By on March 11, 2020

This won’t be the last prediction you read that erases millions from the United States’ 2020 new vehicle sales tally.

Morgan Stanley now says the rapidly growing COVID-19 pandemic (the World Health Organization declared it one midday Wednesday) will send auto sales tumbling at a far steeper rate than initially forecasted. At the beginning of the year, of course, no one had heard of this illness.

As reported by Reuters, Morgan Stanley analyst Adam Jonas wrote in an investor note that the industry will close out the year with sales down 9 percent. That’s about 15.5 million units sold, versus the nearly 17.1 million new vehicles purchased in 2019.

Before the coronavirus outbreak hit China, and subsequently the world, the National Automobile Dealers Association predicted that this year’s U.S. sales would come in around 16.8 million. A modest cooling trend had been on the radar for years; this pandemic, however, came out of left field.

After bouncing around after reaching a record high of 17.55 million in 2016, U.S. auto sales fell roughly 1.6 percent, year over year, in 2019, but stayed north of 17 million — a somewhat unexpected result. While this year was expected to come in below 17 million, no one was expecting a figure below 16 million. Yet the quarantine and “social distancing” measures coming into effect right now all but guarantee a period of significantly depressed auto sales in most regions. How long those periods will last, and how long the pandemic will last, remains uncertain.

Unpredictability abounds. However, in 2021, Jonas wrote, the industry should recover somewhat to about 16 million units.

[Image: welcomia/shutterstock]

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24 Comments on “Pandemic’s Impact on U.S. Car Sales Won’t Be Small: Morgan Stanley...”


  • avatar
    SCE to AUX

    This should help lower prices.

    And the ‘new car smell’ will be aromatic Lysol.

  • avatar
    cprescott

    All the more reason to sell cars online to idiot Tesla, Honduh, and Toyoduh buyers. They know it all anyway and we can just reduce the choices here to those three and tell the other companies to go out of business.

    What?

    Isn’t removing choice from our buying decisions the best option? It works for Healthcare under the left wing. The only choice we should be allowed to have is whether to kill the blob of human tissue cells before and after it is born.

  • avatar
    87 Morgan

    I think the bigger issue with new car sales is the steep decline in the stock markets that will have the largest impact on auto sales. The boomers buy a huge percentage of the cars sold and I do not believe that we have seen the bottom in terms of the drop in the S&P, Dow, along with the world markets.
    I find the idea of only a 9% drop to be humorous, you can’t wipe out 20% or more of the asset values of the largest soon to retire group of spenders in the country and expect car sales to dip modestly.

    Conversely, the market drops really won’t hurt the millennials much because they have substantially less invested and obviously far more time to make up the for the losses they did take. If the markets bounce back quickly reinstating the wealth effect for the boomers, than perhaps a 9% drop is all we will see. My personal belief is we see a drop like 2008 again.

    • 0 avatar
      highdesertcat

      ” the bigger issue with new car sales is the steep decline in the stock markets ”

      Sure, that is serious and will affect most of us in different ways in our daily lives.

      But it will get better. The 1918 Spanish Flu was catastrophic because people didn’t have the medical knowledge they have now, and can help take their own precautions, like isolation, avoiding large crowds and washing hands with soap and warm water often.

      People invest in the stock market because of the promise of future dividends. Well, there won’t be any future dividends because so many investment vehicles and stocks have been negatively affected by this Wuhan Corona Virus.

      That aside, stock market investment should always be only a portion of an individual’s investment portfolio, like not putting all of one’s eggs in one basket.

      So yes, buying a car and interacting with people would not be high on my list of things to do if this Chinese virus persists well into summer.

  • avatar
    Jeff S

    The drop in sales of cars was going to happen at some point regardless of the stock market and the COVID-19 pandemic. There was a lot of pent up demand from those who held off buying during 2008. Many of those who held off purchases have already bought new vehicles. Increased vehicle sales are not sustainable indefinitely at some point there will be a slow down and then another rebound.

    • 0 avatar
      highdesertcat

      Before this Chinese virus made its appearance in Wuhan, China, and grew into a pandemic, I believed the prospects for trade, importing Chinese cars, and improved new car sales in the US would be brisk and at a faster tempo until after the results of the Nov 2020 General Election.

      At this juncture, and at least until an effective vaccine is proven and distributed to the masses (like with the Swine Flu), the uncertainty and fear is becoming more widespread by the day, and permeates American society, especially in densely populated areas, like NYC, LA and SFO.

      There’s nothing we could have done to prepare for this but if the ChiComs had not been so secretive about this virus which started in Wuhan, China, and maybe sent the US CDC and NIH a specimen of the virus earlier, like last year when it started, we would know more about it today.

      Biggest unknown is that there are currently two strains, the L-strain and the S-strain, and they morph differently, so there may be different outcomes for each strain in the future, if they do not each morph into yet another strain.

  • avatar
    SaulTigh

    I actually (for once) happen to be in the perfect position to take advantage of stock market carnage. I would totally be up for buying a Lincoln Navigator with A-plan pricing and an 84-month, 0% interest loan. That may sound crazy to some, but I don’t HAVE to buy anything. If they want to keep the factory open and move some metal, maybe we can make a deal.

    We’re not there yet, but the upper middle class fears little more than becoming poor and will flat lock down their spending. I’m also in the market for a Rolex Daytona. That could happen too.

  • avatar
    Jeff S

    Yes the corona virus does have an effect on sales of new vehicles but at some point sales were going to slow down. I am sure there will be some deals on new vehicles but then the supply of new vehicles at some point will be limited due to parts shortages especially parts from China. I will not be buying any vehicles in the near future regardless because I don’t need any and all my vehicles are not that old and have low mileage. I don’t really need anything and if anything I will be downsizing and getting rid of things since I will be retiring in less than 2 years and will eventually move to a warmer climate.

  • avatar
    watersketch

    There are also going to be some phenomenal used car values coming up. A quick look at my local Avis Car Sales site shows a ton of MY2019 vehicles with 24K-32K miles. Example 2019 Jetta, Corolla for $13K+, 2019 Fusion Hybrid for $15K. I expect those prices to go lower and/or have 0% financing offers soon.

  • avatar
    Jeff S

    Those are good deals especially a Fusion Hybrid for 15k. Fusions are good cars it is a shame Ford is discontinuing them especially since the tooling is already paid off.

    • 0 avatar
      Kyree S. Williams

      True, and I think the Fusion Hybrid is a very good car; however:

      1. The tooling might have been getting worn out, such that it would’ve required a significant (and unwise) investment to keep the model around

      2. Ford probably isn’t making any money on the Fusion

  • avatar
    Jeff S

    If the tooling were worn out then I agree, but I doubt Ford would loose any money on a regular Fusion if the tooling is not worn out especially since many are made in Mexico. It is not so much that Ford would lose money on the Fusion as much as Ford can double their profits on pickups, crossovers, and suvs. Eventually people will tire of trucks and truck like vehicles and GM, Ford, and FCA will be asking for a bailout. I am not as sympathetic about giving the car companies another loan but I am willing to bet the Government will bail them out. I doubt I will buy another Big 2 1/2 made vehicle. If I am going to buy a new vehicle made with mostly Chinese parts or Chinese made I will wait for the Chinese companies to enter the US market and get one for thousands less meanwhile I will buy a Honda, Toyota, Kia, or Hyundai. There is always room in the market for more affordable vehicles which Detroit seems to be getting away from.

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