Analysis: Three crucial car industry trends to watch
Online sales will rise but showrooms will remain a necessity
A key one is the shift to electric, but here are three others that will grow from 2021 on
As the automotive industry emerges from the pandemic, a number of major trends are appearing. Some are because of the events of the past year, while others were already well under way. Here are three of the key factors affecting the automotive industry.
*Trend one: Online sales*
The most obvious trend is the shift towards electric vehicles, but we have also seen a forced increase in online buying. New companies such as Cazoo, Cinch and others have appeared and reports across the world state that online buying will continue.
“More than a year into the pandemic, we’ve seen some major trends gather pace in the new car market, most obviously in the enforced reliance on online sales,” says Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders (SMMT). “The success of click-and-collect services has provided a lifeline for the sector by sustaining sales through much of the outbreak.”
One company that launched during the height of the pandemic is Carzam. Its CEO, Kirk O’Callaghan, says the future of online car buying looks strong, with sales having increased even after showrooms reopened on 12 April. “The pandemic has accelerated a change in customer behaviour,” he says. “When customers understand the benefits of buying a car online and how they can purchase with safety and confidence, they do so.”
For many, though, the buying experience will continue to be at a physical dealership.
Hawes says: “The recent reopening of showrooms could not come soon enough, and as much as digital car buying has been proven to work, it cannot replace the excitement of choosing and test driving a new car in person.”
Some operations are even investing in new facilities. Porsche GB told us that investment by its retail partners in Porsche Centre development will continue in 2021 and 2022. It says this underlines its commitment to physical retail showrooms and follows three new Porsche Centres opening in 2020.
The same is true of large dealer groups, with Robert Forrester, CEO of Vertu Motors, finding that the use of pure e-commerce is very low, in his experience. According to Forrester, people are using online for initial viewing and video chats but most customers are then going into the physical dealership to see the actual car and complete the deal. That’s reflected in the figures, with Vertu selling 130,000 cars through its dealerships in 2020, but just 428 in purely online transactions.
As a further indicator of where Vertu sees the market heading, the company is also investing in new showrooms. “The vast majority of people are combining both online and physical,” Forrester says. “The death of the dealership is an easy story to write but I’m not sure it’s true.”
*Trend two: Where design is headed*
A recent survey of World Car of the Year jurors identified design as the second biggest automotive trend for 2021, after battery-electric vehicles.
In an interview with Autocar, Frank Stephenson, creator of cars as diverse as the modern Mini and Ferrari F430, gave his view on significant current and future design trends.
Stephenson hopes the ideas around radical and polarising design will subside and says it’s being driven by marketing departments. “It’s almost like they [car makers] are in a state of panic a little bit. Most of the car companies are trying to really justify their presence in the market through design,” he says. “If they sell the car, and it looks the way it is and it sells well, they’ll continue with it. They won’t rein it back in. They are trying to show that they’re all behind it and that it’s not a mistake on their part. [They’re hoping] we will, as a general public, eventually get used to it, accept it and see it as the modern way to treat design.”
He admits there have been design trends that have broken with tradition, but says you only need to look at the conservative styling Tesla implements to see that car makers don’t need to take a radical or shocking approach, especially with EVs.
However, the biggest design trend, says Stephenson, will be in interiors. Personalisation used to be about seat covers and stereos, but now it is about technology – lighting and screens in particular. He cites the Mercedes-Benz EQS as a good example. According to Stephenson, personalising screens is simple because it’s just software, but it also allows owners to create their own interior ambience, including specific lighting, sounds and heating settings.
Some fear that car interiors could become too complex, but Uday Senapati, executive director of corporate and product strategy at Lotus, says the key trend is to include all the technology without losing the design simplicity, pointing to the new Evija hypercar as an example. “You’ve got to have voice control, gesture control, eye tracking, all of which are trends that are coming out in technology,” he says. “The packaging will bring some compromises, but we would still like to focus on simplicity.”
*Trend three: Corporate social responsibility*
Senapati also highlights another major trend: corporate social responsibility. He says Lotus and others have started taking it more seriously since they saw customers buying into brands such as Tesla for what he calls “more conscious reasons.”
That view is shared by Adrian Hallmark, CEO of Bentley Motors: “Across the world, our customers are telling us that they want sustainability at the core of our business and we are committed to lead in the luxury sector,” Hallmark says. “We are reinventing every aspect of our operations towards a carbon-neutral future, with only battery-electric vehicles by 2030. They [customers] are also looking for deep and meaningful relationships with socially acceptable brands, sometimes prioritising experiences over goods, and more purchasing online.”
Sustainability also extends to the increasing research into low-carbon fuels. Porsche made headlines earlier this year with the announcement that it is moving ahead with development of synthetic fuels, in itself a key trend gaining momentum. Further investments are planned by fuel companies, as well as by manufacturers such as Audi, BMW, Mazda and Porsche. It’s unlikely that synthetics will stop the rise of EVs, but the UK government is looking at ways to incorporate them into a wider strategy of reducing harmful emissions under its ‘Renewable transport fuels obligation’ programme.
What’s clear is that with an industry in flux, the role of the state is becoming as important as consumers in driving trends, particularly when it comes to areas such as safety, efficiency, advanced driver assistance systems and sustainability. It’s therefore likely that many of the key trends of 2021 will evolve to become the very foundations of the future of motoring.
*Mark Smyth*
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