How COVID-19 Has been the Car Industry

Almost every sector of the global economy is feeling the warm heat of the COVID-19 pandemic. The car industry also has had its fair share of the setbacks posed by this virus as people’s economic strength has been dramatically affected. Is it not when a person can work and make money that they will purchase cars? Since most people now have to stay at home, their primary need seems to have shifted to feeding and entertainment. So, it’s undoubtedly a trying period for car dealers and other businesses that depend on the sales of automobiles.

Car Industry

In April this year, one record has it that new car registration dropped by 97% in the UK. That’s no small figure, which only a global threat such as this respiratory illness could cause. The only moment the UK has experienced this abysmally reduced car sale was in 1992, and the current trend has to change; otherwise, it will surpass the more than two decades record.

How Car Insurance Companies are Affected

One industry that is directly hit by the low car sales currently is the car insurance industry. Since their existence and efficient running depends on people’s continual purchase of cars, they cannot but feel the heat of the moment. To think about car insurance now would mean that the present restrictions have been lifted and people can make enough money to purchase cars in the first place. Consequently, many UK car insurance companies such as Admiral are beginning to refund their customers partially.

Usage-Based Insurance

Given the fewer cars now plying the road and the reduction the travelling miles, several consumers are beginning to advocate for insurance packages based on how they use their cars. Of course, this sounds good for the customers but not necessarily for the insurance company. That’s because a reduction in the number of miles travelled or the number of cars on the road does not automatically amount to a reduction in risks. Factors such as a driver’s attitude and extent of carefulness can determine the degree of risks they are likely to face.

Public Transportation to Suffer

Due to social distancing now in place in the country and around the world, many people are sceptical about boarding public vehicles. For owners of these cars, it’s going to a real struggle to meet their daily financial target because of the reduction in the number of passengers they now have. The implication is that people will now prefer private cars to public ones, and this may increase the volume of cars on the road. Of course, in the final analysis, the car insurance industry may still laugh last with enough patience.

In a Nutshell

The COVID-19 wave is sweeping fast, and the car industry is not spared. Of course, transportation is an essential part of our daily lives, and cars must get proper insurance against hazards. But then, unless the present restriction is relaxed, it may be difficult for the industry to recuperate from the dangerous blow by this virus fully.

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