(Newswire.net — August 25, 2021) — It’s no surprise that a global pandemic has impacted production industries, including the automotive sector. Prolonged shutdowns and labor shortages have significantly disrupted supply chains, loan policies, and capital spending. More than a year after COVID-19 first made headlines, the industry has shown some signs of returning to normal. However, automakers have also indicated the lasting scars that will continue to mark the industry for the foreseeable future.
Like the rest of the world, the automotive industry is adjusting to a new normal. Here are six long-lasting impacts of COVID-19.
A digitized auto finance industry
Even before the pandemic, most auto finance companies were transitioning to digital platforms, and COVID-19 only fast-tracked the shift. Digital sales accommodate a broader consumer base and reduce the risk of infection that in-person transactions pose. Moreover, most states have issued regulations on accepting electronic signatures, making digitized sales the new norm. The rise of virtual financing has led to the growth of lending companies like LoanPro, a loan management system provider. With the ability to ensure optimal data security and a heightened customer experience, automated SaaS loan management software will leave traditional lenders in the exhaust fumes of lapping future-forward competitors.
Employment impact
The economic impact of COVID-19 was felt in all sectors of the automotive industry, especially on labor. To avoid bankruptcy, many employees took cuts in their pay or were laid off altogether. The shrink in the workforce has stayed consistent even a year after shutdowns. As a result, many employees decided not to return to the industry.
Rise of electrification
A push toward electric vehicles became a significant impact of COVID-19 on the automaker industry. Large companies like Ford and Volvo made a considerable investment in clean technologies while rolling back other vehicle plans. While the industry was already leaning toward electrification, the financial strain caused by the pandemic forced them to narrow their focus. The rise of electric vehicles will also shift employment needs and eliminate roles like mechanical engineers. Automotive workers will need to shift their skillset sooner than expected if they are going to maintain careers in the changing industry.
Fall of autonomous vehicles
As companies prioritize eclectic vehicles, their commitments to autonomous vehicle technology took a back seat. Industry leaders like Volvo, who had previously targeted AV development as early as 2022, have pushed back their goals several years. COVID-19 has extended the timeline for driverless vehicles, forcing the world to wait even longer for Robo-taxis and autonomous public transportation.
A shortage in microprocessor chips
During national shutdowns, Americans splurged on items that helped pass the time, like webcams, laptops, video games, and smartphones. The rise in demand for tech-heavy products led to a global shortage of microprocessor chips essential to automakers. The chip deficit brought assembly lines to a halt, and many dealerships struggled to refill their inventory. Ultimately, the shortage means there are one million fewer cars on lots than usual.
Decline in ridesharing
Ridesharing companies like Lyft and Uber saw a significant decrease in revenue in 2020, and understandably so. As people prioritized safety measures like social distancing and sanitization, they became hesitant toward ride-hailing programs. The impact on the ridesharing market will likely experience a long-lasting decrease in rides, and many companies are diverting investments to AV technology. Coincidentally, consumers who previously relied on ridesharing are purchasing personal vehicles in large numbers.
Final thoughts
Like most industries, the automotive sector is pivoting to adjust to COVID policies. The impact of 2020 has changed the landscape of production and employment while ushering in a new era of electric technology. As automakers continue to experience disruptions, it’s vital that companies reevaluate strategies for the ever-changing market.