COVID-19: Automotive & Tire Trends
Some trends of the US automotive and tire industry as a result of COVID-19 include a lower demand for tires, a decrease in road accidents, and the provision of financial assistance and programs by automotive companies. Each has been explained below.
Lower Demand for Tires
- With ongoing travel restrictions, the US government has begun implementing domestic travel bans. As a result, there has been a decline in transport, and as such a reduction in the demand for tires.
- While some US tire manufacturers such as Kenda Rubber Industrial stated their services as essential, and have continued operations, many others have been forced to shut their doors.
- A decline in the number of tires needed will result in a decline in the demand for C4 and its derivatives, including rubber.
- Cooper Tire & Rubber Co said they would temporarily close operations in the US and other countries as a result of the COVID-19 pandemic. This was done in an attempt to keep staff members safe, and as a result, in a decline in market demand for tires.
- Manufacturers, Bridgestone said they would be scaling down operations to align their supply with what is predicted for the market demand.
- With a surplus of supply to cater to the demands of their consumers, Bridgestone said they would continue to fill orders through its distribution centers and warehouses.
- Goodyear is another company that mentioned the decline in demand for tires, due to COVID-19, as one of the reasons for the closing down operations in the US. They, like Bridgestone, will monitor their supplies to know when they should restart operations.
A Decline in Road Accidents
- As a result of many states being on lock down, fewer people are traveling on a daily basis.
- With the canceling of events, the closing of schools and businesses, and the ban placed on public gatherings over ten persons, fewer automobile fatalities will be seen.
- Persons are traveling fewer miles and there are fewer vehicles on the roads, as a result, there are fewer chances of crashes, injuries, or fatalities.
- Fewer road accidents are expected in countries like the US who have implemented stay at home policies as a result of the COVID-19 outbreak.
- The Consumer Federation of California Education Foundation has signed petitions in support of the companies refunding insurance payments and providing credit premiums to customers.
- This is based on organizations realizing that fewer accidents will mean more profits for insurance companies.
- Major insurance companies have not yet responded to these claims, but have begun implementing measures to assist their customers.
- Companies such as Farmer’s and Geico have promised not to cancel subscriptions that are unpaid since April.
- Other known insurance brokers such as All-State and Progressive have also implemented steps to provide financial assistance for customers.
Financial Support and Buying Deals
- Many companies in the automotive and tire industry have extended help to staff and customers during the COVID-19 outbreak.
- COVID-19 has created a lot of uncertainty in the economy with many persons even losing their jobs. As a result, many automotive companies have extended a helping hand to those affected.
- Automotive firms have realized that the ongoing pandemic will affect consumers’ ability to pay for services in the future. As a result, they are finding and implementing new ways to keep business going.
- General Motors, which fosters the Cadillac, GMC, Buick, and Chevrolet brands, are lending not only financial assistance to customers but are implementing ways to keep them connected.
- Ford, Honda, Hyundai, and Toyota, are among well-known US manufacturers that are providing car payment plans and programs for customers affected by the outbreak.
In conducting this research, we visited analysis, industry, and business websites. The first trend, lowered market demand for tires, was mentioned by IHS MarkIt and Tire Review. These sources provided us with a description of the trend and an explanation about how COVID-19 has driven it. Examples of some well-known companies experiencing this trend were found on the NASDAQ and Trucking Info.
The second trend, reduced accidents, was mentioned in articles from Adirondack Daily, and Forbes. These articles provided us with an overview of the trend and showed how COVID-19 was influencing it. Reduced road accidents would directly affect insurance companies. As a result, there is a current debate surrounding what to do about auto policies in the US during this time. Whereas no insurance company has responded to the voiced expectations from the public, they have implemented some relief efforts for their customers. This is an ongoing issue and so none of the insurance companies have yet been affected by this trend. However, based on research, it was noted that in China, where the outbreak began, non-life insurers were seen to have a drastic drop in car accident claims. This has been expected to boost the year’s earnings of Chinese brokers.
The provision of financial assistance to customers by automotive companies was the final trend. This trend was mentioned on CNet, JD Power, and Pymnts. All three sources provided us with an overview of the trend, an explanation for the impact of COVID-19, and examples of companies that are leading the trend.