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The COVID-19 pandemic shut down businesses, schools and all nearly facets of life in mid-March 2020, and life changed for everyone. Many of us were able to work from home, but many others were deemed suddenly as essential workers, venturing into a strange new world with a virus that threatened every part of their lives.
For the auto industry, 2020 was a pressure cooker — an unrelenting, disruptive and sometimes exhausting pressure cooker. And that pressure brought some interesting results, which will impact car buyers and sellers this year and well into the future.
Car Ownership Becomes a Must
Many questions remain around the coronavirus, but something people figured out relatively early was that owning a car became an important part of getting through the pandemic. Trains, buses or ride-sharing no longer felt safe.
Amid the backdrop, nearly 20% of Americans surveyed by Cars.com in 2020 indicated plans to buy a car due to health and safety concerns around public transportation and ride-sharing.
In 2021, the urgency to buy a car because of COVID-19 will continue — even after the vaccines are widely available and many consumers return cautiously to life outside their homes. The personal vehicle will remain a primary mode of transportation. And as more people reconsider where they live — and many consumers relocate from larger cities — the need for personal transportation will increase even more.
Your Driveway Is the New Dealership
With many businesses limiting access or closing to the public due to the pandemic, home delivery is one path that keeps some businesses open, and that’s especially true with automotive.
Cars.com dealerships offering home-delivery services increased 35% within the first six months of the pandemic, a move that allowed shoppers to choose contactless purchasing and delivery. And dealers doubled down on digital tools, turning to online chat, virtual retailing, video appointments and virtual test drives to help shoppers find the right car.
Cars.com found 61% of recent buyers surveyed in September said they’d want their newly purchased car delivered to their home from their local dealership. That demand will likely increase as automakers from Volkswagen to Nissan add digital tools and retailing to their sales experience.
A combination of many businesses struggling and the federal government’s inconsistency in providing assistance to both consumers and employers left Americans hit hard by the pandemic — some devastatingly so. In the automotive sector, manufacturing plants closed temporarily as they grappled with supply shortages and COVID-19 outbreaks. This created a shortage of new cars, which in turn pushed many shoppers from new cars to used, creating demand that spiked used-car prices throughout 2020.
Amid economic uncertainty, consumers struggled in 2020 to keep pandemic-related transportation costs within their household budgets. That boosted the need for longer loan terms, leaving many borrowers with negative equity for a longer period of ownership. It’s another layer of financial difficulty in an already fraught time.
To counter these financial strains, consumers targeted less-expensive cars, with 72% of shoppers surveyed by Cars.com in December 2020 indicating a budget of less than $20,000. In 2021, the trend of inexpensive cars will continue as households reckon with the need for a first car or an addition to the household fleet.
The pandemic has disrupted lives in so many ways. For car shoppers and dealers, it’s accelerated the need to purchase a car and changed how retailing is done. With two vaccines approved by the federal government in hand, there’s hope that 2021 will take a decidedly positive turn and continue to trend that way.
Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.