Covid-19 and the resulting government precautions have had a considerable impact on almost every aspect of our lives in 2020. From what we’ve seen so far, transport and travel are no exception. Here are a few of our thoughts on how we might see the world of mobility changing.
Working from home is here to stay
A large number of companies, including Twitter, Facebook and Shopify have recently implemented ongoing or even permanent flexible working policies to allow staff to work from home more often. One of the few up-sides to being locked down has been that office workers have been rediscovering extra time at home to spend with family or work on personal projects instead of sitting on a train or bus for a couple of hours each day. Here at Foxtrot Papa we believe in the value of working directly alongside our colleagues regularly as the best ideas and most creativity is born from teamwork. But even we don’t expect to be back in the office more than 1-2 days per week in the future. That has a number of immediate implications for public transport, for example, more flexible season tickets will be needed and potentially new timetables drawn up. With more flexible office hours meaning commutes are staggered when they do occur, will the concept of peak and off-peak even be relevant?
The shift to increased home working may also have a significant long-term impact on people who have historically lived in inner city areas. Without the need to sacrifice space in their homes for shorter commutes, many may look increasingly favourably on homes further out of cities.
Outside our cities cars are more important for getting around, with a number of smaller towns and villages not having walking access to stations, supermarkets, leisure centres or restaurants etc. In fact, recent research for CPRE showed half of small towns in the South West and North East of England have such bad transport connectivity that they’re considered to be ‘transport deserts’ or are at imminent risk of becoming one. Nearly one million people (975,227) who live in these towns have no option for convenient and affordable public transport and risk being cut off from basic services if they don’t have access to a car. So, as fewer people use public transport services, routes will inevitably be cancelled, perhaps leading to a rise in private vehicle ownership.
If this is the case, the industry could see a whole new group of first time car buyers entering the market. Whilst this would be an amazing opportunity for car brands to reinvigorate sales on high-tech new model lines, it also comes with the responsibility to re-educate buyers. As a result, the branded automotive content of tomorrow will increasingly need to address the proven lack of customer knowledge and consumer confidence, especially when it comes to EVs.
The time of the EV is now
Another benefit of the imposed lockdowns across the globe has been a significant reduction in air pollution from vehicles. The move towards EV ownership has been gaining pace across Europe rapidly over recent years and a new audience of first time car buyers with environmental concerns high on their agenda should drive uptake even faster now.
With appropriate government support to incentivise the purchase of EVs and real investment in the charging infrastructure, we could be looking at a future where pure ICE vehicles for general private use are phased out very quickly, even in advance of the current bans.
Indeed electric cars remain one of the fastest growing segments in the world. According to the SMMT, in May 2020, the number of BEVs sold in the UK was over 20% higher than in May 2019, at a time period when car sales on the whole were experiencing declining monthly sales. The current year-to-date percentage increase in sales of BEVs in the UK is an impressive 132%.
If the electric revolution is to fully take off, buyers need educating on what EV ownership experience is like. This includes how to plan long distance journeys and how charging works, for example. Producing the right kind of content is key for car brands here, and likewise, the authorities and energy providers have a responsibility to ensure the user experience at the point of charging is straightforward and intuitive.
With increased uptake, a greater number of buyers will face the decision on whether to purchase their first EV from traditional manufacturers or to choose one of the new tech-focused brands. The same is true for private charging; will buyers opt for existing energy companies such as BP and Shell for their home or office charging stations, or look to the band of newly formed providers, such as NIO, an electric vehicle specialist pioneering the world’s first battery swap technology of its kind? Our brand loyalty may be tested more than it ever has been in the past.
Lease cars, don’t buy
Recessions are scary. We all start to worry about the future and whether our jobs are secure. So much of our lives are built around an expectation that if we work hard we’ll keep progressing and our salaries will increase. Mortgages are a great example of this – we stretch ourselves to afford to buy more expensive homes in the expectation that as we progress in our careers we won’t feel as stretched by the mortgage payments and that the value of our homes will increase to provide security. In a recession this thinking goes out the window in favour of a much more risk averse mindset. That means big ticket purchases such as homes and yes, cars, will be scrutinised more than ever before and people will be put off making them.
