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How Car Usage has Changed During the Coronavirus Pandemic
Due to the coronavirus outbreak, many countries around the world imposed a lockdown sometime in February and March this year. Singapore adopted temporary measures until the first week of April when it imposed stricter preventive measures under the Circuit Breaker.
Covid-19 has had a huge impact on businesses and lifestyles all over the world. Non-essential services came to a standstill during the lockdown and Circuit Breaker months. This included car businesses, leading to a drastic fall in car purchase. Car use also fell as more people worked from home and curtailed outdoor activities.
Fall in Car Rentals
In Singapore, car rentals have also fallen. The rental car population which had been growing in the past six years fell by 1.4% in April to 76,312.
Reasons for reduction in self-drive rentals could be attributed to the exodus of expatriates from the country due to cutbacks in certain sectors as well as the closing of borders with Malaysia during Malaysia’s lockdown and Singapore’s Circuit Breaker.
Drop in Demand for Private-hire Cars
The drop in car rentals was also due to the decrease in ride services. With restrictions on travel leading to the drying up of tourists and more people working from home during the Circuit Breaker, there has been a reduced need for the use of taxis and private-hire cars. This can be seen in the fact that the decrease in car rentals included 54,545 private-hire cars and 21,767 self-drive rentals. 
In fact, demand for taxis and private-hire cars shrank by about 60 per cent since January, when the coronovirus outbreak first started.
Drop in Motor Vehicle Sales
There has also been a decline in car buying and selling due to restrictions in social contact and the closing of factories producing cars and car parts. With factories closing in China, Europe and North America, orders have been put on hold. The disruption in supply will also postpone new car launches and it will continue to impact the industry well after the coronavirus pandemic is over, opine industry experts.
In the UK, car registrations fell by 44% in March this year. Similar declines were seen in Europe as well. The automobile industry in Singapore has been similarly affected. The suspension of the COE bidding exercise during the Circuit Breaker put a further dampener on car sales.
According to figures by the Land Transport Authority (LTA), only 1,646 new vehicles were registered in April. This was a decline from an average of 7,200 a month in the first quarter of the year. The bulk of registrations were for cars (41%) and motorcycles (36%).
Industry experts are of the opinion that most of the new registrations were carried out during the first week of April, before the start of the Circuit Breaker. For those done after 7 April 2020, the first day of the Circuit Breaker, some were with Certificates of Entitlement (COEs) secured before the Circuit Breaker began.
A look at the car makes registered reveals that Toyota, Honda and Mercedes Benz made up the bulk of the sales, with 88 units of Toyota , 157 units of Honda and 198 units of Mercedes-Benz sold.
April also saw a drop in the sales of secondhand vehicles. A total of 3,075 secondhand cars were bought and sold, down from a monthly average of 7,000 in the first quarter of the year. Toyota, Honda and Mercedes-Benz cars constituted just over half of these transactions.
In May, motor vehicle sales dropped 97.2%, compared with a fall of 88.2% in April. A sale of 222 units was recorded in May 2020 compared with 1,048 units in the previous month.
Changes in Car Buying Experience
On a positive note, many car dealers have been offering attractive discounts to entice potential buyers and have also been reinventing the car-buying experience.
Car dealerships around the world have been forced to radically alter their business models and automate their business. In Singapore, all car dealerships have been bringing the car buying business online. Digital showrooms have been launched which allow customers to view the cars from the comfort of their homes.
Car manufacturers like Porsche have rolled out initiatives like unaccompanied test drives and contactless servicing. Customers can contact Porsche service centres for test drives. The test drive experience will begin with a virtual sales consultation conducted via a WhatsApp video call, where the Sales Consultant will introduce and highlight the key features of the vehicle up close, before confirming an unaccompanied test drive appointment.
Changes in Consumer Attitude
Also, as countries emerge from lockdowns, a pattern is emerging of virus-fear stricken individuals shunning public transport and private hire cars in favour of individual car use. This has been seen in China. According to a Financial Times report, “sales in the country recovered faster than anyone would have dared to hope, propelled in part by health concerns.”Volvo reported that sales in China were 20 per cent higher than in 2019, while the whole market in April was 4.4 per cent higher than a year earlier.
Automotive experts like Felipe Munro believe that for a period of time, COVID may actually boost car ownership, as people will feel safer in their own private car.
Munro also believes that the pandemic will accelerate the development of both electric vehicles and autonomous vehicles. This view is endorsed by research firm Counterpoint which also expects EVs to weather the pandemic storm better than conventional vehicles.
Drop in COE prices
Another factor that should further entice local car buyers looking to make a purchase is the drop in COE prices. The second bidding since the lifting of the Circuit Breaker on July 22 saw a drop in Certificate of Entitlement (COE) prices. The COE price for cars up to 1,600cc and 130bhp closed at $32,699, 2.45 per cent lower than its previous close on July 8.
The COE premium for cars above 1,600cc or 130bhp finished 2.47 per cent lower at $35,001. The commercial vehicle COE price dipped 2.51 per cent to end at $23,888.
Meanwhile, the COE price for motorcycles dropped 15.48 per cent to $6,510. The only exception to the fall in prices was the Open COE category, which can be used for any vehicle type except motorcycles but ends up mostly for bigger cars. It closed 0.03 per cent higher at $35,001.
Bidding had been on hold from April to June when non-essential businesses were closed to stem the transmission of the coronavirus.
Europe is beginning to see some improvement in vehicle markets, reports Counterpoint, bolstered by pent-up demand and various government subsidy programmes encouraging drivers to trade in older cars for new ones. In France, car sales rose for the first time this year in June, recovering by 1.2% YoY to just under 234,000 units. Germany and Spain, too, have introduced similar incentives for their auto industries. The UK car industry has also been reopening more showrooms.
In Asia, South Korea has seen a rebound in domestic production and sales of cars.
A look at the car ownership figures for the second half of the year shows almost a return to pre-Covid figures for some makes of cars like Honda, BMW and Audi.
This bodes well for the automobile industry. However, experts predict that it will take time for things to return to pre-Covid conditions. In the meantime, car dealerships will still have to stay nimble and be willing to innovate to cater to customers needs.
Tan.C. (2020, June 2). Car rentals reeling from Covid-19 fallout. The Straits Times.
Tan.C. (2020, April 22). Coronavirus: Motor, transport firms face bigger blow from extended circuit breaker period. The Straits Times.
Toh T.W. (2020, July 22). COE prices mostly drop across the board except for marginal rise in Open category. The Straits Times.
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