The automotive industry has been one of the hardest hit by the pandemic. Cars have lain dormant in driveways for months as a result of lockdowns across the world, and economic shutdowns hit supply chains, with reports of some manufacturers even resorting to flying parts across the world in suitcases.

But as consumers emerge into a ‘new normal’, what does this mean for the automotive industry? What are the trends to watch – both in the short and the long-term? 

In this article, our auto experts across the UK, Thailand and Indonesia, Bianca Abulafia, Digo Alanda and Kajornkiat Kiatsunthorn explore 3 key areas:

  1. Changing purchase patterns
  2. The future of electric
  3. The digital path to purchase

Changing purchase patterns

Short term

In the short-term, we expect to see growth in the second hand and luxury end of the market especially.

The pandemic has resulted in a renewed focus on the car as hygiene concerns have come to the fore. This has resulted in those that have previously shunned car ownership such as urbanites and young people re-evaluating their stance. In the US, a cars.com study showed that 20% of people who don’t own a car are thinking of buying one, and this figure rises when we hone in on young people. A recent global Capgemini survey of under 35s shows that 45% are considering buying a car and this is highest in countries that have been hardest hit by the pandemic.

Graph - percentage of potential buyers under 35 in each country
Source: COVID-19 and the automotive consumer, Capgeminia landscape

We have talked about the emergence of “revenge buying” in other sectors, and we expect this to manifest in the automotive industry within the second-hand market as a more affordable option for younger buyers. “Revenge buying” is also relevant at the luxury end of the market. As a result of being able to save, the budget of some affluent buyers has increased, meaning that they’re now able to trade up. Volvo’s Chief Executive notes this has happened in China, where the company has seen a 20% increase in sales compared to 2019. “People are really tired of sitting at home locked and they really want to go out and buy.” Outside of this, we expect sales to suffer, with existing car owners putting off purchases in the midst of economic instability.

Long-term

Looking at the long-term impact, it will take some time until car sales return to pre-COVID levels.  An ING report, looks back to the 2008 financial crisis for indicators, highlighting that it took 11 months for vehicle sales to recover in this instance. But if we consider that this pandemic has brought lifestyle and behavioural changes, in addition to economic instability, it’s much harder to predict.

In the long-term, will we see a permanent shift towards home working that encourages people to move out of urban centres, necessitating the need for a car? Will increased domestic tourism result in a desire to have access to a car for longer trips – ushering in an opportunity for shared ownership of vehicles? The automotive industry doesn’t exist in a vacuum and it will be vital for auto manufacturers to observe the broad trends to understand where they can play a role.

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The digital path to purchase

Short-term

Car manufacturers have had to rapidly adapt to a new sales environment, as they seek to comply with social distancing measures and meet the needs of the more cautious shopper. Capgemini’s COVID-19 and The Automotive Consumer report indicates that 46% of consumers want to minimise visits to dealerships to compare offers, instead preferring to do this online. We’ve seen lots of innovative responses to this. In China, for instance, Volkswagen has trained 70,000 employees to communicate with customers online, even livestreaming from dealerships via TikTok and Kuaishou.

Long-term

In the long-term, we only expect this to continue. The impact of coronavirus has acted as a catalyst for the digital transformation of many industries, sparking changes in consumer behaviour that were thought to take years. Automotive will be no exception as people seek the convenience that they’re experiencing in their interactions with other brands and industries. This will be particularly important in the research phase but we believe it will also extend to online purchase and home delivery, with a recent Think with Google survey finding that 18% of people would buy a vehicle sooner if there was an online purchase option. The desire for convenience could also impact the after sales experience with servicing being carried out at home. 

The future of electric

Short-term

In the immediate term, economic instability, plus the appeal of lower oil prices, could dissuade car buyers from making the move to electric. However, we don’t expect this to last long, with any savings from oil prices likely to be temporary, and not significant enough in the long-term to fundamentally influence decisions. 

One area to watch is other electric transportation options beyond the car – such as scooters and bikes. As people avoid public transport and seek other routes around the city, governments are having to radically rethink how they can support this. The UK has announced that improvements in cycling infrastructure and trials to allow rented e-scooters on the streets have been fast-tracked, which could encourage people to start exploring electric bikes and scooters as alternative options for commuting.  Increased familiarity with electric powered means of transportation could result in a greater adoption of motorbikes or cars.

