How the pandemic has changed the auto industry - and made EVs more inevitable
As much as people talk about "the new normal" of a pandemic, what such a state looks like exactly changes almost minute by minute. For automakers like Volkswagen, that can mean weighing a host of short and long-term factors, from helping customers who've suffered job losses to planning for an electric future.
Reinhard Fischer's job is to keep all these elements in mind. As senior vice president of strategy for the Volkswagen Group of America, Fischer helps plot the company's course for whatever lies ahead. Here are his insights on how personal transportation has changed in the COVID era, and why electric vehicles make even more sense than ever.
How do you see the pandemic affecting the auto industry?
For me, it all starts with understanding how the consumer views the car. With the COVID-19 pandemic, people are really recognizing the benefits of having a car. A private means of transportation that you don't need to share with anybody it can be your sanctuary.
With these shifts in perception, there is an even greater focus on the car-buying and car-owning experience than there was before the pandemic. For example, customers are looking for contactless test drive and delivery experiences. In these times nobody wants a "stranger" in their car. New services, such as the digital tools that can allow consumers to interact with the brand and the dealer without contact, are gaining significant relevance for the consumer.
We have also seen that the new digital world is coming soon. Offering customers the option to select their new VW, arrange a touch-free delivery, schedule a trade-in evaluation, complete an online finance application, choose accessories, and utilize the digital service experience, where appropriate with pick-up and delivery are all options that are being rolled out.
But to be very clear, digital tools will not replace the need for VW dealers. Car buying, in most cases, is the second largest purchase most people make in their lives after buying a house. Customers still are looking for the experience touching, smelling and test driving their VW before they buy. The addition of digital features now just makes the experience much more comfortable.
Do you anticipate a change in the way people use their cars, especially as we see major changes to the way people view travel?
Overall, I believe that the status of the personal car is high and will continue to increase in the U.S. after the COVID-19 pandemic. People see their personal car as their sanctuary. There is a lack of comfort with any form of public transportation.
In regard to travel, I expect people will use their cars more, especially for shorter trips when you can drive rather than fly. On the other hand, with the increased popularity of working from home, people will be driving less.
However, if we see trends of people leaving the big metro areas and moving to secondary metro markets continue, as those areas normally have less public transportation, people will need more cars.
What effect do you believe the pandemic could have on the transition to electric vehicles, if any?
I expect the pandemic could cause the transition to electric vehicles to briefly hesitate but then accelerate. The main reasons are:
Charging Stations: With charging stations at home, there is no danger of infection at gas stations. The handle of a gas pump is a highly contaminated surface that drivers regularly touch, even before COVID-19.
Clear Air: We all are experiencing the positive changes to the air quality that we are breathing right now as fewer vehicles are on the road. Scenic views once prohibited by smog are now more visible. People have realized that a decrease in combustion engine-driving may translate to cleaner air. We are seeing some of these effects. I predict municipalities will want to hold on to the cleaner air for their inhabitants and increase regulations on the local level.
How do you think ride sharing will change, if at all?
Now more than ever, ride sharing is a service that should be used carefully. Customers should consider what health condition is the driver in? Who was the last guest in the car, and could they be a risk?
The other consideration is a political one. Many countermeasures can reduce the flexibility of the ride sharing concept as there is the possibility of being regulated like taxi services are today. That could have an impact on the price position of these services for the consumer.
Other plans, like the one being explored by the state of California where a percentage of ride sharing vehicle miles in the future will need to be 100 percent electric, will further increase the cost of entry into the ride sharing business model.
What digital tools do you think will be most critical for dealers to engage with customers in the future?
Digital tools that cover the complete purchase and ownership process will be the most critical. This includes tools that help people with researching information, evaluating the trade-in value, putting custom financing together, individual after-market products, service appointments, and ownership information.
These are the immediate focus areas for VW dealers. And through the effects of the COVID-19 crisis, we have seen a tremendous spike in dealers engaging with such tool sets.
But we need to remember that these tools are just the beginning. With every new VW vehicle generation, we will see new features that take our cars into the digital world creating the connection between customer, dealer and car. More and more, we will see digital tools used more frequently, such as the over-the-air updates or specific modules in the car that are activated by the customer as they please. There will also be special features that allow consumers to customize their VW to their specific needs, for special occasions or for the everyday use. And for the first time, the vehicle's second owner will have the capability to customize a used car to their taste. This will establish a very strong link between the customer and the VW dealer.
How do you envision future showrooms?
The future showroom I see them as locations where customers can experience the brand. For example, they can get in touch with the colors, the materials, the emotions of the brand, and of course, the VW products. As we continue to leverage our digital tools to showcase the products, it's possible that future showrooms might not need to be as big as they are today.
VW dealers and the VW brand will work together in defining what future showrooms could look like, so we can offer the right mix of digital and physical retail. It will be a true VW concept that is a win-win for the customer, the dealer and the brand.
DISCLAIMER: This information is published as per the press release sent to us. It has not been verified or ratified by OVERDRIVE.