• Covid-19 cases on the rise in the US brings further downside to the US sales forecast
The public health crisis in the US threatens to derail the vehicle market recovery

The public health crisis in the US threatens to derail the vehicle market recovery

A week is a long time in this crisis. Just last week it was heartening to see that the analysts at JP Morgan had called the US market above 14 million for 2020 based on reports of strong showroom traffic in June. Above 14 million for the US market is the position that GlobalData has held for a long time.

Covid-19 infection rates are insurgent in some of the US's most populous and prosperous states.

A week later and new headwinds have emerged. Covid-19 infection rates are resurgent in some of the US's most populous and prosperous states. Such status means that those markets also command a large share of the US light vehicle market.

Data from the The Atlantic's Covid Tracking Project shows that between 18th June and 25th June 230,000 new Covid-19 infections were recorded. On its own California accounted for nearly 34,500 of the new infections, followed by Texas on just over 32,000 and Florida on 28,000. For California the figures meant a second wave of infections, for Florida and Texas it marked a rapid escalation in the two states' relationship with the virus.

Central to the new threat to the US market prognosis is that the three states mentioned just happen to be the US's three single largest light vehicle markets.

More recently it's been held that depleted inventory would be the impediment to US market recovery in the mid part of the year as reopened factories struggled to replenish stock due to new Covid-19 manufacturing protocols and fractured supply chains. Depleted inventory in turn means less need to move the metal and a scaling back of the 0% finance offers that were common in the market in March and April when the pandemic first materialized.

Now with increasing infection rates in the three key sales markets the direction of the headwind has changed. If tighter social restrictions are introduced/re-introduced in the coming days and weeks prospects for the US market will suddenly look much dimmer than the 14.6 million GlobalData currently forecasts for the US market and potentially result in a sub-14 million market.