FORT LAUDERDALE, Fla. – The coronavirus pandemic is shifting consumer behavior as the economy reopens. This is especially true in the automotive industry.
Marc Cannon is the executive vice president of AutoNation, the country’s largest auto dealership chain. The Fort Lauderdale-based automotive retailer posted an all-time record third-quarter on Wednesday.
Cannon said this is mostly because the demand for used vehicles is exploding. Consumers are willing to pay to protect themselves and their loved ones from the risk of COVID-19.
“People want their own space,” Cannon said. “They don’t want a shared space.”
The risk of infection has made ride-sharing apps, public transportation, and commercial airlines less appealing, and South Florida car dealerships are taking notice.
In March, auto sales plummeted; auto supply chain issues surfaced. Consumer behavior changed when the lockdowns lifted. And then in August, the U.S. Labor Department reported a 5.4% increase in the prices of used cars. It was the largest monthly gain since March 1969.
Richard Gonzalez, the vice president and general manager of Vera Cadillac in Pembroke Pines, said the rise in demand also applies to new vehicles since consumers' needs have changed during the pandemic.
“They want their own sanctuary,” Gonzalez said.
Diane Swong, chief economist at Grant Thornton, said the people who are buying used cars tend to be lower-wage workers who want to avoid using mass transit. She said high-income workers are buying new high-end luxury cars as they replace air travel with road trips.
“Some of them are just doing it to be more comfortable in the vehicles that they are going to be traveling in,” Swong said.
A survey released by management consultancy McKinsey on Sept. 22 found that a third of consumers value constant access to a private vehicle more than before — especially among young consumers.
“I don’t see it changing until people feel it is safe in shared spaces again,” Gonzalez said. “I think road trips have been one of the major reasons why people are getting newer and nicer vehicles.”
Gonzalez and Swonk both said some of the high-end consumers have disposable income because of the ongoing complications that make international vacations less attractive.
“I think we will stay pretty strong as long as we avoid that second downturn and this morphing into a larger, longer-lasting recession,” Swonk said.
MORE CONSUMER STORIES