More People Are Interested In Buying A Car Due To COVID-19

More People Are Interested In Buying A Car Due To COVID-19

Is it the same scenario in the Philippines? Car sales are gaining traction in countries that have eased lockdown restrictions.

Reports about the automotive industry for the past few months have all been bleak. With dealers closed and factories shut, car sales for Q1 2020 for the global auto industry haven’t been good. Here in the Philippines, the Association of Vehicle Importers and Distributors (AVID)–an automotive alliance comprising of 20 member companies representing 26 automotive brands, recorded a 34.4% sales drop in the first quarter of the year. However, because of the fear of contracting the coronavirus when using public transportation, global interest in owning a car is higher than ever. Will this actually lead to increased car sales?

According to Bloomberg, car sales are gaining traction in countries that have eased lockdown restrictions. In Frankfurt, Germany, real estate assistant Anna Pawliczek is driving to work for the first time in her career. “I definitely have always preferred to chill out in the train, instead of being stuck at traffic lights,” she said. But days after Germany ended its lockdown, her company is asking returning employees to avoid public transportation at all costs.

In China, public relations account director James Li, says he would rather spend an hour sitting in Beijing traffic than risk 30 minutes exposed to crowds on a train. “Traffic is as bad as it could be” but the subway is still too dicey, he said.

These sentiments also reflect current driving and public transport statistics around the world. In China–where the coronavirus outbreak first occurred, morning traffic is higher than the 2019 average for Beijing, Shanghai, and Guangzhou. Meanwhile, subway use in Beijing, Shanghai, and Guangzhou is down by 53 percent, 29 percent, and 39 percent, respectively.

In Germany’s capital city of Berlin, public transport use is down by 61 percent from pre-coronavirus levels while the number of people driving has slightly recovered to 28 percent below -pre-coronavirus levels.

More People Are Interested In Buying A Car Due To COVID-19
Driving and public transport figures across 27 cities around the world. Data provided by Bloomberg.

As summer approaches in the United States, an increasing number of families are preparing for their vacation plans. Demand for long-haul recreational vehicles has increased as people opt for road trips over air travel.

Meanwhile, in the UK, eBay Motors Group says that 76 percent of the 693 car buyers it surveyed are interested in purchasing a car between now and 2-3 months after lockdown ends. All of those that said they wanted to buy a car as soon as possible are “key workers” that need a new car to get to work.

Will the Philippines experience the same scenario? Under the “new normal,” public transportation can only operate at a reduced capacity in order to practice social distancing. GMA News reports that the Metro Rail Transit 3 (MRT3) can only operate at 13 percent capacity. Because of this, MRT3 Director Michael Capati says that waiting times could last from two to three hours under the new system, compared to 30 minutes under the old one.

If anything, the enhanced community quarantine (ECQ) has clearly shown that owning a car has become increasingly advantageous for a lot of people. With a private car, people are less exposed to the risks of coronavirus and are not subject to the government’s will to shut down public transportation as a means to prevent the spread of COVID-19.

Of course, it would be unexpected for someone to suddenly buy an SUV like a Mazda CX-5 merely as a way to avoid contracting the disease. Where consumer interest among Filipinos is currently increasing is with entry-level compact cars, motorbikes, and second-hand cars.

According to our friends at Autodeal, the percentage of consumers who were willing to buy a car within a month from now has decreased, but the number of consumers that are interested in buying a car three months from now has shown significant signs of recovery.

More People Are Interested In Buying A Car Due To COVID-19
Consumer interest in subcompact cars is higher than pre-ECQ levels. Data provided by Autodeal

While midsize SUVs such as the Toyota Fortuner and Mitsubishi Montero Sport have dominated car sales for the past few years, consumer interest in a post-ECQ environment has shifted towards more affordable subcompact cars. As a matter of fact, consumer interest for cars like the Toyota Vios, Honda City, and Honda Brio has experienced a 30-40 percent increase. Interestingly, consumer interest for pick-ups has shown resiliency for the duration of the ECQ.

Car sales all over the world have gone down significantly from pre-coronavirus levels, but the fear of contracting the disease when using public transportation may give the public renewed interest in purchasing a car or a motorbike of their own. At this point, it is still hard to predict whether the increased interest in cars globally and locally will be sustainable for the next 12 months.

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