By on April 16, 2020

2019 Ford F150 Lariat FX4 front quarter

Thanks to our friends at J.D. Power, we’ve been able to offer up weekly insights into the greatest disruption to the nation’s auto industry since World War 2. It’s a volatile time, with major changes occurring week to week, rather than over the course of months and years, and the disruption remains highly dependent on region and the legislative proclamations of various states.

Last week’s sales results tell us the great weakening of the U.S. new vehicle market has reached rock bottom, with no signs of further digging. It’s also not as deep a trench as the firm’s analysts predicted.

Based on retail data compiled for the week ending April 12th, U.S. new vehicle sales came in 54 percent lower than J.D. Power’s pre-virus forecast — which happens to be less of a drop than the 56 percent drop recorded a week earlier. The week ending March 29th showed a 59-percent drop compared to pre-virus forecast.

For analysts at the firm, last week provides a good indication of where things are headed.

“What we’re seeing is our expectations of declines of 80 percent are short-lived, and sales have flattened out now around the 55-percent decline mark,” said Tyson Jominy, J.D. Power’s vice president of data and analytics.

As Jominy noted, better-than-predicted sales will have automakers looking closely at their inventory levels. Days supply of vehicles, when matched with demand, will factor into any phased restart of production.

In total, since the beginning of the COVID-19 shutdowns in mid-March, J.D. Power says the country has shed an estimated 780,000 new vehicle sales.

As for who bought what, and where, that’s all over the map. Literally. While some U.S. markets remain resilient (Dallas and Phoenix show sales just 27-percent below the pre-virus forecast last week), the coronavirus hotspots of New York City and Detroit offer nothing in the way of sales. That picture could soon change, what with Michigan opening the door to online sales this week. Elsewhere, San Francisco has pretty much bottomed out at about 70 percent below the pre-virus forecast.

Interestingly, with the hard-hit, near-complete dealer (and public) lockdown states of New York, Michigan, and Pennsylvania taken out of the picture, the country’s new vehicle sales were only 45 percent below forecast last week. Which just goes to show how, at many dealerships and in many regions, things are carrying on close to normal.

Jominy notes, “While that may seem possibly reckless to have that many people shopping cars during a pandemic, the way the maths works out, it’s only roughly one sale per dealer, per day. Which means that adequate safety protocols can still be in place. This is not supermarket shopping where you see one customer per minute enter the store.”

Customers who did enter dealers last week were likely on the hunt for trucks. While premium nameplates have bottomed out at around 60 percent below the pre-virus forecast (worse than the industry average), large light-duty pickups were only 18 percent below. That continues a trend seen since the start of the pandemic.

Of the top 5 vehicle segments, compact cars fared the worst. That may change in the economically compromised aftermath of the pandemic, but for now, the most affordable segment recorded sales 65 percent below forecast in the week ending April 12th. Go figure, what with OEM cash landing on the hoods of trucks in a desperate bid to move high-margin product. Zero-percent financing and 84-month terms helped greatly in that regard, too.

On that note, last week saw a climbdown from the record average transaction prices and incentive spend per vehicle seen the week prior. While still near record levels, ATPs and spiff outlay saw very mild declines. Meanwhile, an uptick in leasing brought that share of new vehicle purchases to 24 percent, up from 21 percent seen the previous two weeks.

[Image: Chris Tonn/TTAC]

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15 Comments on “U.S. Sales Slide Bottoms Out; Pickups Keep Things Afloat While Compact Car Customers Stay Away in Droves...”

  • avatar

    Market-wise, pickup sales have a few things going for them-
    -Contractors are still facing business as usual.
    -The $70k luxury pickup crowd already has the means. If you can afford the gas + tow truck bill on a new RAM nothing in the pandemic is gonna change that.
    -Those buying a full-size truck are likely in an area with lower population density which will have a less aggressive curve.
    -Those buying cars in denser areas likely have it as a tertiary expense, whereas living in Dallas it’s a must.

    Meanwhile, someone looking for economical transportation like a Corolla is likely dipping into what little savings they have after being furloughed or laid off.

    • 0 avatar

      “The $70k luxury pickup crowd already has the means.”

      Even if you’re sitting on a stack of cash and have no debt or future concerns, I’m surprised people are buying much for personal use. It just seems like there isn’t anywhere to go. Maybe the deal are huge.

