The continuation of Coronavirus (COVID-19) has taken a toll on car sales. Bottlenecks in the supply chain have played a part in the decisions made by automakers and OEMs alike. The industry, struggling with shortages of parts and vital raw materials, has had no choice but to restrict production.

The result is fewer new and used cars and increasing prices. The pandemic has also shown the way to what might be a solution: e-commerce. A recent poll of global automotive executives revealed that many of them predict the majority of all car sales will shift online by 2030.

How the pandemic impacted the auto industry

According to a poll of global automotive executives by KPMG International, expectations are that there will be a significant shift to online car sales by the year 2030. Automotive News reports that 46% of these executives predict a considerable rise in direct-to-consumer sales by automakers instead of sales through typical franchised dealerships. The poll indicated that 78% of these executives believe most new car sales will be online by 2030.

The pandemic created many problems, starting with safe conditions during this global crisis for workers and consumers. It also caused labor and parts shortages and supply chain issues. The result was fewer available new and used cars and a significant increase in prices.

The ongoing semiconductor chip shortage, in particular, has hit the car market hard. According to Car and Driver, the problem goes beyond reducing the number of new cars offered. 

When the supply dwindled, some automakers halted entire production lines for some vehicles. For others, they continued production but removed non-essential tech features that require chips. It kept lines moving, and people kept their jobs.

Factory-direct car sales

Nontraditional sale models have emerged quickly by necessity because of coronavirus. Factory-direct auto sales were unheard of a decade ago. But thanks to the rise of electric vehicle start-up companies like Rivian and Tesla, online vehicle sales aren’t new. They are meeting with growing acceptance. 

The consensus among these executives is that consumers are done with the auto dealership experience. Companies that can provide consumers with easy, hassle-free experiences will enjoy the greatest success.

KPMG polled 1,118 global executives in August 2021 to gather insight into what they anticipated for the auto industry’s future. 84% of them said they expect vehicle subscription programs will be competing with traditional buys and leases. The guarantee of a seamless experience, they say, will be as important a factor in their buying decisions as vehicle branding and features.

Gary Silberg, KPMG International’s global head of automotive, explains that new businesses will bring new ideas to the game as shopping migrates online. Franchised dealers will have no choice but to invest in data and analytics not only to understand their target audience but to have any hope of remaining competitive.

What it means for the future of the industry

Silberg explained that he expects to see a lot of consolidation in the industry as online auto sales become more mainstream. Larger dealers with capital and digital prowess will quickly become dominant forces.

The study found that most executives had a positive outlook on the industry’s future profitability and the change over to electric vehicles (EVs). According to the KPMG poll, 53% of the auto executives were confident in the industry’s ability to grow over the next five years. 38% of those surveyed had concerns about the future.

The concern stems from worry over supply chain issues like the semiconductors and other commodities like aluminum, lithium, and components needed for batteries. Silbert explained that the two points presented the current dichotomy of the automotive industry. There’s long-term optimism pitted against short-term worries.