What to Expect in the Automotive Industry in 2021

The automotive industry suffered greatly in 2020 as a result of the global COVID-19 pandemic. Manufacturing and assembly plants around the world were forced to shut down for months, which led to widespread interruptions in the supply chain. Many consumers avoided public places, including automotive dealerships, due to the risk of contracting COVID-19, which led to a decline in foot traffic and automotive sales. By the end of the year, automotive sales were down nearly 15% compared to 2019.

But the automotive industry is resilient, which is why many experts believe that 2021 could be one of the biggest years yet. Here’s what consumers should expect from the automotive industry in the year ahead:

Will the Automotive Industry Rebound in 2021?

Automotive executives acknowledge that last year was difficult, but they are confident that the industry will recover in 2021. The COVID-19 pandemic has not been resolved, but automotive executives believe that consumer demand and sales will continue to grow as more people get vaccinated. 

Industry analysts predict that new vehicle sales will range from about 15.6 million to 16 million this year, which would represent an increase of between 7.6% to 10.3% compared to 2020.

Will Car Prices Go Down in 2021?

Although fewer people are purchasing new vehicles, consumers who are purchasing new vehicles are spending more than usual. According to Edmunds, the average price of a new vehicle is over $40,000 for the first time in history. 

There are a number of factors driving the increase in the average price of a new vehicle. First, many consumers who are purchasing new vehicles are opting for SUVs or pick-up trucks instead of more affordable sedans.

What to Expect in the Automotive Industry in 2021
Red miniature car on coin stack

Automotive consumers are also purchasing more expensive vehicles due to better financing terms. The average new-vehicle buyer placed a down payment of less than $5,000 and borrowed more than $35,000. Consumers are more comfortable borrowing large amounts right now due to low-interest rates and other attractive financing terms. 

If this trend continues, it may be easier for automotive companies to increase their profits and make a full recovery from last year.

The average price of new vehicles is on the rise, but the average price of used vehicles is finally dropping back down to its pre-pandemic, normal level. This means budget-conscious consumers may be more likely to purchase a used vehicle instead of a new vehicle this year.

What Factors Will Impact Consumers’ Automotive Purchase Decisions?

There are a number of factors that could impact automotive consumers’ purchase decisions in 2021, including:

  • Economic Uncertainty
  • Price
  • Attractive Financing Terms
  • Sources of Information

Economic Uncertainty

Economic concerns will play a major role in many automotive consumers’ purchase decisions. There’s no doubt that the pandemic completely disrupted the global economy. Millions of people are either out of work or earning less as a result of the COVID-19 pandemic, which could affect their decision to purchase a new vehicle.

According to the 2021 Global Automotive Consumer Study, 17% of consumers in the United States have decided to delay the purchase of a new vehicle due to the impact of the COVID-19 pandemic. 

The pandemic could also impact what type of vehicle consumers decide to purchase. The study found that 16% of U.S. consumers have changed their minds regarding what type of vehicle to purchase due to the pandemic. More than half of these consumers are now going to purchase a less expensive vehicle than originally planned.

This data indicates that consumers could be hesitant to make big purchases this year, which could have a major impact on the automotive industry’s performance.


Price is always an important factor in the decision-making process, especially when it comes to purchasing a new vehicle. But this year, price could play an even bigger role than usual. 

According to Google, search volume for the best deals on cars and trucks rose exponentially last year. This data indicates that consumers are willing to purchase new vehicles as long as automotive dealers are willing to make a deal. 

Automotive dealers must promote special deals and discounts in order to attract these price-conscious consumers. 

Attractive Financing Terms

The right financing terms could also influence an automotive consumer’s purchase decision. Many automotive consumers are committed to finding the best financing deal possible. In fact, one-fifth of automotive consumers in the U.S. spend between one to three hours researching financing options before purchasing a new vehicle. 

What is most important to these consumers is finding a financing deal that offers the lowest interest rate for their credit rating. Google reports that the best way for automotive dealerships to win these consumers over is to offer 0% annual percentage rate financing for a period of 48, 72, or 84 months. This is an attractive financing deal that could help dealerships get consumers in the door and increase their sales.

What to Expect in the Automotive Industry in 2021
Approved car loan application with car keys

If no-interest financing isn’t an option, automotive dealerships should also consider offering consumers no-penalty payment deferments. For example, the Hyundai Assurance program covers payments for up to six months if the car owner loses their job due to the pandemic. 

Sources of Information

Automotive consumers tend to conduct a lot of research before deciding whether or not to purchase a new vehicle and which vehicle to purchase. Twice as many automotive consumers start this research online as opposed to at a dealership. This isn’t a spur-of-the-moment decision, either. Automotive consumers typically spend between two to three months conducting research on their options. 

During this time period, they get information from an average of 18 different sources, including TV, news articles, blogs, online reviews, and loved ones. To put this in perspective, this means the average automotive consumer gathers information from more sources than the average patient who is considering whether or not to get elective surgery.

Automotive manufacturers must make sure that they are able to get their message in front of these consumers while they are conducting their research. Implementing effective marketing strategies to reach these consumers could make a major impact on how well automotive companies perform this year.

