The automotive industry is known to heavily rely on the impacts of interest rates and economic volatility. The purchase of cars, much like houses, is very sensitive to the cost of capital and is typically financed upon acquisition. Automotive sales for the first two months of 2020 were very positive, even outperforming those of 2019 (KPMG, 2020). However, with the onset of the COVID-19 pandemic, sales plummeted and manufacturing facilities shut down around the world. Over 10 000 Canadian workers in manufacturing facilities were temporarily laid off or lost their jobs (Maclean’s, 2020). The auto industry regularly contributes $20 billion CAD to the Canadian GDP, and nationally accounts for 16.8% of manufacturing sales (CVMA, 2020). In Ontario, the industry makes up 20% of the provincial GDP, which illustrates that changes to the auto industry will be felt here at home in Canada (CVMA, 2020).


The retail sector has also been among one of the hardest hit sectors of the economy which had to adapt, and automotive companies are taking notes. Across Europe, engagement with various industries and the retail sector through online channels has increased by an average of 13% since the beginning of March (Hofstätter, et al., 2020). The auto industry had never engaged with many digital channels before the pandemic, but with many consumers planning on continuing to utilize online resources to research and make purchases, automotive groups were behind. One U.S. electric-vehicle (EV) maker had already implemented an online sales offering system, which allowed it to increase its sales in China by over 10% during the pandemic (Hofstätter, et al., 2020). In comparison, China experienced an overall 80% decline in automotive sales (Hofstätter, et al., 2020). This proves that establishing an online presence, including a structured online shop, offering contactless test-drives and home car deliveries is a very effective sales strategy for the automotive sellers of the future. Infiniti is another auto brand that has successfully introduced contactless test drives in Canada. “Scouting for, and securing, a new vehicle these days is different than it was a few months ago. At Infiniti, we saw this as an opportunity to make the customer experience more seamless for everyone involved,” Jennifer Dobbs, senior manager of marketing communications at Infiniti Canada, said in a statement (Reid, 2020).

Flexible Options and Recurring Revenue

In times when cash is scarce and uncertainty looms, customers often hesitate to make large purchases. Instead, many people opt for shorter subscription-based offers that are easy to terminate and do not use a significant amount of capital. A preference for subscription-based models in the transportation industry is already apparent, even during good economic times, as thousands of riders enjoy services like Uber and Lyft. Recurring revenue streams could become very important to automotive players as a way to create robust income streams and address changing needs. The COVID-19 crisis has reinforced the existing trend towards greater flexibility, and this presents the opportunity for auto groups to reposition their offerings to increase flexibility. For example, rental companies are offering short-term leases as an alternative to car sales and some automotive sellers are doing the same. Another innovation in the industry that will help shield against cyclical downfalls is recurring revenue streams. Tesla’s current revenue structure suggests what will drive the value of auto players in the future. Traditional vehicle sales accounted for about $20 billion USD of the company’s valuations, while software upgrades contributed roughly $25 billion USD (Hofstätter, et al., 2020). These software subscription services allow customers to pay for programs that unlock features such as heated seats and full self-driving capabilities.

Industry Collaboration

A major part of “future-proofing” the automotive industry will be optimizing asset deployment through strategic partnerships. Significant resources will be required to implement new technologies like autonomous vehicles, connectivity, and electrification. By working together as opposed to competing against each other, all parties can benefit from faster development and reduced costs. Collaborating with former competitors, tech players, and investors will likely become a prominent element of the auto industry soon.


Throughout history, the auto industry has been among the hardest hit by cyclical changes. However, the COVID-19 pandemic has expedited the rate of adoption of new technologies and strategies that will help auto players remain resilient and stronger than ever. This means that generation Z will likely have a much different experience when purchasing a car and that the automotive industry could expand beyond its traditional scope. By adopting winning strategies, the auto industry is poised to make a big comeback over the next few months and well into the future.


Hofstätter, T., Krawina, M., Mühlreiter, B., Pöhler, S., & Tschiesner, A. (2020, October 27). Reimagining the auto industry’s future: It’s now or never. Retrieved October 29, 2020, from

CVMA. (2020). Automotive Industry Fact. Retrieved October 29, 2020, from

KPMG. (2020, June 04). COVID-19 and the automotive sector. Retrieved October 29, 2020, from

Maclean’s April 30, 2. (2020, April 30). COVID-19: Canada layoff tracker. Retrieved October 28, 2020, from

Reid, A. (2020, June 28). Infiniti Now offers contactless test drives and other social distancing options. Retrieved November 01, 2020, from