Cox Automotive is forecasting a decline in auto sales of 24.2% in the U.S. during the first half of 2020, although June is anticipated to be another small step back to some semblance of normalcy.
The seasonally adjusted annual rate (SAAR) for June will come in at 12.6 million units — a significant decline from last year’s 17.2 million, but up from May’s 12.2 million. Sales volume in June is expected to decline by 30% compared to 2019. And the pace of recovery for auto sales — although moving in a positive direction — is expected to slow down.
“The auto market will have some major obstacles over the summer that will slow the V-shaped rebound we had all hoped for,” said Cox Automotive Senior Economist Charlie Chesbrough. “Available inventory is likely becoming a drag on sales, and some pull-ahead demand may have occurred in previous months as a result of all the aggressive 0% financing offers, particularly those directed at pickup buyers.”
Precious recessions have led to a fall in demand for autos while OEM factories continued to operate, resulting in an over-supply of vehicles — a move that often paves the way for automakers to offer large incentives. However, Cox Automotive said COVID-19 is unique in that factories shutdown at the same time consumers pulled back from buying vehicles.
“As states began to reopen, buyers started coming back to the market — more quickly than many had anticipated — but factories have struggled to get back to pre-COVID levels,” said Cox Automotive.
Unsurprisingly, vehicle inventory levels have declined with limited supply in several markets across the globe. The result is that consumers may not find the specific product they want, in the right colour or trim package, and may choose to wait or buy their vehicle elsewhere.
According to Cox Automotive, and based on its research, around one-third of consumers intending to buy a vehicle in mid-June indicated they would delay their purchases — thanks largely to general uncertainty in the market, civil unrest in the U.S., and unemployment concerns.
Jonathan Smoke, Cox Automotive’s Chief Economist, said the industry is facing the potential for a “cruel summer” for automotive sales.
On the vehicle inventory front, that particular issue is expected to be managed once vehicle factories, supply chains, and dealerships can work their way back to “normal.”
