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March 12, 2020

Coronavirus seen hitting US sales

US new vehicle sales could drop as much as 9% due to the impact of the coronavirus, a media report said.

By Olly Wehring

US new vehicle sales could drop as much as 9% due to the impact of the coronavirus, a media report said.

As the number of Americans identified as having the coronavirus rises, automotive analysts are predicting that new vehicle sales will fall, thedetroitbureau.com reported.

The report cited Morgan Stanley as predicting sales would fall 9% year on year. Prior to the outbreak, the US industry had been expected to see a fall of about 2%, according to analyst predictions.

Morgan Stanley auto analyst Adam Jonas reportedly wrote “demand shock” triggered by the spread of the virus may cause cause consumers to delay large purchases, new vehicles and suggested US sales could drop to 15.5m vehicles, from 17.1m in 2019.

Thedetroitbureau.com noted predictions for the US market in 2020 ranged from 17.1m to as low as 16.6m but LMC Automotive had revised its forecast down to 16.5m to account for the coronavirus.

The group said the outbreak could drive global vehicle sales this year down 4% to 86.4m, from 90.3m in 2019. LMC previously had expected relatively flat global sales of 90.1m.

However, the report added, some believe the true impact of the virus is yet to come.

Morgan Stanley analyst Adam Jonas predicts sales could drop to 15.5m units in 2020.

Carla Bailo, CEO, Center for Automotive Research in Ann Arbor, Michigan, told thedetroitbureau.com the numbers can be understated, as a lot of Chinese parts and components go first to Mexico which then uses them for goods that ultimately come to the US. However, she believes that the other shoe is going to drop.

“There will be an impact on (US vehicle) production within a month, month and a half but sooner on the parts and service side,” she said.

However, it’s already happening to some extent on the production side.

As the virus spreads, it will continue to have a negative impact on the auto industry, thedetroitbureau.com quoted Jeff Schuster, LMC president of global vehicle forecasts as saying and adding “volatility will remain with us until there is evidence of containment globally, and the lasting effect could spill into 2021”.

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