      • 0 avatar

        The attitude seems to be:
        1. Trucks last longer so they’re a good investment
        2. I may not need it *today* but I can afford to buy low sell high.
        3. Trucks hold their value much longer so even if this lockdown continues I’m not losing much value on my toy.

  • avatar

    Well I hope safety protocols are in place when the customer thinks he has a deal and is then led in to the F&I office.

  • avatar

    It makes perfect sense, donut? I’m only surprised pickup sales aren’t greater and compact sales aren’t lower.

  • avatar

    So much for “they’ll be left with nothing to sell once consumers flock to small cheap cars!”

  • avatar

    And in which regions do people prefer trucks? Cali and NYC, which are totally locked down, or the plains, where some states have no lock down at all? Then there is the mind set of the buyer. There was a protest against the stay home order in Lansing yesterday. The vast majority of the vehicles the protesters were driving were trucks.

    I had to laff at Power’s “better than expected” spin. Same thing we heard from everywhere in early 2009. Sales down 55% are a disaster. Bet every automaker is losing money at that rate.

    In 2008, auto sales were only down 18%, and down an additional 21% in 09. Both GM and Chrysler had to be bailed out. Auto sales in 2009 were 10.4mil, lowest since 82. 55% off of last year’s 17mil pace would put the US at 7.6mil.

  • avatar

    “Interestingly, with the hard-hit, near-complete dealer (and public) lockdown states of New York, Michigan, and Pennsylvania taken out of the picture, the country’s new vehicle sales were only 45 percent below forecast last week.”

    ONLY 45 percent below forecast? In almost any industry, that would seem to be a disaster.

  • avatar

    I went to my local Toyota dealer the other day for an air bag control module recall. The dealership ( brand new, multi milion dollar, espresso machine, 75 inch TVs everywhere, small hotel-like gym) must be hurting big time. I got a phone from service personnel and told me that they could do the recall that day and don’t have to wait. A free loaner will be provided. It was about 1030. Showroom was totally empty, service area had 3 customers. I got my free loaner ( loaded Corolla XSE) and left. I got back three hours later and the place was just as empty. Of course, service advisor informed me of impeding disaster for my coolant ( 4 years old), MAF sensor and throttle body being one step away from oblivion. Also, at 120,000 miles ( all hwy at 75 mph) my iridium spark plugs are dead. I respectfully declined all work offered and left. At 1300 no activity at all in the showroom. Shiny new Tacomas at 39-42k were everywhere. Same as 50k Tundras.

    • 0 avatar

      Yeah you would think they would start making deals but Toyota seems to be stubborn (plus believe their vehicles are made of gold)

      I’ve been waiting to strike on a new Sienna for my wife but the discounts just aren’t there yet.

  • avatar

    Anecdotally, I have noticed over the decades that I have been observing what sells and does not, people look at gas prices of the day to influence their choices, as if those prices will forever after not change. Currently gas prices are about as low they have they have ever been. I remember paying 23 cents per gallon in 1970, about $1.50 / gallon, adjusted for inflation. So, sales of the biggest vehicles (which lots of us strongly prefer) is holding up? No surprise.

  • avatar

    No surprise here.

  • avatar
    Art Vandelay

    Lies. I read over and over on here that cars like the Versa would be the big sellers moving forward. And who buys a fullsized pickup when clearly a Kia Telluride is the better choice…I mean it’ll tow 10,000 pounds and shoot lightning out of its tailpipe while MAKING…not USING fuel.

  • avatar

    I saw an article saying that some guy named Bill Gates (I think he’s in the software business, so you can see the relevance) said that we will be in Chicken Little mode through the end of next summer.

    If that’s true then things are going to be pretty bleak. People out of work -> people not spending; not paying mortgages, car loans, etc. -> retail, manufacturing, and banks tank -> people with piles in the bank lose out as FDIC goes bankrupt. The defaulted mortgages/loans will likely be bought up (as the failing banks are parted out) at pennies on the dollar and then the foreclosure/repo slaughter will begin. You don’t need a degree in economics to see all this. And guaranteed no conspiracy theory (that playground jibe), I just don’t see how it could be any other way if this thing goes on that long…

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