2020. There are some years that pass by almost in a blur, but decades from now, as much as we might prefer to forget it ever happened, 2020 will be a year that will stand out in sharp and, for many, painful relief.
Certainly, for those in the auto industry, there are plenty of reasons why this year will go down in the record books, starting with the two-month shutdown of North American production as the nation struggled – unsuccessfully, it turned out – to bring the coronavirus pandemic under control. Yet, what was widely forecast to become the industry’s worst year since the Great Recession struck a decade earlier is ending on an unexpectedly upbeat note, sales rebounding to nearly pre-pandemic levels.
The outbreak of COVID-19 was clearly the dominant factor shaping the lion’s share of industry news during 2020, including the near-complete halt of global auto shows. But there were other big stories this past year not directly linked to the virus, including the launch of the first fully driverless vehicle test programs, the rollout of a new wave of battery-electric vehicles and the Trump administration’s move to roll back Obama-era fuel economy standards.
Here’s a look back at the most significant automotive stories of 2020, and a forecast of what could prove to be big news in 2021:
- It started out as an unknown infection circulating in China’s heartland, but by mid-winter, the virus formally known as SAR-CoV-2 had reached Europe and North America and though some calmly predicted it would soon go away, “like a miracle,” it rapidly took a toll, infections spiking across the country. The auto industry would quickly feel the impact.
- In mid-March, to help “slow the curve,” automakers closed office buildings, telling employees to work from home. By month’s end factories would close, as well, staying shuttered for two months.
- A handful stayed open as automakers launched the “Arsenal of Health,” converting plants to address a massive U.S. shortage of masks, ventilators and other medical supplies.
- Even dealers were ordered shut in many states, though many worked around that problem by turning to online sales. The shift happened “two to three years faster” than expected and is likely permanent, says Ford marketing chief Mark LaNeve.
- Online retailing helped salvage what was expected to be a disastrous year. JD Power initially predicted demand could plunge 80% in April, with total 2020 sales falling below Great Recession levels. Instead, the number will be off around 16%, Power now says, with recent months coming in around year ago levels.
- Automaker earnings tanked during the second quarter but rebounded with a vengeance in Q3, and dealers posted some of their biggest profits ever. But the question is whether they can maintain that pace.
- The light truck boom accelerated in 2020, COVID adding to the momentum. SUVs, pickups and other light trucks now account for three quarters of new vehicle sales. With rare exception, manufacturers accelerated moves to quit or pare back passenger car offerings, Ford ending 2020 with only the Mustang in its mix.
- The strength of pickup and SUV sales has had an unexpected downside: a severe inventory shortage leaving some potential buyers struggling to find the products they want, while automakers have raced to ramp up production – though they’ve been encumbered by protocols meant to reduce the spread of COVID-19 on factory floors.
- Once a critical part of the industry, auto shows largely went dark during 2020, only the pre-pandemic Chicago Auto Show and delayed Beijing Motor Show taking place.
- Amidst all the challenges faced by the industry in the Year of Pandemic, a number of manufacturers have undergone major personnel shifts, notably Ford which, in Jim Farley, now has its fourth CEO in barely six years.
- The pandemic has, if anything, accelerated the growth of mergers, acquisitions and joint ventures. The Fiat Chrysler/PSA tie up cleared its last major hurdle and will be completed early in 2021. Ford and Honda added new JV projects, as did Aston Martin and Mercedes-Benz, among a long list of others.
- Despite the pandemic, the pace picked up in two key areas that could radically reshape the auto industry in the coming decade: autonomous and electrified vehicles. A wave of new battery-electric cars, including the Ford Mustang Mach-E, debuted, with more to follow. Meanwhile, more autonomous vehicle prototypes have taken to the road, including the first fully driverless ones.
- Another trend expected to reshape the business largely went bust in 2020, many ride-sharing customers pulling back, either due to lockdowns or a fear of getting into vehicles where they could be exposed to the coronavirus. The same concerns have led to a massive drop off in the use of mass transit.
- Many commuters have decided to shift back to personal vehicles, helping boost U.S. sales. But with millions now working from home, U.S. traffic is ending 2020 still sharply down from pre-pandemic levels, according to tracking data from TomTom and others.
- As it entered its last year in office, the anti-regulatory Trump administration finalized plans to sharply scale back the Corporate Average Fuel Economy standards set by the prior Obama White House – though that and other moves are tied up in courts and could be reversed as a result of the 2020 presidential election.
- And, rounding things out from a business perspective, Tesla joined the S&P 500 after watching its stock price increase nearly a dozen-fold from the beginning of the year – while also now positioning its balance sheet solidly in the black.
These are just some of the most significant developments this past year. During any other circuit around the sun plenty of other stories would have made the list. The latest wave of the COVID-19 crisis ensures it will remain part of automotive headlines going into 2021. The question is how much of an impact it will continue to have? Here are key stories to watch for next year:
- As infections and deaths rise, there are concerns about the need for new lockdowns.
- The pandemic relief bill passed days before the holidays begin should help shore up the U.S. economy, though the smaller level of assistance may not carry the muscle of the spring 2020 effort. The general consensus is that, with the new aid, auto sales will continue to rebound – but fall short of pre-pandemic levels.
- The incoming Biden administration is expected to take a decidedly more pro-regulatory approach, especially when it comes to the environment and industry observers expect to see quick moves to reverse the CAFE rollback, boost demand for EVs and move forward on new safety regulations.
- A new company called Stellantis will be born sometime during Q1 2021, completing the planned merger of FCA and PSA. But there are widespread expectations that the industry will see an accelerating wave of consolidation and cooperative efforts, especially new joint ventures.
- The new year will usher in what is expected to be explosive growth in the number of new battery-electric vehicles, (as well as plug-ins and conventional hybrids). Among key products to watch for: the GMC Hummer, the Volkswagen ID.4, the Tesla Cybertruck and the Lucid Air.
We’ll also be watching to see what happens in terms of traffic, public transit, ride-sharing and gas prices, as well as the possible revival of auto shows, among other stories to come in 2021.