By: Christopher Sirota, CPCU
Can't take the train or bus or rideshare or rental car or rental e-scooter because of the COVID-19 crisis? Wondering what's left for urban transportation and commuting? Your combustion engine automobile of course! (Really?)
The Wall Street Journal has reported that large drops in mass transit usage and ridesharing ridership during the COVID-19 crisis may be leading to a short term increase in car sales.
The convenience and relatively low costs of ridesharing have actually long been considered major reasons why many urban consumers lost interest in car ownership. During the crisis, urbanites have now lost interest in ridesharing causing a dramatic drop in usage: in April 2020, according to The Motley Fool, Lyft reported a 75% drop in the number of gross bookings for rides, and Uber reported a similarly high 80% decrease as well.
The Journal explains that in currently post-COVID-19 crisis China, about 60% of car sales in May 2020 were completed by first-time buyers. Some experts reportedly expect something similar in other markets as countries reopen and consumers continue to think about social distancing, avoiding crowds, and cleanliness.
In fact, the article quotes the chief executive of the U.S. dealership chain AutoNation who reportedly said that "he’s already seeing a shift in consumer attitudes that helped lift April sales and that could last beyond the pandemic."
Prior to the COVID-19 outbreak, the trend of city-dwellers choosing other travel options in lieu of private vehicle ownership was a major concern for the U.S. auto industry. Now, U.S. automakers are reportedly aware of this potential new development. And per the article, automakers are taking it seriously; for example, Ford has begun to:
re-evaluate business plans for autonomous vehicles, concerned the pandemic could lower demand for shared services longer term. Last month the company said it would delay introducing a commercial autonomous-vehicle service slated for next year until 2022.
GM has also reportedly shut down its car sharing service Maven.
Conversely, Volkswagen reportedly still plans to expand its electric vehicle sharing service WeShare in Europe.
A related article in Vice noted that:
A recent survey by Washington D.C.’s Metro system found an “overwhelming majority” of former commuters would not use the subway system if offices reopened now because of crowding concerns. [And at] least some cities in China, like Shenzhen and Guangzhou, experienced an increase in rush hour traffic after they re-opened compared to the previous year.
Of interest, Vice also reported that during the COVID-19 crisis, there has been an uptick in sales of a human-powered vehicle in New York City: the bicycle.