Auto Sales Start to Turn Corner


Auto Sales Start to Turn Corner
Photo: mino21/ A new Mazda 3 car outside the showroom of a dealership in the United States.

New light vehicles sales in the United States are expected to reach near 1.1 million units in May according to a recent forecast by Cox Automotive, down 33 percent from a year earlier but 49 percent higher than the previous month. The firm said those results indicate a step towards recovery from Covid-19 pandemic.

Cox tracks data from U.S. automobile dealers. The company noted that after incorporating seasonal adjustments, the annual vehicle sales pace is expected to result in sales of near 11.4 million for full year 2020. A sluggish annual vehicle sales pace in April had resulted in a much lower projection of 8.6 million for the full year. In May 2019, new car sales were on pace to reach 17.4 million for full year 2019.

“Recent trends suggest daily sales are showing significant gains over March and Aprils’ collapse,” Charlie Chesbrough, senior economist at Cox Automotive, said in a news release. “Data reveals the market hit a bottom around the first of April, and since then has been making a slow but steady recovery. The opening of dealerships – and whole states – over the last few weeks is greatly contributing to the upward sales trend.” According to Chesbrough, the key question for the market moving forward is whether the modest but steady sales gains will continue into June or if instead the sales recovery stagnates.

According to the company, a full light vehicle sales recovery faces several headwinds. “This crisis is unique because the industry is facing a negative demand shock and a negative supply shock simultaneously,” Cox Automotive stated. “Vehicle factories have mostly closed since late March and are only beginning to restart. That means new vehicle inventory is at the lowest volume in more than a year.” This low inventory means less choice for consumers, the company explained, particularly with popular vehicles like pickup trucks and SUVs.

According to Cox, as sales start to recover, inventory levels will be drawn down even further, quickly causing some brands to face serious shortages. “At a minimum, selection may become more limited as the desired model may be in stock but not in the consumer’s preferred color or trim, potentially resulting in the consumer delaying purchase, switching brands or moving into the used-vehicle market,” the company said.

The National Automotive Dealers Association’s chief economist echoed Cox’s forecast in a June 4 blog post. “April appears to have been the bottom of the slump for new-vehicle sales, which improved throughout May as many state and local governments relaxed or ended their stay-at-home orders,” NADA Chief Economist Patrick Manzi said.

Manzi noted that many customers took advantage of near-record manufacturer incentives, including generous loan terms of zero percent financing for up to 84 months. “Expect this level of incentive spending to be dialed back in coming months, thanks to reduced dealer inventory from automaker shutdowns during the Covid-19 pandemic,” he added.

Photo: mino21/

A new Mazda 3 car outside the showroom of a dealership. New light vehicle sales in the United States rebounded in May, up 49 percent from April.

Related Topics

Business    North America    Region    U.S.A.