By Ray Birch
ATLANTA—Vehicle sales are picking up in at least one part of the country and there is some optimism the same could occur in other parts of the nation as businesses reopen and Americans step out of quarantine, according to one person.
PureCars CEO Jeremy Anspach told CUToday.info his company—an automotive industry data analytics and marketing firm—is seeing a pickup in car sales on the West Coast.
“We’re seeing shopper activity increase in states that have been in lockdown for the longest period,” stated Anspach. “These are signs of hope and the beginning of recovery. No doubt we have a long way to go, but to see some light at the end of the tunnel is a reassurance.”
Anspach said data show vehicle sales in those states that were first issue stay-at-home orders have outpaced sales in states where the orders came later or not at all.
“States that have been under lockdown for 30-plus days are foreshadowing the pent-up demand for sales that other states may likely see in coming weeks,” said Anspach.
Anspach cited PureCars dealership inventory data for his outlook.
“We first saw a massive decline in sales as COVID-19 accelerated and placed a chokehold on the nation,” Anspach explained. “However, we are seeing multiple brands and vehicle models picking up from the trough. I'm communicating with dealers and recently they said they sold nearly as many cars over a weekend as they did pre-pandemic.”
Three Factors
Several factors are contributing to the increase, Anspach believes.
“One, on the new car side, incentives are becoming very impressive and consumers are taking advantage of that,” he said. “Second, there is pent-up demand. There's millions of vehicles being crushed every year that are just old, and there's millions of vehicles coming off lease that people have needed to turn in for the past several weeks. Then, there are just those people who need automobiles who are ready to buy—and now they get a chance to come out of quarantine…Those three things have allowed the industry, at least on the West Coast, to have some rebound.”
But in other parts of the country the outlook for cars sales remains grim. As CUToday.info reported, total vehicle sales continued to plummet in April, falling to 8.6 million annualized units. Monthly sales levels were down 47.8% versus April 2019 and hit the lowest number on record since January 1976 when the Commerce Department began recording data series.
More Traffic at Auctions
BlackBook, which has forecast new car sales will fall to about 12.5 million units this year, down from 16.5-17 million that was originally forecast for 2020 by most analysts, reported wholesale auctions lanes are beginning to see business once again. As CUToday.info reported, the auctions had come to a halt due to the pandemic.
Jeremy Anspach
“After weeks of high no-sales rates, this past week we started to see some small signs of improvement with some auctions around the country reporting conversion rates reaching 40% or more,” Black Book stated.
But Anspach does think what’s occurring now on the West Coast could move across the nation as more states reopen for business.
He also believes the West Coast car markets are a good example of what people can adjust to in the new normal—and with car sales the new normal includes a marked increase in dealers selling cars online, and delivering cars to people at their homes. Anspach believes since the West Coast faced lockdown first, car buyers there have had the most time to become accustomed to the new car-buying/car-selling model.
“Automobile dealers are taking this very seriously. Staff are wearing masks. You're seeing them service cars and placing plastic on the steering wheel and seat. They are performing Clorox 360 System disinfection on vehicles before cars are dropped back off someone’s home. It’s all been very effective and consumers and dealers are adapting.”
The ‘Core’ Challenge
Kevin Tynan, senior analyst, new vehicle and auto part manufacturing at Bloomberg Intelligence, agreed dealers and consumers are adjusting to the new normal, but emphasized headwinds remain.
“The 'all-clear' certainly has not been given yet, so while indications that mid-March through mid-April may have been the trough, there are still health and financial issues people are dealing with,” Tynan told CUToday.info. “At the core of it all, if we assume that consumers are most comfortable spending when there is stability and visibility in the job picture, then the tens of millions filing unemployment would indicate there will be a lingering effect on new vehicle sales, although during that period, the flow of off-lease vehicles driving down prices could indicate that the demand recovery will be first noticeable in the pre-owned segment, where financially tentative consumers leverage the depreciation and value proposition of the used vehicle market.”
Many Unknowns, But…
Anspach, acknowledged the future for auto sales is as unpredictable as is the impact of the pandemic on the U.S.
“I can't tell what's going to happen because none of us can. But the data show positive things are starting to emerge from this devastating crisis. We will continue to see incentives rolled out by brands. We're seeing more stimulated sales in markets on the West Coast,” said Anspach, who noted demand for cars might also pick up as workers shy away from public transportation. “There's a lot of unknowns around consumer confidence, and how long unemployment will remain at a devastating level. But if we recover quickly from the pandemic, I think what we are seeing on the West Coast is a sign auto sales will rebound.”