The question that everyone is asking is, ‘how much has COVID-19 affected the automotive industry’?
Here is our analysis.
Vehicle manufacturing and supply were affected by the following disruptions, which in turn impacted other aspects of the industry.
As a result of social distancing measures, several manufacturing units, including vehicle manufacturers, had to suspend activities to protect their employees.
A significant number of vehicle parts used to be brought in from China every year. With Chinese factories affected equally, if not more severely during the pandemic, there was a disruption in the supply chain.
This was further exacerbated by the restrictions that countries have placed on moving non-essential goods across borders.
As part of the lockdown, vehicle dealerships also had to close. This meant that vehicle manufacturers no longer had their traditional outlets available even if they could resume production.
Since all Government offices were shut during the lockdown, it meant new vehicles could not be registered.
As a result of the lockdown, several companies have transitioned to remote working in order to carry on with business. Since employees were no longer commuting to work, there were fewer vehicles on the road. As a result, there has been a temporary decline in demand for new vehicles. This development, however, is not all bad, as manufacturers can now build up stock to prepare for when sales go up again.
As a result of the disruption in vehicle manufacture, fleets have faced delays in getting new vehicle orders fulfilled. However, the main concern fleet managers have now is employee health and safety, while trying to carry on with business as usual.
Delivery and logistics fleets have been designated essential, and are responsible for keeping supermarkets stocked and for the delivery of online orders. However, whilst the drivers are on the roads, they constantly face the threat of infection. This has resulted in a change in the way these fleets operate, which we have detailed below.
In addition to keeping a safe distance, both from co-workers and customers they may have to interact with, fleet drivers have had to follow stringent sanitation procedures. This is because they often come in contact with fuel pumps and keypads which are frequently-touched surfaces. They may also have to share vehicles with other drivers.
As a result, fleet managers have had to create sanitation policies to ensure that drivers wash their hands and sanitise their vehicles every time they get out and get back in again. They are also being encouraged to wear gloves and wipe down vehicles before turning them in.
With businesses transitioning to home working, many fleet owners have also invested in online fleet management solutions. These cloud solutions have been instrumental in ensuring that vehicles are maintained at roadworthy levels during the lockdown, even when MOT's were extended for all vehicles.
These resources also help fleet managers schedule their drivers in staggered shifts to reduce contact between them. Since tiredness can be detrimental to drivers and their driving behaviour, fleet management tools also help managers allow ample rest time for regular drivers.
In addition to tracking essential fleet vehicles whilst they are on the roads, telematics is also being used to support drivers, helping them optimise routes and streamline working practices. At SG Fleet, we have even modified our telemetry offering to create a product designed for vehicle dealerships.
During the lockdown, non-essential businesses had to halt all operations and their fleets were not being used. This became a problem if the fleet was leased. With no revenue being generated, paying for the lease was a drain of resources.
As a result, leasing companies collaborated with fleet managers to mitigate some of the damage caused by COVID-19 in the fleet industry. They offered their customers payment holidays, where payments for the leased vehicles were deferred, helping fleets manage their finances during this difficult time.
Whilst the impact of the pandemic is yet to be determined, here are some trends that are emerging that could affect the long-term landscape of the vehicle industry.
In the first eight months of 2020, registrations for purely electric vehicles (EVs) was up 112% compared to 2019. This trend is expected to continue to grow, especially with the new Business in Kind (BiK) tax rates in place.
Moreover, if remote working becomes more popular, range anxiety, which has been one of the bigger concerns for drivers, will not be an issue any longer. This might mean there is a greater demand for low-emission vehicles like EVs.
At SG Fleet, we’ve been working through the lockdown to provide support to our customers as and when they needed it. If you are interested in our services, please call us on 0844 854 5100 or email CSalmon@sgfleet.com for more information.