Covid-19 update

Aftermarket and workshop services may benefit as COVID lockdown eases.

Almost 1.1 million unroadworthy vehicles are set to return to the UK’s roads as the lockdown begins to ease and people increasingly take to their cars, according to a report from aftermarket rapid fit company, KwikFit. The research also revealed that 49% of UK drivers - whose vehicles were eligible for a six-month extension to their MOT - will go to the end of the period without getting their car tested, despite the law requiring vehicle owners to keep their vehicles roadworthy.

In the UK, further easing of the lockdown is alsolikely to translate into more car journeys by consumers, with car showrooms set to reopen on 1st June. The Society for Motor Manufacturers and Traders (SMMT), which has issued guidance to help them reopen safely, has revealed that the daily cost to the Treasury of keeping dealerships closed has been £61m.

The aftermarket sector, which will be in the frontline as lockdown eases,  is also receiving guidance on hygiene and distancing practices from the Institute of the Motor Industry (IMI) which has collaborated with the Garage Equipment Association (GEA), Independent Automotive Aftermarket Federation (IAAF), Scottish Motor Trade Association (SMTA) and the Society of Motor Manufacturers and Traders (SMMT).

Meanwhile April commercial vehicle registrations in the EU declined by 67%, according to the European Automobile Manufacturers Association (ACEA). The fallout of the Covid-19 pandemic affected all 27 EU markets and every vehicle segment. Spain (-87.8%), Italy (-85.5%) and France (-82.4%) saw the biggest losses in April, as they were also among the countries with the most restrictive containment measures in place.

In the UK, likely fluctuations in supply and demand has led to car dealers being warned by cap hpi to "hold their nerve."  The organisation added: “We would encourage vendors to keep close to cap Live valuations as well as look back at their mid-March values as a barometer. If consumer demand is relatively healthy, as it may be due to a lack of new car supply, PCPs ending or a reluctance to use public transport, then prices may not need adjusting by much,” said Derren Martin, head of valuations UK at cap hpi. 

Covid-19 may have closed car dealerships but Chinese Geely Auto is set to be the the country's first automaker to achieve fully digital direct selling. Vice President Feng Qingfeng said, “The live-streaming car sale is emerging due to the impact of novel coronavirus spread, which brings new chances to the development of Internet-based online direct selling."

The boost to the 'virtual' environment was also evidenced by the number of live-streaming sessions involving the auto industry.  These jumped 15-fold in March compared to January. Total numbers of participants were up sixfold, according to a report jointly released by specialist automotive website and app Dcar and the China Automobile Dealers Association.

Kline reports that the US's quick lubes sector, while deemed an essential business during Covid-19, has operated at a fraction of normal levels with retail sales of lubricants for do-it-yourselfers and commercial sales by retailers to installers being equally depressed. However, fleets are expected to maintain normal consumption levels of commercial vehicle lubricants (CVLs).

Kline recommends that post Covid-19 lubricants suppliers should focus on individual sectors, not the entire market, and monitor these leading industry fundamentals for value and growth opportunities:

  • Synthetics penetration in automotive and industrial lubricants will continue to grow driven by OEM technical demand and end user acceptance.
  • Government and industry regulations for reductions in automotive emissions and improvement in fuel economy continue.
  • OEM and end-user demand and acceptance for extended oil drain intervals continue.
  • Operating efficiency gains in industrial machinery and equipment will be supported and enabled by synthetics, technology, and more diligent and measured maintenance practices.
  • EVs will continue to penetrate the market and displace ICEs and offer opportunities in alternative and specialty oils and fluids.