Sophus3’s Quarterly Insights Event: the second wave emerges
Scott Gairns | Managing Director Sophus3
What the digital data tells us about the car market as the second wave of Covid-19, and accompanying restrictions, take effect.
The sense of optimism building in the car market during Q3 has been drained in recent weeks as a second wave of the pandemic flared across Europe. Governments responded with lockdowns and other measures which have impacted the industry in different ways. In France and the UK showrooms were again required to shut with predictable results. The French finance ministry stated that new car orders fell by over 70% in the first week of the renewed lockdown.
Online we have seen a similar pattern of behaviour as in the first lockdown, with a decline in traffic to car brand sites noticeable in all markets as these different restraints were introduced.
Consumers it would appear are less panicked than they were during the first lockdown, but car purchase is clearly lower down their priority list at a time when their movements and need for mobility are restricted. This appears to be true across all of the markets even where showrooms remained open.
A significant factor in website traffic holding up may be that, unlike the last lockdown, car brands are spending again and realising the simple truth that if their competitors are reining in on TV, Print and digital campaigns there is an opportunity to win a bigger share of audience with the same or even less spend than under normal circumstances.
So who are the winners and losers at this point? October registrations were down a disappointing -8% across the EU after an improved September – which can now be attributed to the release of demand suppressed by the first lockdowns. But again we see huge variations by brand. Audi was the clear winner with sales volumes up 20% during the month. Amongst the volume brands Fiat, Kia, Opel/Vauxhall, and Renault all enjoyed positive growth. What are the factors of success? We can’t help but notice that it is the more digitally competent brands who have invested in virtual showroom and other interactive technologies who appear to be weathering the Covid storm better.
However, the year-to-date figures make sobering reading for all brands. Car sales at this point in the calendar are -27% behind their 2019 level with little prospect of making up much of that deficit by year end.
So what are our expectations for the weeks and months ahead? The much talked about ‘new normal’ looks set to stretch into the New Year with longer or intermittent lockdowns remaining a feature of everyday life until vaccines are widely distributed. Even the most optimistic forecast is that this will not happen until the Spring at the earliest…
[At this point Scott presents a number of ‘positives’ brands may need to react to or seek to exploit – this section of the presentation is available exclusively to eDataXchange participants and can be accessed through the contact details below.]
…One of these positive trends is the benefits for those brands that have embraced electrification early. In September xEVs outsold diesel cars in Europe for the first time, and their market share has almost tripled within the last 12 months. Brands with a strong offering in this as yet uncrowded segment look set to profit mightily as a niche turns into the mainstream.
Our reading of the future is that any broader recovery, and within that, car market recovery, will be K-shaped rather than V-shaped. Some sectors – travel, hospitality – face further decline whilst we will see supermarkets and online businesses continue to flourish. We expect to see a similar differentiation at brand level. Those with a strategy and vision to pivot to digital processes will continue to be the victors, whilst digital laggards look set to continue in the slow lane. For automotive marketeers and retailers the next few months will be about turning digital ‘can do’ responses to the crisis into robust, end-to-end digital business platforms that can respond to a whole range of new consumer preferences that the pandemic has either created or revealed.
The Sophus3 Quarterly Insights November webinar also features an Interview with Damir Gavran, Manager of sales and marketing operations at Opel/Vauxhall. Access to the complete recording has now been opened up and it can be viewed here.
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