When starting a new year, it pays to know what to expect. For all of our advances as a species, we still can’t forecast the future with complete certainty. Instead, we must rely on data and experts’ experience to make predictions, as is the case with Kevin Tynan’s industry forecasts below.
Tynan is a senior automotive analyst for Bloomberg Intelligence. Journalists at CBT News spoke with Tynan to analyze the events of 2020 and use industry trends to predict what dealers can expect for the new year.
Dealers and industry analysts alike were pleasantly surprised by the quick turnaround car dealers made in the second half of 2020. Still, Tynan says that COVID-19 will have both positive and negative long-term effects on automotive.
Bloomberg’s Top 7 Predictions for Automotive
- We will see a better supply and demand balance due to factories moving away from high-volume, low-margin cars.
- European- and Asian-based automakers will catch up to the American truck and SUV makers.
- The SAAR is historically unimpressive during the beginning months of the year; however, it will signal a healthier mix with higher transaction prices and better margins.
- There will be opportunities to generate increased revenue in parts and service, as well as used car sales.
- While the gross number of transactions might be lower, the quality of the transactions will be higher.
- Online retailers like Carvana and Vroom will not gain significant market share on franchise dealers.
- More leasing options will become available to counter affordability issues.
Another Key Player in 2021: Electrification
Electric vehicles (EVs) have already been on the rise around the world as countries push to lower carbon emissions. President Biden has announced plans to replace the U.S. government fleet of roughly 650,000 vehicles with EVs, propelling electrification further into the spotlight. Currently, only 3,215 federally-owned vehicles are electric.
The intensified focus on EVs, along with Biden’s plans to build 550,000 EV charging stations, will undoubtedly shape the industry throughout 2021. The administration’s goal is to increase consumer demand for EVs. The automotive industry has already signaled it believes electrification is the future, and automakers are quickly developing their own electrified offerings.