Despite some continued pandemic restrictions on purchasing premium and luxury cars in dealerships throughout 2021, in addition to significant supply impact from the shortage of computer chips, the category recovered to the pre-pandemic level of current value sales in 2021, making up for the sales lost in 2020. While many consumers put such big-ticket purchases on hold in 2020, resulting in the automobile industry being amongst the hardest hit amidst the pandemic, the continuation of the stay-at-home trend, as well as continued hesitancy to ride public transportation, led wealthy consumers to use savings from 2020 to purchase new premium and luxury cars in 2021.
Much of the sales decline in premium and luxury cars in 2020 can be attributed to the months of March and April, when dealerships and showrooms were unable to operate due to lockdowns in most of the country. However, even as dealerships reopened and vehicle assembly plants came back online in May, increased regulations, including masks and social distancing requirements, continued throughout 2020 and into most of 2021.
While household names such as BMW and Audi witnessed sales drop by double-digits in value terms in 2020, electric vehicle newcomer Tesla registered an increase in its value sales in the US, as well as high growth in stock market capitalisation. CEO Elon Musk kept Tesla a permanent fixture in the news cycle, and the company especially made headlines in October 2021 for announcing the move of its headquarters from California to Austin, Texas, in large part as a result of California’s pandemic restrictions.
Prior to the pandemic, consumers’ attitudes regarding vehicle ownership versus vehicle access, such as through car rental, ride sharing and autonomous vehicles, had been changing as consumers reassessed the cost and value proposition of their personal vehicles. This led to increasing partnerships between the industry’s biggest players, as many sought to capitalise on these opportunities together, including the FREE NOW mobility venture from BMW and Daimler, and Volkswagen and Fords’ agreement to share electric and self-driving vehicle technology.
While the pressure exerted on consumer spending by the COVID-19 crisis was disastrous for car sales in 2020, the continued effects of the pandemic have begun to have the opposite effect, now driving sales of new cars as consumers remain hesitant to join strangers and other large groups in ride sharing and on public transport. While consumers were gaining interest in both in prior to the pandemic, COVID-19 made consumers wary of popular car sharing services, and also made them increasingly averse to high-density services such as public transport; both of which will translate into growth in new car sales for financially-stable households if such behaviours stick in the coming years.
The number of electric vehicle charging stations in the US is set to continue to increase in the coming years, as governments not only prioritise the installation of infrastructure for electric vehicles, but also as real estate developers and landlords increasingly add charging stations to their parking lots as an incentive for residents. This infrastructure expansion was further supported by regulations to increasingly limit petrol cars, such as California’s decision in September 2020 to phase out all sales of new petrol-powered cars by 2035.
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