BUFFALO, NY — The impact of the Coronavirus is global and impacts many industries. The automotive industry impacts half of the Dow Jones and the result is the lower stock market and a huge impact on auto sales for the globe. ALG, a subsidiary of TrueCar, updated its 2020 new vehicle sales forecast for the USA, calling for a major downshift in car sales in what it described as the longer-term economic slowdown as the economic wreckage for the industry.
The forecast calls for a 14.2% decline in new vehicle sales, down 2.4 million units from ALG’s initial 2020 forecast, that brings the possible sales for 2020 to 14.9 million vehicles from last year 17.1 million vehicles sold. That is a huge drop in sales and the impact will be dramatic on all the suppliers and the manufacturers. Last year the US sold 41 million used cars and that number is expected to increase as is auto repairs.
The short and long term:
Coronavirus will also have a short term drop in sales in the US as well as in other countries. Chinese automakers are asking for assistance as sales fell by 79% due to the ongoing Coronavirus pandemic. This marked the largest-ever monthly decline in auto sales in the world’s largest auto market. The China Association of Automobile Manufacturers said they would like to see cuts to the purchase tax on smaller vehicles, measures to support sales in rural areas, and an easing on emission requirements.
However, a representative from the organization said they do not expect all measures to be taken. Buyers have not been working on a global basis and once they get back to work, buying a new vehicle will be put on the back burner.
Manufacturers are trying to help buyers. General Motors is looking to cushion the blow for current owners and prospective buyers. The automaker has rolled out zero-interest loans for up to 84 months for customers in top credit tiers. GM said it will also work with current owners feeling the financial effects of the pandemic. Ford said its existing Ford Credit U.S. customers affected by Coronavirus who purchased or are leasing vehicles are encouraged to contact Ford Credit to discuss options. Hyundai is reinstating its Assurance Job Loss Protection program to support customers affected by the uncertain business and financial environment created by the coronavirus pandemic.
With automakers shutting production off and waiting till the end of March, the new vehicle production may not be there until the 2021 model year.
Based on the possible length of the virus and a possible vaccine, we are not expecting things to return to normal until the third quarter of 2020.
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