Long-term

When we look at the long-term view, we don’t expect the shift towards electric to be significantly impacted. From the canals in Venice being clear enough to see the fish to Nasa satellite images showing the dramatic drop into pollution levels in China, the upsides of the lockdown on the environment have been well documented – with many consumers acknowledging benefits of this on their quality of life. 

This could influence purchase behaviours in the longer term, with consumers wanting to do their bit for the environment at the point at which economic conditions become more favourable for them to do so. But more significantly, changing consumer sentiment towards the environment is also likely to increase pressure on governments to bolster schemes to incentivise electric car ownership, making them a more financially attractive proposition to car buyers. In fact, this is something that has already happened in China in the wake of the pandemic, with some cities announcing subsidies for new electric vehicles, and others upping their investment in the associated infrastructure.

We also shouldn’t forget the status symbol factor, particularly in the luxury segment. Our research has shown that owning an electric car represents a new way to demonstrate wealth and status, and we don’t see this diminishing any time soon.

This week marks a change in the focus for many news outlets and governments. From protection to productivity – as leaders grapple with the challenge of getting economies moving again. There is more confidence in some countries’ approach and communication (New Zealand) than in others (UK, US – looking at you!). However, in all situations, there is an agreement that the world we are returning to is not the same as we left.

The workplace is no different. The Straits Times last week carried a story from Singapore’s Minister for Trade and Industry about how ‘working from home will continue to be the norm for the majority even after restrictions are lifted. Forbes has taken this further and stated that “The Covid-19 coronavirus is becoming the accelerator for one of the greatest workplace transformations of our lifetime. How we work, exercise, shop, learn, communicate, and of course, where we work, will be changed forever!”

However, for those of us that have been able to continue our working life from the safety of our home, will the adjustment back to the office be harder than the adjustment to work at home? US Tech website BuiltIn quote a CEO who states that it takes “6 to 12 weeks for a smooth transition from on-site to remote working”. For many, this timeframe has already been met. People are working at home, people are productive, and…are people are starting to realise the benefits: lack of travel, more flexible hours, ability to help with childcare … With many positives to working from home, what does this mean for the future of work?

Certainly, in the short term, offices will be sparse locations. Governments are still advising those who can work from home to work from home. If you do return, social distancing measures will have to be evident. Here in Singapore – if you are do not implement safe management of your workplace, the government can fine you or even shut down operations for errant employers. The Economist offers up an opinion piece on how that distancing may look. A 2m gap between desks could reduce the capacity of workspaces to 30-35% of the pre-Covid lockdown. The piece also details a high-tech solution before the lockdown in UAE, with contactless pathways from door to desk, relying on motion sensors and facial coding to open doors. Having a reduced workforce onsite, or investing in tech are expensive options for most firms – but what about the office itself. What role will it play?

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At Kadence, we have managed to retain productivity. Completing projects to time, and collaborating using video calls, Slack, online whiteboards, and Google Docs. What we really miss is the unintended interaction with others. Overhearing conversations and adding some extra insights, hearing the chatter of voices and the energy in the room. At Kadence, we also have some onsite resources that are hard to replicate offsite. Focus group viewing facilities, a call center, and workshop facilities will all be utilized in the future. However, the floor space may change. We might be more open to a higher proportion of staff working from offsite at any one time. Rather than whole team meetings and designated desks, perhaps our floor space will have more meeting areas. So that project teams can come together in an environment to bounce off each other, then return home to execute the required tasks. Vice talk of new rituals being formed to bring meaning to home working and The Atlantic talk about dress codes changing in life after COVID.

However, perhaps the most important change will be in HR, not in the physical use of space. If people are going to work from offsite more often, how does team bonding work? How will you help teams to prioritize their workloads? How will you manage line reports? These skills will require even more attuned social skills and people managers.

I would foresee offices being more flexible environments. Bringing people together when it matters, but keeping people apart for safety….and for their own personal preference. As a result, team dynamics will change. Managers will need to juggle a wider array of pastoral matters. The corporate cultures that thrive will be flatter, more candid, and more collaborative.

Perhaps the new normal is still being discovered, but the ‘now normal’ is all about flexibility and creativity.

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Opponents of cannabis legalization often cite concerns about cannabis’s effect on public health, warning that increased accessibility will likely result in an increase in the abuse of cannabis and other substances. However, for a country in the midst of an opioid crisis, with an estimated 47,600 opioid-related deaths in 2017, research is needed to understand the relationship between cannabis and pharmaceutical use, as cannabis is often cited as an alternative to opioids for pain management. Research conducted by Kadence International, a global boutique market research agency, indicates a nation-wide increase, in the past year, in adult use of cannabis to treat pain and other medical issues, often as a substitute for pharmaceuticals or alcohol.

