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Auto Sales in 2020 Expected to Hit Lowest Point in Nearly a Decade

The auto industry hangs on as Covid-19 changes car-buying habits.
(Mikbiz)
(Mikbiz)
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“The U.S. auto industry is expected to report its lowest yearly sales in nearly a decade Tuesday,” WSJ writes.

Why It Matters: It’s a clear result of the Covid-19 pandemic, which “upended a record run for the American Auto sector.” But a big bounce-back in the second half of 2020 gave signs of hope that levels could return on the other side of the global health crisis.

Key Numbers:

  1. Research analysts expect U.S. vehicle sales to total between 14.4 million and 14.6 million in 2020.
  2. That would be a 15% decline from a year earlier and the lowest level since 2012.
  3. The latest numbers broke a five-year streak where sales exceeded 17 million vehicles annually.

It could be changing already. With record-low interest rates and new federal stimulus, dealers and executives are “optimistic the fallout from the pandemic will spur new-car demand as some consumers opt for personal-vehicle ownership over public transit or shared rides.”

  • A few obstacles, such as the unknown length of the pandemic, shortage of dealer stocks and supply-chain hiccups, remain.
  • The result for 2020 is a rough but better-than-expected year. Some 2020 predictions had put the total vehicles mark below 13 million.

The Outlook: IHS Markit recently said new-car demand should remain healthy, but pandemic-related supply-chain snags could slow production. With tight inventories still at play, IHS anticipates U.S. vehicle sales of roughly 16 million, a 10% increase.

Justin Oh:

I imagine automobile sales will recover once the world returns to normalcy. Although there are some that believe that work commutes will remain permanently lower with the advent of a new work-remote culture. 

I believe that commutes may be reduced permanently, but I am not convinced that 30%+ of white collar workers will be working remotely into perpetuity. Needless to say, I am not particularly bullish on the legacy auto industry.

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