Oil prices saw a sharp decline at the start of the coronavirus pandemic. Economic uncertainty, a surplus of supply, and a total lack of demand from an inability to travel led to a downward spiral of gas prices across the country. Pfizer’s recent announcement of a potential vaccine with a 90% success rate has caused oil prices to skyrocket toward stability, which has led consumers and auto manufacturers alike to question the future of this industry. While many understand the positive impact that a vaccine would have for the economy overall, others with a closer focus on the auto industry aren’t sure if this is a bad omen or an opportunity for the future of their businesses.

As Pfizer announces a possible vaccine, we take a look ai its impacts on the auto industry.

As Pfizer announces a possible vaccine, we take a look ai its impacts on auto

To discuss this topic, it’s important to understand the history of increases and decreases in oil prices and how they have affected the automotive industry. The Great Recession, for example, led to a significant decrease in oil prices. Right before this economic downturn, however, oil prices had spiked. It’s clear that volatility generally has a negative impact on the economy, but what about the auto industry?

It makes sense that when times are really tough, people don’t have enough money to purchase new vehicles. But when oil prices aren’t indicating a greater economic phenomenon, it’s easier to see how car sales are being affected. Generally speaking, fuel-efficient cars sales increase when oil prices are high, since saving money is the consumer’s top priority. When oil prices are low, consumers are more likely to either upgrade their vehicles or purchase less fuel-efficient options like trucks and SUVs. Since the economic downturn from the coronavirus shutdowns, which were accompanied by low oil prices, many companies began heavily promoting their new trucks. Now that oil prices are rising, this trend could very well change, and more fuel-efficient options could start being developed and promoted to the public.

Oil prices and the automotive industry are heavily affected by each other. Concerns that increasing prices could decrease the likelihood of car sales should be offset by the likely overall economic relief that a COVID-19 vaccine would bring. Until then, we will be monitoring and discussing industry trends as they develop.

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