In a national survey with over 2,000 adults, Kadence found that one in five (20%) adults report they have used cannabis in the last 12 months. Of those cannabis consumers, eight in ten (81%) use cannabis for at least one medical reason, an increase from 72% in 2018. Compared to 2018, significantly more adult cannabis users reported using cannabis to help treat anxiety (48% to 58%), sleep issues (39% to 53%) and pain or inflammation (40% to 49%). Many say they use cannabis for more than one of these therapeutic reasons.

While the vast majority of adult cannabis consumers believe that consumption of cannabis is safer than alcohol (92%), people who say they use cannabis for at least one therapeutic reason are more likely to state that their alcohol consumption has decreased as a result of their cannabis use (51% pain users, 48% anxiety users, 49% sleep users vs. 42% average). They are drinking less because they perceive cannabis to be less harmful, healthier and state that cannabis helps them feel better than alcohol. When asked whether they would prefer to consume cannabis or alcohol while doing different popular activities, the vast majority of these users would prefer cannabis over alcohol in nearly all situations. How else do these therapeutic users differ from the average cannabis consumer?

Profiling therapeutic cannabis consumers vs the average U.S. cannabis consumer

More than 1 in 4 (27%) adult cannabis consumers report that they use cannabis as a substitute for at least one prescription or over-the-counter medication. They are most commonly replacing pain medications with cannabis (21%), followed by sleep aids (17%) and anxiety medications (17%). Many choose cannabis over traditional pharmaceuticals because they feel it effectively relieves a combination of their symptoms. A notable 14% of adult cannabis consumers are using cannabis as a substitute for prescription pain killers/opioids, largely due to perceptions that cannabis is a “much safer”, “more natural” way to treat pain with “fewer side effects”. Interestingly, although there is no difference between opioid replacers and other cannabis consumers, with three in four living in states where cannabis is at least medically legal, opioid replacers may be obtaining their cannabis from the black market more than the average US cannabis consumer, as 61% said they usually buy from somewhere other than a dispensary, compared to 52% of total cannabis consumers.

Kadence’s data indicates there may be an opportunity for medical professionals and dispensaries to help combat the opioid crisis by targeting these black market cannabis purchasers, particularly in light of the recent vaping illnesses, thought to be coming more from black market products than regulated products available in dispensaries.

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Across all of these findings, there are no significant differences between cannabis consumers in medically or recreationally legal and non-legal states. Furthermore, the research found that not only cannabis consumers but the majority of adults nationwide believe that we are just beginning to discover the power of the cannabis plant for medicinal purposes (69%) and state that cannabis should be taken off the schedule 1 drug list so that its medical benefits can be explored more freely (69%).

The key point is this: regardless of whether or not they live in legal states, the data shows that adult consumers are already turning to cannabis for symptom relief, often choosing cannabis over pharmaceutical treatments or alcohol.  With increased accessibility, product sales could be more effectively converted from the black market into legal channels where they can be regulated appropriately and taxed handsomely. This also makes more thorough research possible for pharmaceutical companies, medical professionals and public health researchers, and expands product innovation opportunities for brands and manufacturers across a wide range of categories. After due diligence, ultimately, the potential health and well-being benefits of cannabis can be made available, through appropriate channels, to more adult consumers in need.

 Download the full research to learn more about trends in cannabis usage in the US. 

With legalization of recreational marijuana becoming more commonplace alongside a continual rise in the availability of cannabis-based products, it is a turbulent but exciting time for CBD. But do people really understand what CBD is and what it does? Why do people use CBD products … and how are people using it compared to cannabis?

According to our recent study on the topic, CBD usage is rapidly growing in popularity.  4 times as many adults are using CBD products in 2019, compared to 2018, growing from 5% to 18%. 

Unsurprisingly, there is considerable overlap between CBD and cannabis usage, with half of CBD users also using cannabis.  That said, CBD growth is also coming from those who don’t use cannabis. 

Many CBD consumers use these products regularly to address a range of ailments.  Roughly half of CBD consumers use CBD at least once a week, while very few only use the product a couple times a month.  Most (60%) use it for pain relief or inflammation; the next most common reasons are anxiety (45%) and sleep (33%).

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Despite its increasing usage, there is still a large gap in product understanding. Only 24% of US adults believe they are moderately or extremely familiar with CBD, and, more surprising, only half of CBD users (57%) believe they are. 

