Coronavirus could cost the U.S. auto industry more than a million sales
Dealers want to sell you a car, but will you make the trip?
Car dealerships are expecting to feel the pinch from coronavirus control policies as U.S. state governments have begun calling for lockdowns of walk-in businesses. Dealers, like other retail outlets, will begin to see the impacts of social distancing in the coming weeks.
Analysts are projecting that U.S. auto sales could drop between 3% and 9% compared to 2019. Depending on the duration of control measures, those figures could jump to nearly 15%. This is a significant deviation from pre-coronavirus estimates, which essentially called for a flat 2019.
According to Automotive News, analysts are predicting that the pandemic will have ramifications beyond simply limiting foot traffic to retail showrooms. With sporting events and other large-scale gatherings being called off or even banned outright, automakers are also missing out on millions of dollars in marketing and advertising opportunities.
Analysts from ALG and TrueCar expressed similar concerns:
“In the rapidly moving, highly volatile global economic environment caused by the COVID-19 pandemic, we believe it’s prudent to provide a revised range of auto industry projections to new vehicle sales for 2020. The range is based on various scenarios provided by expert third party forecasts of macro-economic impacts from the Coronavirus outbreak,” said Eric Lyman, chief industry analyst for TrueCar subsidiary ALG.
“A quick recovery by the end of April would lead to roughly half a million lost sales, while a prolonged slow down through the end of the year would result in a nearly 15% year-over-year sales decline in 2020. While forecasts are changing day to day, our current likely scenario has new vehicle sales for 2020 landing in the mid 15M unit range,” Lyman continued.
Automakers have begun to offer coronavirus-induced incentives. Hyundai, along with its luxury subsidiary Genesis, is offering payment relief for buyers who are laid off or otherwise separated from their jobs. Ford has likewise implemented payment relief and first-payment deferral plans for new and existing financing customers.
ALG also projects that new-car transaction prices will dip as a result of slowing foot traffic. Translation? There may be deals to be had providing you’re in a position to make a purchase and comfortable doing so in this health-conscious climate.
Dealers will likely be eager to accommodate buyers who want to conduct transactions remotely. A sale is a sale, after all, and thanks to modern connectivity, it’s possible for buyers to get a good look at a potential purchase without ever leaving home. Combined with personalized delivery, which we expect will become a much more commonly available service in the coming months, this would allow dealers to sell cars without any direct human contact whatsoever.
There’s even better news for used-car buyers who can turn to services such as Carvana, which offers an entirely remote purchasing process.
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