Coronavirus Impact on the Car Industry
21.04.2020 by Alice G
Financial regulators have proposed a brand-new set of payment freezes to try and help those who are struggling to make their payments on payday loans, car finance deals and even buy now and pay later schemes.
This all comes down to the coronavirus pandemic. It’s time to look under the hood to see if the car industry has been hit as badly as some people claim.
What does the Coronavirus Mean for the Car Industry?
As the coronavirus brings Europe to a grinding halt, major suppliers and car manufacturers are now shutting down their factories. 2.6 million auto workers will probably need government support as they are forced into temporary unemployment. This is having a huge impact on the car industry. Significant changes are being made and more work is being done to try and make sure that every company is able to pull through this pandemic without experiencing too much irreparable damage. That being said, there are a few things that you need to take note of.
What if you’re Buying a Car?
A lot of cars are available right now if you need to buy one so that you can perform essential travel. Some manufacturers warned that there will be delays in the delivery of any pre-ordered cars, and others have stated that they are currently being forced to respond to a constantly evolving situation so nothing is guaranteed. Either way, most car manufacturers are awaiting government advice so that they can re-open and continue to work as usual. With supply chains also being affected as well, it’s safe to say that the car industry is experiencing a tough time. A lot of car manufacturers are trying to put the health of their retailers, employees and customers first, to safeguard the future of their company. Others are actively trying to protect NHS workers by doing whatever they can to lend a helping hand to those who are responding to the pandemic. Jaguar Land Rover, for example, are making protective visors, and others are trying to find a solution to the ventilator shortage.
Can I Order a New Car Right Now?
Unless you are an essential worker, then you may want to hold off ordering a new car right now. After all, nobody should be out buying a car unless they have to. On top of that, you probably won’t be able to test-drive a vehicle given the current lockdown situation. That being said, just because car manufacturers aren’t open for business, does not mean that you cannot buy a car if you need one desperately. Manufacturers have stated that there is an abundance of cars available right now, due to the reduced demand. Showrooms might have closed, but some manufacturers have an online showroom that you can buy from instead.
Coronavirus and Car Waiting Times
If you have ordered a car, then you may be curious to see if your vehicle is going to be delayed as the result of the coronavirus. Note that whether or not your car will come on time will depend on whether or not it is available in the UK. Delays are far more likely if you have ordered a car which has been customised, with a mix of options. It’s probably not likely to be in stock or held as a standard option. If you need a car very urgently, then some manufacturers would be willing to swap the model you have with one of a different specification, if there is one available with a faster delivery option. Some manufacturers, mainly the ones who rely on overseas delivery, have stated that delays should be expected.
A lot of Minis are built right here in the UK, which means that delays are not likely. BMW cars, on the other hand, tend to be built abroad, which means that waiting times can be way longer, or will be dependent on stock. If you buy a BMW that needs to be made to order, then the delivery is around 3-4 months. Waiting times will also be much longer for models which are in very high demand. BMW has stated that they cannot provide any projections for delivery at this time, as due to the coronavirus, everything is changing constantly.
Ford has released a statement saying that they are going to do everything they can to deliver a car that has been ordered if it has been made already. They are working with their customers to see if they would rather wait, or swap their car for one that has already been made.
Right now, there are no delays for Honda. Honda has, however, stated that they are waiting for the UK lockdown to be lifted so that they can get their car production back to normal.
Land Rover and Jaguar
Land Rover and Jaguar have stated that delays are likely for any vehicles at this current stage. Local government implications are going to affect retailers and manufacturing plants. They have said that customers need to contact their local dealer.
This brand has said that most of their customer base buys new cars from stock retailers or from their online showroom. These cars can be bought, and you can place a refundable reservation online. If you have a car of this brand, then you can find out more about services on their site.
Toyota and Lexus
Toyota and Lexus import their cars from a lot of different countries, which makes it very difficult for them to predict whether or not there are going to be delayed.
Volkswagen, Audi, Seat and Skoda
The Volkswagen group said that they paused most of their car factories on a two-week wait and that there is a period of uncertainty right now. This means that they are not able to make predictions. The main issue is in regards to the situation in Germany. The cars are in stock and in the UK, but the closure of UK showrooms means that they cannot make any promises regarding delivery.
