Covid-19 and the automotive aftermarket:
“People are thinking differently about their cars.”

2020 was a year unlike any other as the global pandemic changed the way we live. Lockdowns disrupted daily routines, retail moved increasingly online and working from home became the norm. Like many industries, the automotive sector had to adapt fast. To discover what happened and how the impact of coronavirus is evolving, we spoke to Vincent Ranic, Vice-President Automotive Aftermarket at Lumileds.

How did Covid-19 impact the automotive aftermarket industry in 2020?

Last year was challenging for everyone, but in contrast with the Global Financial Crisis of 2009, the pandemic affected people’s health as well as their livelihoods. Behavior patterns have changed because of lockdowns and curfews, with people driving less and thinking differently about their cars. New vehicle sales have dropped, impacting the aftermarket but to a lesser extent. Financial uncertainty means many are keeping their cars for longer. The aftermarket has shrunk by around 15% overall, although the picture varies significantly by country.

Were all regions affected in the same way?

China was the first to feel the change, followed by Korea, Japan and the rest of Asia. Then came Europe, Latin America and the United States, with all regions seeing a slowdown by the end of the second quarter. The speed and size of change depended on the type of lockdown each country imposed. In some places retailers had to close, in others it was garages, sometimes both. We also noticed consumer reaction often differed between urban areas, so it’s a complex picture.

What was the biggest challenge the sector had to face?

Organizing production and getting hold of components has been difficult. As an OEM supplier we have our own factories, some of which were locked down, so we’ve had to be flexible in our manufacturing. Gearing production down and up is tricky as the pandemic closes and reopens markets. Logistics are another headache – for example, air freight hasn’t been operating smoothly. Of course, slower sales caused by the market decline were concerning, but the biggest challenge, and our top priority, was and remains ensuring the safety of all our employees.

Have you noticed any changes in market trends?

The Covid-19 crisis has led consumers to prioritize wellbeing and safety. At Lumileds we’re well placed to respond, because our lighting plays a big role in road safety and we have a wide range of wellbeing-oriented accessories like car air purifiers. People are using their cars differently, too, with less car-sharing and less travel on public transport recently, which means more cars on the road. Conversely, working from home has halted the daily commute to the office for many.

What can we look forward to in 2021 and beyond?

The aftermarket is recovering, but the speed varies from one region to another. The situation in Europe, for instance, is unclear. What impact will vaccination campaigns have, and when restrictions are lifted, will people feel confident enough to travel again? We think 2021 will be better business-wise, but consumers will remain cautious. We don’t expect big demand swings like we saw last year. Beyond then, change will be more linear as trends already in play, like ordering online, continue.

How about the changes you yourself experienced in 2020?

Like everyone else, I found working from home a new experience. Since offices closed, I’ve missed the face-to-face interaction with colleagues and customers. Relationships have become more digital because of the pandemic, and that’s not always easy to adjust to. So when we get the chance to meet others again in person, it’s very welcome, even if we have to maintain safety protocols and keep our distance.