What Automotive Trends to Expect in 2021

The automotive industry constantly evolves to keep up with the times. Experts predict that these will be some of the biggest trends to take the automotive industry by storm in 2021:

  • Electric Vehicles
  • Shift to Digital
  • Self-Driving Vehicles
  • Connectivity
  • Streamlined Business Approach

Electric Vehicles

Experts believe that electric vehicles will become increasingly popular in the year ahead.

There were only 59 different electric or plug-in hybrid vehicles on the U.S. market in 2020, but there are already 75 different electric or plug-in hybrid models available for sale in 2021. This number is expected to grow throughout the year as more automotive manufacturers shift their focus to producing electric vehicles.

Tesla is by far the biggest player in the electric vehicle market, but many people believe that could change this year. Fifty-four percent of consumers and 63% of automotive dealers believe that a new electric vehicle startup will enter the market this year and compete directly with Tesla.

What to Expect in the Automotive Industry in 2021
Charging modern electric car on the street which are the future of the Automobile

Many dealers are already preparing for the influx of electric vehicles. In fact, 30% of franchised dealers are investing in upgrades to prepare their facilities for a larger inventory of electric vehicles in 2021.

Shift to Digital

In the past, automotive consumers typically conducted research online, but then visited dealerships in-person to complete their purchase. But now, a growing number of consumers are completing the entire process online without ever stepping foot inside a dealership.

In 2018, only 1% of automotive consumers said they purchased their vehicle online. But in 2020, nearly 1 in 10 car buyers made their purchase online as opposed to at a dealership. Now, experts believe the percentage of car buyers who purchase a vehicle online will grow rapidly over the next 12 months.

Some automotive consumers are comfortable with moving the entire purchase process online. But others only want certain aspects to go digital. For example, consumers may be comfortable comparing different models in a virtual showroom from the comfort of their own homes before visiting a dealership in-person to actually purchase a vehicle.

To keep up with changing times, automotive companies must be willing to invest in a digital platform to make the car buying experience more convenient for consumers. 

Self-Driving Vehicles

Self-driving vehicles won’t necessarily be a priority for automotive companies in the year ahead, but they will continue to be a hot topic of conversation. 

Experts believe that tech companies such as Google, Apple, and Microsoft will continue to work with automotive manufacturers to develop, test, and perfect the technology that will make self-driving vehicles a reality. Tesla will be another major player in the race to bring an autonomous vehicle to market.

Even though a lot of work will go into self-driving vehicles this year, experts do not believe that self-driving vehicles will be available to consumers by the end of 2021. Instead, experts predict that tech companies and automotive manufacturers will spend this year fine-tuning the technologies and generating buzz among consumers. If all goes according to plan this year, experts believe that the first self-driving vehicles may be available for sale within the next few years.


Many vehicles available on the market today are already designed with infotainment systems, navigational assistance, and other connected features. But this year, consumers will have even more options to choose from when it comes to connected vehicles.

The number of connected cars is expected to increase by 30% per year for the next several years. Experts believe that automotive manufacturers will continue to introduce a wide range of infotainment and safety features in these connected vehicles. Some automotive manufacturers may even partner with tech companies to create various apps that are only compatible with their vehicles’ software.

Many automotive consumers believe that increased vehicle connectivity is beneficial. However, nearly two-thirds of consumers in the U.S. worry that someone could hack a connected vehicle and access sensitive information or put the passengers’ lives in danger. To address these concerns, automotive manufacturers must prioritize cybersecurity when designing these connected vehicles.

Streamlined Business Approach

The automotive industry is still in the process of recovering from the impact of the COVID-19 pandemic. There’s no question that it will take time to make a full recovery. But to speed up the process, automotive companies may need to focus on streamlining their business operations over the next 12 months.

Experts believe that automotive companies should attempt to simplify their businesses this year by getting rid of unprofitable, complex projects and investing in essential activities. Automotive companies must also increase the speed at which they are able to change in order to remain profitable and competitive.

Committing to a streamlined business approach could help automotive manufacturers rebound strongly by the end of this year and set the stage for a very successful 2022.

What to Expect in the Automotive Industry in 2021
Blurred dealership store, with the cars and soft lightning

What Will the Automotive Industry Look Like in 2025?

The automotive industry is entering a period of transformative change, and 2021 is just the beginning. Experts believe that these six trends will dominate the automotive industry by 2025:

  • Energy efficiency: Electric and plug-in hybrid vehicles will become more popular, but fuel-powered vehicles will still dominate the market. However, manufacturers will focus on increasing the efficiency of fuel-powered vehicles to appeal to eco-conscious consumers and comply with regulations.
  • Lightweight vehicles: Innovative, new materials may be used to create lightweight vehicles that are sleeker and more energy efficient. 
  • Evolving supply chain: The use of lightweight materials could drive up the cost of parts, which will force businesses in the supply chain to figure out how to keep up with the changing times while keeping costs low.
  • New competitors: Tech companies may play a larger role in the automotive industry and could eventually become direct competitors with automotive manufacturers.
  • Internet of cars: Increased vehicle connectivity could make the driving experience safer, more convenient, and more enjoyable.
  • Emerging markets: The demand for vehicles will start to increase in many developing countries. For example, experts predict that India will be the third-largest car market by the year 2025. This could reshape the global automotive market.

Only time will tell whether or not these predictions are accurate. But if experts are correct, it’s safe to say that the cars that are produced, companies that build them, and customers who buy them may be very different in the years ahead.