In its latest report, Cox Automotive found that U.S. consumers continue to delay buying and servicing vehicles, and inventory shortfalls are starting to impact price discounts offered by dealers.
The report released in mid-June — COVID-19: Tracking U.S. Consumer and Automotive Dealer Sentiment (Issue #12, June 12-13 period), also found there remains much opportunity for dealerships to adopt new solutions and that despite high levels of uncertainty, consumer activity is increasing while caution remains around travel and transportation.
The report found that 33% of franchise dealers and 25% of independents think consumers are ready to get back to their normal, pre-COVID activities. But really, only 2% of consumers surveyed think things are back to normal and 20% are comfortable going back to their regular activities.
The chaotic environment in the U.S. is the source of consumers’ decision to delay vehicle purchases. That chaos includes COVID-19 and the potential for a second wave, general uncertainty in the market, civil unrest, and continued unemployment concerns.
For example, the vehicle delay situation moved from 2% to 4% to 10% in May for purchasing delays of six months and more. In June it fell to 7%. Delays of three-six months moved from 37% to 29% to 36% throughout May, and then increased to 43% in June (from the period of June 12-13).
On vehicle repair, 95% of consumers are delaying vehicle maintenance, while 52% are delaying vehicle repair work.
And inventory levels continue to decrease for dealers: 59% of new vehicles are deemed “too low.” That number moves to 49% for CPO, 54% for used vehicles (franchise dealers), and 62% for used vehicles sold by independent dealers.
The situation is causing retail prices to increase by 14% (up from 8%) for new vehicles sold by franchise dealers, 12% (up from 7%) for CPO vehicles (franchise), 20% (up from 8%) for used vehicles under franchise dealers, and 9% for used vehicles sold by independent dealers.
Cox Automotive said the situation will be an unwelcome surprise for the 92% of consumers expecting to find a “deal” or prices on favourable terms.
For more information, read the full report.
