A transformative two years have seen the switch to electric vehicles (EV), the COVID-19 coronavirus pandemic and an accelerated shift to online sales change the shape of automotive retail for good.

In this exclusive AM 'guest opinion' piece Volkswagen Financial Services UK chief executive, Mike Todd, reflects on the sector's rapid evolution and offers insight about what's needed to adapt to the road ahead.

If I turn back the clock to New Year’s Day 2020 and think about the expectations I had for the year ahead and beyond, I’d never have predicted the 24 months that we’ve all lived through. No-one would have.

That’s because, pre-pandemic, annual forecasts and market predictions were based on stability and predictability. If you’ve been in the industry as long as I have, you become accustomed to certain patterns and trends.

But the COVID-19 pandemic, as well as the global semi-conductor shortage, have dramatically reshaped the automotive ecosystem. This unique period has ushered in a new era where uncertainty is more prominent.

So as I sit at my desk and consider what 2022 may have in store for us all – and if the past two years have taught us anything – I really believe that we should expect the unexpected.

Expect the unexpected

In that regard I think this is a really exciting time for the industry, and businesses that are agile and dynamic will be in really good shape to succeed this year.

There is no doubt that the world is changing, with consumers actively becoming more digitally savvy and more environmentally conscious, so businesses large and small need to have a real focus on operational readiness.

For us at Volkswagen Financial Services UK it’s a mantra that we’ve been committed to for a while and we’ll continue to be prepared to pivot to suit customer needs so that we always remain fit for the future.

But I think one of the biggest areas of discussion in 2022 will be around how the industry reacts to the rapidly-shifting EV landscape.

The Volkswagen Group continued its successful electric offensive throughout 2021, and demand for the exciting range of Volkswagen Group brands’ EVs is at an unprecedented level.

Of course, we all know that the electric vehicle market is still in its infancy, but with the government set to ban the sale of new diesel and petrol engine cars by the end of the decade, and having pledged an extra £350m to support the electrification of UK vehicles and their supply chains, the EV needle has definitely started moving.

What we’re seeing is that people are already fully aware of the environmental benefits of electric vehicles. I believe this means that our task now as an industry is about helping people live with electric vehicles as opposed to simply raising awareness of them.

As we race towards the early majority stage, leaving behind the early adoption stage in our rearview mirror, the next 12 months are about being agile enough to develop new services and products for EV drivers, especially with an extra £620m for electric car grants and infrastructure as part of the government’s Net Zero Strategy.

Sustainable and digital

Recent research of ours shows that more than a third (38%) of people claim to be living more sustainably than before the pandemic, whilst 54% of people are planning to buy more sustainable products over the next three months.

On the subject of sustainability, we’ve sent almost half a million documents via email this year rather than paper letters, saving roughly 1.8 million grams of carbon emissions.

This leads me onto another topic that I expect will be a major focus for the automotive industry in 2022: digitilisation.

The rapid growth of online shopping has been pretty meteoric and in the automotive industry we’re not immune to that; our phones have become more central to our lives than ever before and this will only continue.

Lots more people, particularly younger generations, feel comfortable searching for their next car on their devices and as a forward-thinking car finance provider we have a duty to constantly improve our digital customer experience and evolve our e-Commerce ecosystem.

In 2022 we’ll continue to develop and support in-life needs through our Customer Portal, allowing customers to self-serve, as well as provide tools and information that allow people to research their next vehicle.

But as I look to the road ahead, two years on from New Year’s Day 2020, I firmly believe that agility and operational readiness hold the keys to the automotive industry’s road back to normality in 2022.

Just as all businesses have had to plan and implement new processes to react to unprecedented times over the past 24 months, we will need to continue to innovate and adapt to new challenges down the track.

This industry has shown itself to be hugely resilient and we will need to harness this approach now more than ever.