Stage by stage, all the “tiles” that hit the car

The automobile industry is shocked at foundations and also the roof it is not in good condition. Indeed, for some years now, its tiles have been falling one after the other, posing a long series of problems to managers, organizations and those who buy cars (motorists, companies, institutions, rental and mobility companies, etc.) to face and which are intertwined by multiplying cause-effect links. Let’s see what these are shingles, one by one.

The pandemic, mother of all problems

The first is the pandemic. Starting from March 2019, covid-19 has stopped factories (at least initially for this reason) and the sales networks in the area. Homes and dealers had to stop the elimination of sales and assistance and, once out of the total lockdown, organize the counter-moves. The reaction was very quick and can be summed up in one word: dematerialization.

You can do almost everything online

Dematerialization is the other side of digitization. The impossibility, the difficulty or even the fear of having physical contact in the salons has pushed manufacturers and dealers towards the creation of new procedures that allow to manage the process of distance selling, from the beginning of the negotiation until the signing of the contract. Is it the antechamber of online sales? It is certainly an accelerator. The idea of ​​the car as a dream of status and freedom to be caressed before it becomes reality is increasingly an image of the past.

Fewer sellers, more leads

The role of the networks changes, but also the professionalism required and the level of humanity. More than display places and salespeople doing quotes behind the desk, consultants are needed on the phone and in greater numbers than before. And they are also used to show the car via videoconference and manage appointments at the dealership and for coupons, perhaps with a collection and delivery service. In a nutshell: It may take fewer steps to sell and service cars, but more people are needed.

Whose incentives are they?

The incentives in place since 2019 have given a hand to the temporary recovery of the market, but their management has not been optimal. The comings and goings of the availability of funds and news has done and is causing sales to go into fits and starts, creating expectations that have a significant impact on the decline in registrations. The management of funds by the sales networks has also raised more than one perplexity. Wouldn’t it then be the case to transform them into tax credits that the final customer can choose to keep for himself or sell as happens with building renovations or energy efficiency works?

The shared car, the contagion interrupted by the pandemic

The other big problem has fallen on short-term rental companies and, above all, car sharing companies. The shared car is not exactly the best to protect yourself from contagion. With the collapse of tourism, the so-called airport and leisure channels fell to zero for a long time. Conversely, the city and business channels regained their share, the incidence of which had been in constant decline for years. Light commercial vehicles are especially strong, supporting both healthcare professionals and above all the surge in e-commerce.

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I travel alone, even on a scooter

The well-founded distrust of shared and public means has given new impetus to the private use of the car with a consequence: the increase in traffic. The second consequence is the surge in alternative mobility: see bikes with or without pedal assistance and scooters. With all the implications of the case for safety and the framework of the rules that, in practice, did not exist. Here too the tiles arrived and it was necessary to run, but new business opportunities have also been created.

The grip of the transition rules

Another tile, still in the balance, is represented by new European regulations. Euro 7 is still being defined and the European Commission’s proposal to stop the sale of cars equipped with internal combustion engines by 2035 is still under discussion. If both measures were to have the more restrictive form assumed, the push towards the energy transition would be even stronger. The evolution of the market towards hybrid, plug-in hybrid and electric are already underway.

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Methane gives you… a punch

On the other hand, a tile that has already reached the drivers’ heads is the price of methane. Suddenly finding yourself with a doubled cost at the pump and 1.1 million vehicles in circulation, ideally crumpled in their residual value is a big problem for families, but not only. Our mining industry can make a lot of unexpected money in the short term, but it has the problem of converting itself. Hydrogen is an alternative, but will it arrive soon enough? Italy also has the world’s number one industry for converting vehicles to gas. For them it will be inevitable to look outside Italy and Europe.

Raw materials, between shortages and speculation

Along with the increase in methane, the other tile is theoil rise and all raw material. Steel, aluminum, copper but also magnesium, titanium, lithium, rare earths and all the materials involved in the electrification of cars are splashed. Speculative factors linked to organizational problems rather than to a real shortage, but which put prices under pressure, increasing inflation and, therefore, both the car lists and the actual availability of income by families. It goes without saying that the propensity to buy decreases.

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Used, new business and new risk

The increase in cars has had another effect: the search for second-hand, especially the fresh one. And just at the moment when the sources (returns from rentals) were drying up. And so the second-hand car also had a surge. There is a business opportunity, but also a theme for reflection: the slowdown in the renewal of the car fleet. Someone has already renamed it the “Cuba effect” and, in fact, it means the consolidation of two layers of the market: one extremely sticky and low value and another fluid and rich.

Semiconductors, the real automotive pandemic

But to push towards the used there was also the shortage of the new one caused, as is known, by the well-known semiconductor crisis that began to manifest itself in mid-2020. other critical issues, cut sales in Europe by a third in the first 10 months of 2021. The lack of electronic components is the real covid-19 of the car and its vaccine is the reallocation and shortening of the supply chain that The West has delegated in the past to China and the Far East. But it is a process that takes time: experts speak of at least 8-12 months.

Chips, rich stuff

Also in this case, there are speculative factors that push the suppliers of components to produce those with the highest added value that on cars are few out of the very many present (3-5 thousand for each unit produced). That’s why manufacturers put models that produce high margins and lower emissions on the assembly line. And as there is little product, stocks and discounts are very low. The result? Although volumes are in free fall and factories are in fits and starts, house budgets are sparkling with profit.

The next tile is social

That of semiconductors was a completely unpredictable tile. Could there be another one around the corner? A social one can be glimpsed. An industry that is more agile and that to make profits is no longer tied to volumes will reasonably have less need for factories and workers as cars become more expensive and less accessible. Moments like these are ideal for making draconian renovations acceptable.

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A transition to share

The crisis – in the etymological sense of passage and transition, not just a problem – towards the future therefore risks being perceived as a phenomenon desired by aelite economic, political and social and vice versa experienced by the common man as yet another tile: a worsening of the quality of life to be suffered instead of a necessity and an opportunity that affects us all. A polarization on these issues, as well as being useless and misleading, would not do anyone’s good.

Source: Italia – News by

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