Historic lows are expected in April as the full effects of COVID-19 are felt across the US new passenger vehicle market for the entire month, a forecaster predicted.
According to Cox Automotive , new light vehicle sales volume is expected to finish near 620,000 units, down 53% compared to last April and down 37% compared to March 2020.
After incorporating seasonal adjustments, the annual vehicle sales rate in April is expected to finish near 7.5m, down significantly from 11.4m in March 2020 and far below the April 2019 16.5m level.
Citing “reliable [auto industry] data reaching back to 1976”, Cox said the single lowest sales month was January 2009 (global financial crisis) when sales fell to 655,000 and the seasonally adjusted annual rate (SAAR) fell to 9.6m.
The lowest sales pace in the past 40-plus years was 8.8m in December 1981 during the ‘Double Dip’ recession.
“Given the massive impact of this pandemic, it seems very likely that the resulting market response in April 2020 will be history making,” the forecaster said.
Senior economist Charlie Chesbrough said: “April is likely to be the sales bottom for the vehicle market during this crisis. Recent sales data suggests demand is starting to recover modestly after the initial shock in March and early April.
“Year over year daily declines, while still high, are consistently showing improvement over recent weeks. Some people want to buy a vehicle or need to buy a vehicle, even in a pandemic.”
Cox noted US dealership closures, which began in mid March in many parts of the country, are now being lifted, and sales are slowly improving.
“Sales should continue to show modest improvement in May as the country gradually reopens, and dealerships implement new strategies to sell and deliver vehicles in ways that are consistent with social-distancing guidelines.”
The forecasters reckon luxury and Japanese brand vehicles are taking a bigger hit as those products are stronger in the northeast and west, regions that have been most impacted by COVID-19.
High priced products like luxury vehicles are under threat as consumers delay spending during the crisis.
But full-size pickup trucks are doing relatively well thanks to the southern and plains states remaining open for much of this crisis.
Aggressive 0% financing offers, led mostly by the Detroit brands, have attracted buyers.
By mid April, nearly 20% of new vehicle sales were being financed with a zero-percent interest deal, up from less than 3% in January. Pickup trucks were showing a strong share of these purchases.
Fleet activity will decline significantly in April as well, Cox said, as COVID-19 has stopped business and leisure travel, and this will impact the need for rental cars.
“Since fleet is about 20% of the retail auto market, the likely decline will exacerbate this historically weak sales month.”