Passport, our In-Car Entertainment research and analysis database.
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