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Jeddah - Yasmine El Tohamy - DUBAI: As the coronavirus disease (COVID-19) pandemic continues to push industries to the wall, the automotive industry has been seeing an unusual upward trajectory, with rising demand for new cars.
Many in the UAE value car ownership now more than ever, with 27 percent deeming it “more important” than during pre-pandemic times, according to a recent report by US-based management consultancy Arthur D. Little (ADL).
The Future of Automobility study surveyed around 8,500 people across 13 different countries, including the UAE, China, and Japan.
“The crisis has influenced car ownership intentions, with UAE consumers in particular expressing a need for the sense of security. The protection we feel inside our ‘socially distanced transport bubble,’ as opposed to using public transport, seems to be preying on the mind of the consumer more than ever before,” Joseph Salem, regional practice leader transportation at ADL, said.
This increased interest in car ownership was also reflected in the 2020 financial disclosures for some big car brands in the region.
Volkswagen in Saudi Arabia posted a 28-percent growth in new car sales by the end of last year, which was notable because of the pandemic and the mobility restrictions it prompted throughout 2020.
There was an extraordinary uptick in car sales in the Kingdom in June last year, as people rushed to buy new cars before the value-added tax was increased from five percent to 15 percent. Around 247,800 sales were made in the first half of 2020 in Saudi Arabia.
Across the 13 countries where the ADL study was carried out, nearly half of the respondents also said car ownership has become more important than it was before the pandemic.
The report predicted a release of pent-up demand post-pandemic that will potentially stimulate the market, translating this enthusiasm into actual car sales.
But it warned the “longer-term health of the car industry will ultimately depend on national economies and post-pandemic recovery.”
The pandemic also introduced new challenges for car brands to reach out to the market, accelerating the adoption of digital strategies such as online car lots instead of traditional face-to-face consultations.
Buyers in the UAE still preferred person-to-person interaction when it came to purchasing cars, the report said.
Japanese luxury brand Infiniti launched an online platform at the peak of the pandemic to circumvent COVID-19 restrictions.
“This new service allows consumers to interact with our brand virtually, enabling them to customize their new car, book in-home test drives and home pick-up and drop-off for owner servicing,” Nasif Siddiqi, managing director of Infiniti’s international markets, told Arab News.
This digitization push will continue in 2021 for the global automotive industry, with the Chinese market at the forefront.
Some 71 percent of customers with the Asian giant said they would be willing to buy their next car fully online, as against just 35 percent in Europe and 42 percent in the US, the ADL report said.
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