Sailing Into a Storm: 2020 Sales Predictions Grow Even Leaner

Steph Willems
by Steph Willems
sailing into a storm 2020 sales predictions grow even leaner

Everything seemed hunky dory after the New Year’s celebrations wrapped up and all the party hats and disposable drink cups were swept from the floor. Unbeknownst to the auto industry, however, the ship was heading into a sea roiled by a storm no one saw coming. Now, with the first quarter of 2020 almost in the rear-view, the radar mast is overboard, the bilge pumps are running non-stop, and the crew can only guess when the skies will clear.

The impact of COVID-19 on U.S. auto sales is far from set in stone, but the best-guess picture is becoming clearer. Clearer, and worse for the industry.

Earlier this month, Morgan Stanley analyst Adam Jonas foresaw a 9-percent drop in U.S. sales, translating into 15.5 million transactions. Last year saw 17.1 million new vehicles roll off lots. LMC Automotive was more conservative, predicting a more modest 3-percent drop to roughly 16.5 million units. Globally, the firm said, new vehicles sales would fall 4 percent.

Elsewhere, RBC Capital markets predicted the big sales increase seen last year at Tesla would invert itself, with overall sales falling — despite the introduction of the Model Y crossover. Ford will post a full-year loss, it added, with General Motors burning through $3.5 billion — and that’s after eating a couple billion during last fall’s UAW strike.

Liquidity levels are strong within the industry, something that will help OEMs weather the storm. Some automakers, most notably Ford and GM, have tapped credit lines to bolster their financial position.

As the pandemic grows in the West, predictions that were already pared back from start-of-the-year crystal ball sessions are getting further haircuts. Wednesday morning brought the latest:

LMC is coming out w/ our revised forecast & we will be at 14.2mn units in the US for 2020, w/ further risk of 1-1.5mn units. At this stage, we don't see going as low as 2009. Global outlook will be out later today with the significant cut in the outlook exceeding 12mn units.

— Jeff Schuster (@jwschust) March 25, 2020

At the height of the recession, U.S. auto sales plummeted, falling to 10.4 million for calendar year 2009. So far, it doesn’t look like we’ll return to those depths; 14 million translates into 2012 figures, but too much uncertainty exists in the market to be sure of anything at this point. It’s a wait and see game.

Even if the U.S. economy is reopened for business come Easter, that doesn’t mean long lineups outside the dealer. Lessees at the end of their term will need new wheels, sure, but job and health uncertainty, coupled with a very contagious viral outbreak that won’t disappear the moment store lights come on, will certainly impact spending habits.

[Image: Joerg Huettenhoelscher/Shutterstock]

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  • Mopar4wd Mopar4wd on Mar 26, 2020

    Been looking at buying a used car (3-5 years old. So far still not much movement on prices but some dealers have started offering to drop off cars to your house for test drives or delivery. I think it's too soon for them to try and dump inventory but it depends on how it looks. I know on the wholesale side auction sales are way off plenty off cars running the block but none hitting reserve price. So dealers seem to be trying to dump inventory on the wholesale side but no ones buying. I heard a rumour the local car max auction was so bad they took a loss on almost every car they sold. I said the other day I expect if sales are still bad going into this weekend I expect prices to start moving down. I'm still looking for a car but only halfway as this stuff plays out. My job is considered essential but if the infection rolls thru there is still a chance of shutdowns.

  • Speedlaw Speedlaw on Mar 26, 2020

    People I know are all home, some are still working if the job lends to telecommute. If you aren't an information worker, you are in trouble....a family member who is a hotel manager was just furloughed for two months, off to the unemployment office...and this is someone with a perfect work record and history of promotions. The SAAB 900 they were going to replace, now isn't being replaced.....

  • Jim Bonham Thanks.
  • Luke42 I just bought a 3-row Tesla Model Y.If Toyota made a similar vehicle, I would have bought that instead. I'm former Prius owner, and would have bought a Prius-like EV if it were available.Toyota hasn't tried to compete with the Model Y. GM made the Bolt EUV, and Ford made the Mach-E. Tesla beat them all fair and square, but Toyota didn't even try.[Shrug]
  • RHD Toyota is trying to hedge their bets, and have something for everyone. They also may be farther behind in developing electric vehicles than they care to admit. Japanese corporations sometimes come up with cutting-edge products, such as the Sony Walkman. Large corporations (and not just Japanese corporations) tend to be like GM, though - too many voices just don't get heard, to the long-term detriment of the entity.
  • Randy in rocklin The Japanese can be so smart and yet so dumb. I'm America-Japanese and they really can be dumb sometimes like their masking paranoia.
  • Bunkie The Flying Flea has a fascinating story and served, inadvertently, to broaden the understanding of aircraft design. The crash described in the article is only part of the tale.