Is this the transformation or the demise of the automotive industry?
By: Anja Hendel
Tags: Automotive, Software, Engineering, Transformation, Covid 19

When the much-acclaimed “Cars: Accelerating The Modern World” exhibition opened in London in November 2019, visitors, organisers and the media agreed on one point: the automotive industry will change more decisively in the next five years than in the previous fifty.

Photo by Omar Prestwich on Unsplash

We are experiencing the sunset of the era of automobility and the dawning of the age of multi-mobility. Corporations that benefited from stable economic growth and globally recognised art of German engineering for decades are now facing many challenges: from intelligent technologies and the structural change of cities to disruptive start-ups, as well as innovations from the USA and Asia and of course from the pandemic. From the latter, the most pressing and urgent challenge is the sales slumps of between fifty and sixty per cent, fluctuating new car registrations, production standstills and serious bottlenecks in liquidity worldwide. In short: 830,000 jobs gone under the burning glass of the pandemic.

Experts estimate that the market will not recover until at least 2023. In its most important transformation phase of all, Germany’s most relevant industry is more vulnerable than ever before.

The car as a place of refuge

We cannot say with a sense of certainty what long-term effects the COVID-19 pandemic will have on the economy and society. However, it has long been clear that nothing will be quite the same as it was before. This also affects our methods of mobility, both here and across the world.

The trend towards remote work shows no signs of reversal, and the initial losers will be offices with mandatory in-person presence and probably many city centres. Futurologists are already predicting an uptick in rural populations as netizens move out of the cities, therefore contributing to a corresponding upswing in small towns. In the short term, public transportation is the clear immediate loser of the coronavirus crisis. Whether by plane or long-distance bus, ICE or underground trains, many people are now converting back to private means of transport out of a precautionary measure to protect themselves from the viral transmission.

Photo by Edwin Hooper on Unsplash

Bicycles are particularly popular, but of particular interest is the unexpected renaissance we’re seeing among individual car ownership — even among young urban professionals. For example, in the international scene, the used car dealer Vroom is shining on the New York Stock Exchange and seeing record figures. Suddenly, the car is synonymous with taking refuge and travelling safely, especially now in the dark winter months. Somewhat surprisingly, the pandemic is fuelling the demand for automobile ownership.

So does the much-cited traffic turnaround play a role in the backwards development of the automobile industry? No, I do not believe so.

Even after the coronavirus pandemic, individual mobility, especially the kind based on combustion engine-driving trains, is still the battleground between demographic changes and the mega-trend of sustainability, alongside political debates and technological progress. There are four relevant pillars that form the bases for change:

Autonomous Driving, Connectivity, Electrification and Shared Mobility.

And these four bases are centrally based on two ongoing global developments: smart technology and our collective social development, which seems to be currently stuck in beta testing. These present both challenges and opportunities for us all.