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

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]