Suppressed Demand for Car Parts?

It may seem that things have recovered from the outbreak of Covid-19; however, a look at some governmental and large search engine company statistics may change that view. Let’s start with a look at a range of economic activities and social interactions:

Visits to location types using Google Mobility - Office for National Statistics (ons.gov.uk)
Visits to location types using Google Mobility – Office for National Statistics (ons.gov.uk)

Generally, we can see that workplaces, transit stations and retail visits are still below where they were compared to before the pandemic. Less visits means less travel which means less use of transport. It would not be unreasonable to assume that this would also mean less use of cars. The decreased use of vehicles will inevitably mean less wear and tear on car components, and vehicle damage. Working from home would still seem to be a thing.

The vast majority of cars are powered by an internal combustion engine [ICE]. These require fuel. So let us look at fuel consumption since just before the pandemic.

Visits to location types using Google Mobility - Office for National Statistics (ons.gov.uk)
https://www.gov.uk/government/statistics/average-road-fuel-sales-and-stock-levels

We can see that fuel consumption, as measured by fuel sales at filling stations, is still below what it was before the pandemic. There are a number of reasonable deductions that can be made:

  • The existing vehicle stock may have gotten older but it has not been used as much as before the pandemic.
  • Less usage will have resulted in less demand for consumable car parts [such as brakes, tyres, exhausts].
  • There will have been less chance of accidental damage requiring replacement parts.
  • Fewer accidents will mean less commercially written off vehicles entering the used car parts recycling market.
  • Unless working from home diminishes then car usage will remain below that of pre-pandemic levels; however, not as bad as the two lockdowns.
  • The price of parts from vehicle recyclers may rise despite less vehicle use as fewer vehicles are available due to lasting longer through non-use or damage.

Time will tell if this will borne out. There is another pressure that the motorist is going to face now and in the immediate future: The cost of living. This will have various causes [such as war, the pandemic]. The cost of lockdowns in terms of government debt and damage to supply chains is increasing the cost of living. This will in turn inhibit consumer spending. Less money available will mean household cutbacks. Used car parts may well be part of the consumer’s choice to navigate these troubled times, as was seen in the last recession.