The impact of hybrid working on car buying

In pre-Covid 2019, 68% of the UK workforce commuted by car. Successive lockdowns challenged the way many worked, with almost half of working adults working from home at times during the pandemic. While Covid-19 remains as an ongoing issue, lockdown restrictions have lifted and across the UK, people are free to travel. However, people are continuing to work from home, at least some of the time, which has implications for car retailing.

The trends in home/hybrid Working

Workers asked about their future working location plans in February 2022, saw more than 8 in 10 people who had to work from home during the coronavirus pandemic saying that they planned to hybrid work, both working at home and their usual place of work.

Since then, the proportion of those people who are hybrid working has risen from 13% in early February 2022 to 24% in May 2022. The percentage working exclusively from home has fallen from 22% to 14% in the same period.

Road traffic and travel post-pandemic

Travelling to work exclusively has been the most common working pattern since national restrictions were lifted, with 46% of workers doing this in late April and early May 2022. Nevertheless, there has been a subtle shift in weekday travel.

In the year to March 31st this year, car and taxi traffic rebounded from lockdown, increasing by 32.9%, to 237.5 billion vehicle miles, when compared to the year ending March 2021. However, this volume remained down -9.6% when compared to the pre-pandemic year ending December 2019.

The fall in mileage can, at least in part, be attributed to the change in work patterns as some people work from home.

Weekend travel is broadly back to pre-pandemic levels.

Impacts for car retailing

Hybrid workers still need to travel to work, albeit not as frequently. Some previous car owners may choose to move away from a car, but non-urban people are likely to require more persuasion in light of the challenges facing some areas of public transport.

There are demographic differences

Office for National Statistics (ONS) data reveals that hybrid and homeworking increased by income bracket. More than a third (38%) of workers earning £40,000 or more hybrid worked between 27 April and 8 May 2022. Lower earners were less likely to report hybrid working. In short, travelling to work was the most common working pattern for all income groups earning up to £40,000,

The two car household

Pre-Covid, 35% of households owned two or more cars. While this number may have fallen as the overall parc has declined, the wealthier demographic of hybrid workers and their continuing commuting need, albeit less frequently suggests that the rationale for owning multiple cars will remain valid for most hybrid working households.

Conclusions

The inevitable conclusion of the change in working patterns for car retailing is that it may not be as dramatic as first indicated. While separate considerations, the cost-of-living crisis and for some, CAZ/ULEZ costs should not be ignored in assessing the impact of the social change driven by hybrid-working on car selection, or not.

What we can see is:

Sustained demand for weekday commuting capability, but for some reduced frequency
A continuing desire for weekend travel
Concern about the rising cost of living, which will impact travel

The net result that dealers should consider

Lower-paid workers are most likely to commute; add in the impact of the cost-of-living crisis, and it seems car changes may become extended.
Increased demand for older, cheaper cars, perhaps most notably petrol cars due to fuel cost and CAZ implications (the general rule is that to travel within a CAZ without a charge, a vehicle has to be at least a Euro 4 emission standard compliant petrol model - in other words, registered after January 2006 - or, if it is a diesel, compliant with Euro 6 standards (registered after September 2015)
Annual mileage and therefore servicing and maintenance needs may have declined

Having drawn our conclusions in the most likely trends for used cars, the latest used car data from Indicata supported our hypothesis on rising demand for older used cars. Battery Electric Vehicles (BEVs) moved from being the fastest-selling fuel type in August to the slowest-selling in September as the market turned to buying cheaper used petrol, diesel and hybrid cars.

Chris Rowthorn, Director of Motor Sales Operations