There are also many misconceptions regarding CBD products. 25% of US adults believe that pure CBD can “get you high”, which is not true. CBD users tend to be more knowledgeable about these products but many are still misinformed.  For example, 13% of CBD users believe that it can get you high.

“CBD is a fantastic option for many, but it’s a very complex landscape for consumers to navigate.  One sees CBD advertised with specific medical claims through dispensaries in medical cannabis states.  Then one sees hemp derived CBD available at the local natural foods store as a dietary supplement — but without medical claims and available in isolate form, full spectrum form, or hybrids of the two” comments CBD Industry Executive, Ashley Grace.  “It’s a lot for consumers to decipher and it all doesn’t work the same.  The dispensary CBD might get you high, the isolate CBD may not work at all or might stop working quickly, and many ‘full spectrum’ CBDs are really just oils spiked with isolated CBD.  Then you have US grown or imported.  While it’s difficult for consumers to find the right products to meet their needs, the good news is there are some amazing products available that are literally changing people’s lives,” said Grace.  

It is important to note that the average CBD user looks just like anyone else. There are no major differences in gender, employment, income, marital status or geography when compared to average American adult. Although, younger adults (age 21-44) are more likely to have tried CBD. Interestingly, they are also more confident that they are familiar with CBD but more likely to be misinformed about it.

Download the full report to explore the findings in depth.

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Nowadays people have very hectic and busy lifestyles – trying to balance work, home and a social life is increasingly challenging. However, companies are becoming more attuned to this and starting to adapt their products to suit.

Lack of time is typically the main reason for lack of participation in sport or gym attendance. However, it remains hugely popular, with the number of people taking part every week reaching around 16 million and the number of fitness centre members in the UK being the highest ever.

Maybe this is because gyms are increasing the number of classes or reducing their length to be more flexible. For example, some gyms are now promoting 30 minute classes, which are easier to squeeze into your lunch break. Some offices even have gyms that you can pop to whenever in the working day to help cater for busy lifestyles. Also having exercise studios entirely dedicated to one activity (such as yoga) means there are more classes for people to choose from.

Participation in high-intensity exercise classes and activities, like spin and boxercise, continue to attract large numbers of people, potentially rivalling more traditional sports such as football, netball and hockey. Outdoor activities such as bootcamp and Parkrun are also increasing in popularity which are seen as a highly sociable way to exercise. Maybe this is people’s way of ticking both the ‘exercise’ and ‘socialise’ boxes on their to-do lists?

More established activities like yoga and pilates are still gaining in popularity as well. These classes are expected to provide both physical and mental benefits – such as increased muscle strength and tone, improved athletic performance, stress relief and encouraging relaxation. People can therefore achieve a healthier lifestyle in a more compact way, which saves time relative to completing several separate activities to achieve the same benefits.

As well as exercise companies, nutrition companies are also adapting to people’s hectic lifestyles. Nutrition is becoming more of a focus and healthy eating is a main element of having a healthy lifestyle. We have therefore seen the rise in trends such as The Body Coach, Joe Wicks, who promises that you’ll be able to lose weight, despite eating more food and spending less time at the gym. He also has a 15 minute meals cookbook that caters for those lacking time in the evenings and suggests quick exercises you can do in the comfort of your own home.

Adapting to hectic lifestyles has also paved the way for food companies such as HelloFresh or Gousto. Their USP is that they deliver fresh ingredients and healthy recipes straight to your doorstep. This means you can get back from a busy day at work and have your dinner all bought and planned out for you – all you have to do is follow the recipe. The next step on from this is Deliveroo that actually delivers healthy food options straight to the doorstep of either your home or office ready for consumption! So now when you get home from work late and cooking is the last thing on your mind, instead of the traditional Chinese or Indian takeaways you can now get Pho or Sushi delivered to your door!

So having a healthy lifestyle doesn’t appear to be a fad or a trend, it’s the way things are nowadays. We have already seen intersections between health and exercise but this also begs the question – where will this go? What’s next for healthy lifestyles?

Maybe exercise and retail companies will start partnering up. For example, introducing grocery stores at the gym to save having to do a food shop later that evening. Or they could pair up in a totally different way. It may be counter-intuitive but BeerYoga is something that I stumbled upon recently where attendees can drink beer whilst doing yoga. Now this ticks all the boxes – social, mental and physical. Will that mean that WinePilates or SushiSpin emerge as trends as well? It’s fair to say some of these may seem slightly odd now but many fads do before they become accepted into society.