However, leasing is a different way forward. For people who want or need a vehicle to enable their everyday lives the security of a leasing deal is hugely beneficial. Leasing gives you a guaranteed cost per month for your car which in times of uncertainty is valuable. Leasing deals have been getting better and better with deposits and minimum terms falling in recent months. When you combine the security of a guaranteed monthly price with the knowledge you often aren’t responsible for servicing your car, it’s clear to see why more and more car buyers are taking this route. Factor in that the car is brand new with a manufacturer’s warranty, so should be among the most fuel efficient and safest models on the road, AND that you can give it back relatively soon if your circumstances change, and you have a way of justifying that big ticket purchase.
Leading car leasing comparison site, Leasing.com has seen enquiry levels up 812% on one day in May from the lowest point of lockdown, with Volvo selling out most of its in-stock deals over the course of the month. Dave Timmis, managing director of Leasing.com, said: “Volvo utilised all the tools we provide to their fullest potential. In one example, an enquiry was sent to them at 6:15pm and within the hour finance was approved and the vehicle was ordered. Customers love that kind of convenience and simplicity Leasing.com offers.”
When more customers than ever are purchasing their vehicles through intermediary leasing companies it will be interesting to see how the car manufacturers go about differentiating themselves. Relevant, targeted information and content will start to play an even bigger role in creating brand affinity and we should see advanced CRM platforms become the norm as the cycle of car ownership becomes more predictable with fixed term lease deals.
How brands then address the second hand market will be fascinating to see with more high quality, newer vehicles than ever before becoming available. Companies specialising in second hand leasing deals were already starting to flourish before the Covid-19 pandemic, could there be a new niche to fill for the companies that get it right?
The post Covid-19 period may also see the car sharing and reimagined car rental companies, such as ZipCar, experience a surge in business as holidaymakers who don’t own cars look to domestic driving holidays instead of flying abroad.
Inner city transport could see a revolution
People will undoubtedly want to avoid sharing cars in the post Covid-19 world, but whilst there will always be a place for taxis, we might start to see more people take to motorcycles and scooters for shorter journeys. In fact, sales of motorcycles have seen a healthy rise in June 2020, when compared with June 2019, rising over 13% to 13,361 units, according to the MCIA.
Bicycles too have been increasingly popular since the lockdown with many outlets reporting huge surges in demand. In the first three months of the year, 8% fewer bikes were bought in the UK, according to the Bicycle Association. However, in April, the number of bikes sold rose 60%. The biggest change was in more affordable bikes valued at £400 to £1,000, sales of which doubled in April.
We can also see governments starting to prioritise infrastructure and investment for more personal transport options such as electric scooters, monowheels and electric skateboards. The UK Government has brought the trials of rental electric scooters forward in several cities across the country, in order to deliver a ‘green restart of local transport’.
The key will be to make users and pedestrians feel safe and secure on and around these newly adopted forms of transport and that could mean a big program of education for all road users. That could take the form of new modules and aspects of the traditional driving test and could also be carried out through media.
Mobility software may also become more relevant and more profitable (for both owners and users) in the near future as people look for cleaner and safer forms of getting where they need to be. Inner city navigation apps designed for cars, cyclists and pedestrians, such as Citymapper, will need to adapt to maintain relevance in a world where innovative new technologies are appearing on an almost weekly basis. The latest offering from Rydes allows you to earn points with every mobility provider and redeem them for the latest lifestyle rewards.
Bringing the dealership to you
The digital showroom will become more and more important now as a way to show off a brand’s products but there is still a place for physical experiences. Some dealer franchises have been taking cars to people in recent weeks. Mazda and Suzuki, for example, are doing it here in the UK, whilst Hyundai are doing it in the US. There are even companies that will let you test drive pretty much any car from your home, with the vehicle delivered to your door for you to experience at your leisure. We can see a not-too-distant future where this type of service becomes more popular, as people look to enjoy the buying experience more. In theory, providers could quite easily supply a shortlist of demonstrator vehicles for customers to drive in the familiar surroundings of their own neighbourhood, meaning that buyers wouldn’t need to browse dealer forecourts or even shop around online. Combine this with a tablet-based digital specification and purchase platform to really enhance the buying experience and you could probably quite easily rely on word of mouth and the resulting social media coverage to ensure its success.
To this day the dealership forecourt remains a daunting place for many, especially for first time car buyers who are yet to develop any brand affinity and are perhaps looking for a car with a more utilitarian mindset. As a result, we think that any initiative that looks to address this and further flip the concept of buying a car on its head, might just start to close more sales and create a form of automotive entertainment in the process.