Will my Price be Protected?
A lot of brands have stated that the prices of the cars you have purchased, or committed to, will be protected. This includes Citroen, Land Rover, Jaguar, Peugeot, Vauxhall and Honda. BMW and Mini. They have stated that they will protect the prices of orders if there is a change to the production chain, or if there is a delay in delivery.
All About Car Finance and the Coronavirus
9 out of 10 cars are acquired on finance. The finance market fell in February as car registrations plummeted. Things could get even worse in the coming months as the coronavirus pandemic continues to take its toll on the economy. Although there was a dramatic reduction in the number of new cars being financed, the value of advances being offered on vehicles did not fall as much. Lenders are still shelling out, and when you look at the used car market, you will soon find that things are even better. Looking at the number of used financed cars there was modest growth in the market. Ultimately, there has been a massive blow to one of the most prized industries in the EU, but it’s hard to predict how much damage is going to be done. The main parameter that is impacting the face of the car industry is the demand for motor vehicles. The shutdown may accelerate a recession that was already well underway. The car market was down by 7.4% in terms of sales when you look at the first two months of the year, but whether or not the demand collapses, will be entirely dependent on the national government and how they can manage this crisis. A speedy economic recovery is the priority of every carmaker out there, as this ultimately determines whether or not people have the means to buy a new car.
Freezing Car Finance Repayments
The FCA has proposed a freeze on any car finance repayments. They have even gone as far to rule out repossessions during the crisis. They are going to offer three months of payment pauses for customers who are experiencing financial difficulty as the result of the coronavirus. They are aware of the struggle that people are going through right now, and that is why they are offering immediate support. Of course, the FCA understands that payment freezes may not be in the best interest of the customer in every situation, and that is why they have ordered firms to take alternative solutions. It may be that they waive interest fees or that they reschedule the total term of the loan. Lenders should also offer a single month of interest-free freezes on short-term credit agreements.
Cars and the Leasing Industry
The FCA has also released a statement saying that they are going to add car financing to the temporary measures they are putting in place. They are going to try and support households who are currently facing a level of hardship as the result of the current pandemic. The FCA’s move is an instruction to banks, saying that they must offer a freeze to any customer who needs one. The FCA has also set out proposals last week where banks would provide three-months with payment freezes to credit card debts, loans and more. It is expected to carry over to the automotive leasing industry.
Are Lease Deliveries Taking Place?
Right now, we live in a very fast-moving situation. There are still deliveries for new cars taking place. It depends, of course, on the funder and the key worker situation. Vehicle drivers tend to be semi-retired or senior, and this has contributed to the driver shortage right now. Social-distancing is beginning to affect supply. The Department for Transport has made it abundantly clear that the logistics, including the delivery and collection of vehicles, has to carry on during lockdown as long as the right coronavirus guidelines are met. The BVRLA are urging dealerships to move vehicles again as it would unclog the thousands of cars that are in congestion right now.
Right now, you can hand your car back as normal. Vehicle inspection teams will adhere to the right guidelines, and if your lease deal is going to end soon, then you can discuss a possible extension with your provider. Two options will generally be available when you do this, you can have a formal extension, which will give you the chance to extend your agreement by 3 months, or you can have an informal extension. When you do this, you will have it for a much shorter, rolling period.
What if I Can’t Make my Lease Payments?
The Financial and Leasing Association have stated that they are going to do everything they can to support those who have been severely affected by the virus. There are several options that you might want to think about here, and they include requesting a short holiday for your payments and requesting a mileage review. This may bring down your payments. The FCA has also announced a package of measures. They have asked firms not to take steps to end the agreement of a leased vehicle and also to make sure that they do not repossess any car either. Every delivery driver has been asked to sanitise every single vehicle at the handover and they also need to clean the touchpoints too. This includes the steering wheel, gear selector, handles and more.
The car industry is severely impacted by the coronavirus, but it has the potential to bounce back faster and better than ever before. The right measures are currently being put in place, but there is no way to possibly predict when things are going to be back on track, or if there are going to be lasting consequences. A lot of this comes down to not just the economy in the UK, but also the world.