New vehicle sales drop inevitable in America

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Words: NZ Autocar
25 Mar 2020

Experts in the area are predicting a substantial drop in US auto sales for 2020, down from five straight years of numbers in the 17 million region to roughly 13 million, a drop of 23 per cent. A worst-case scenario has the level at a little over 11 million, down by just over one-third.

But industry analyst ALG believes automotive sales will bounce back once the pandemic comes under control. “We cannot stress this enough”, said representative Morgan Hansen.

Eric Lyman, ALG’s chief industry analyst, reckons on 13 million new vehicle sales in the US this year. An optimistic figure is 15.3 million units sold. That’s based on restrictions of movement being lifted by May 1 and an economic stimulus package.

If multiple physical-distancing periods are required that limit shopping activities, or there is a supply disruption the figure is likely to be roughly two million lower, even with incentive packages.

The cautious figure of 11 million would be likely if there are ongoing disruptions to social interactions, limited success of stimulus packages or increased unemployment throughout 2020.

None of these scenarios envisages prolonged social distancing beyond six months or sustained declines in demand.

Lyman posited “Online shopping and digital retailing will play a critical role in mitigating the drop in vehicle sales. Automakers...must become more accommodating to shoppers in a ‘stay at home’ environment.”

AGL staffers believe that there are sound underlying reasons for solid ongoing auto sales in the medium to long term. “Natural replacement demand remains steady at roughly 15.5 million vehicles per year”.

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