Cars have become an essential instrument to living the best life, and while we didn’t get to go on as many road trips with the global pandemic keeping us locked down for the majority of 2020, it did help us get to places safely. And now that Covid-19 restrictions are easing as vaccination rollout programs continue to progress, the notion of going outside and breathing in fresh air is finally picking up some steam.
However, that’s not to say we’re out of the running yet because we are far from fully resolving this health crisis, and it’s left quite the impactful mark on the auto markets that can still be felt until today. In fact, both optimists and naysayers are pretty much on the fence about market sentiment, and today we’ll be exploring the relative economic confidence for the industry and just how valuable your car has become in these past few months.
Travel Demand On The Rise Again
Isolation didn’t do any good for the entire global population, and that’s including the homebodies who generally prefer staying at home and getting stuff done without going outside. And now that movement is a lot less limited than the initial outbreak, travel demand is on the rise again, and there’s no other immediate beneficiary than the automotive industry.
People have spent way too long cooped up inside and penny-pinching if something far worse was to happen, and there’s no better way to release all that pent-up stress than taking a nice long ride outside and introducing a change of pace. As a result, the same people looking to destress are also on the lookout for a brand-new car to take on a much-deserved weekend road trip.
President Biden’s Support For EVs
Apart from the consensus on the opportunity to go outside again, President Biden and his administration have been adamant these past few weeks about their support for electric vehicles. President Biden even comments that “the future of the auto industry is electric,” which we can evidently see in The American Jobs Plan, where it points out that EVs will create jobs and establish the United States as a leader in green energy.
As a result, it has created a forward momentum in the auto markets and invigorates the demand for electric cars. Plus, it’s only natural to expect a bullish sentiment from the President himself to create a ripple effect that indirectly gives the industry the go-signal for more research and development on green innovations.
People Are On The Move
Moving and storage companies have been in high demand since the beginning of 2020. They provided essential services to families who found themselves either purchasing a new home far from heavily populated areas or downsize to save money. And because the world is showing positives signs of opening up again, we are starting to see a trend of people moving back into more urban parts of the world.
This shift in location preference shows that people are now on the move, and both local and private means of transportation will be in the up and up again. Therefore, it suggests an improving positive outlook on the use of vehicles and the decision to purchase one to accommodate emerging needs in the post-pandemic new normal.
However, It’s Not All Sunshine And Rainbows
Likewise, despite the push factors that denote strong economic confidence in the auto industry, it’s not all sunshine and rainbows for potential buyers and car manufacturers. And to give a fair and relatively comprehensive overview of the outlook for the auto markets, we must also acknowledge the pitfalls and shortcomings it faces in 2021.
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Global Chip Shortage
We are still feeling the strain of the global chip shortage on many major supply chains, and the auto industry is expected to lose $110 billion in revenue for 2021 alone. And because most, if not all, modern vehicles require chipsets to function properly, it’s preventing major companies from operating at full capacity and eating into their profit margins.
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Sky-High Prices
As a result of the interplay between increasing demand and the lack of supply for manufacturing new vehicles, it made prices for current car supplies skyrocket, including used cars that are now way beyond their actual valuation. And it’s been dissuading and stopping potential buyers from investing in a new car.
Transportation Will Be Everything
In conclusion, while we can count on the push for economic progress and recovery to be the driving factors for confidence in the auto markets, there’s no guarantee that the potential risks and threats won’t worsen in 2021. Therefore, it’s still early to discern any concrete evidence and recommend everyone hold onto their cars because they’re starting to become worth more than ever before.