Quick Sales Rebound? Forget It, Says Bank of America

Steph Willems
by Steph Willems
quick sales rebound forget it says bank of america

U.S. auto sales were already heading into a long-predicted cooling-off period when that spiky little virus arrived, throwing economies into disarray. As a result of the coronavirus’ impact on world markets, including that of the U.S., a return to the kinds of volume the industry enjoyed over the past few years won’t take place overnight.

According to a new Bank of America study, good times won’t really return until the middle of the decade — and even then, not to levels seen last year.

In 2019, the U.S. auto industry surprised itself by unloading 17.1 million new vehicles; a slight decline from the year before, but not the significant drop many predicted. Oh, if only those forecasters could have seen 2020 in their crystal ball…

As reported by The Detroit News, Bank of America’s annual “Car Wars” forecast sees U.S. sales falling 25 percent in 2020 — to 12.8 million vehicles — and not climbing back to a mere 16 million annual sales until the middle of the decade.

On a global scale, the study envisions a 20-percent decline for 2020, and no return to normal until 2023.

Earlier this month, a dire forecast from consulting firm AlixPartners projected 13.6 million U.S. sales this year, with a return to the recent normal not happening until 2025. Globally, the firm sees the industry shedding 36 million vehicles over a three-year period starting this year, with consumers foregoing car buying in order to pay down debt and stabilize their financial standing.

Lower levels of predicted consumer spending are hardly the thing to instill confidence in investors, and indexes did incur damage from Bank of America’s report. The Dow Jones plummeted in early Monday trading, though it’s since recovered most of the losses.

[Image: Fiat Chrysler Automobiles]

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  • THX1136 THX1136 on Jun 15, 2020

    "U.S. auto sales were already heading into a long-predicted cooling-off period when that spiky little virus arrived, throwing economies into disarray." I take issue with the opening statement. COVID 19 didn't throw things into disarray, human decisions in response to it did so. Fine point? Possibly, but accurate nonetheless. Agree with DenverMike. How is the auto aftermarket and parts industry doing. With folks not buying, generally speaking, that would suggest folks keeping vehicles longer.

    • DenverMike DenverMike on Jun 16, 2020

      It's taboo to write about or industry analysts to explore. But it's the pink elephant in the room. Yes absolutely, the aftermarket industry has been growing by leaps and bounds for years while the new car sales stagnate or drop. Maybe you've heard of a little thing called SEMA. You can throw $8K at a '90s Cherokee and maybe it's just worth 7K when you're done, but next year it's worth the same or a little bit more. Except it was done to your specs, and you decide the China content (if at all) and where it's placed. With the median new vehicle exceeding $37K, that could go a long way on a Fox Mustang build, or Miata, etc, built in stages or whatever. It could be we're just getting smarter, and that 37K car is worth what in 3 years? Combined with not having a payment (or quickly depreciating asset), a few years old Rav4 or F-150 can be made a lot more enjoyable to own and drive with a little help from the aftermarket. It could be backlash against new vehicles, but every year there's rapidly increasing and tasty alternatives, where as the analysts insist if new vehicle sales are down, we just can't afford them.

  • Conundrum Conundrum on Jun 16, 2020

    Not sure what Bank of America gurus are providing here but the obvious that a trained chimp could forecast. Throw thirty or forty million out of work with evictions bound to follow in huge quantity very soon, where even rentiers are going to suffer and not be able pay their"mortgages", and only the really big boys will be able afford to buy up the scraps on the super-cheap. The 0.1% become the 0.01 percent and who in hell is going to be buying new vehicles in mass quantity? What about food? The weather last year kind of bombed a lot of the mid-West. Fun times for all coming soon.

  • Art Vandelay Best? PCH from Ventura to somewhere near Lompoc. Most Famous? Route Irish
  • GT Ross The black wheel fad cannot die soon enough for me.
  • Brett Woods My 4-Runner had a manual with the 4-cylinder. It was acceptable but not really fun. I have thought before that auto with a six cylinder would have been smoother, more comfortable, and need less maintenance. Ditto my 4 banger manual Japanese pick-up. Nowhere near as nice as a GM with auto and six cylinders that I tried a bit later. Drove with a U.S. buddy who got one of the first C8s. He said he didn't even consider a manual. There was an article about how fewer than ten percent of buyers optioned a manual in the U.S. when they were available. Visited my English cousin who lived in a hilly suburb and she had a manual Range Rover and said she never even considered an automatic. That's culture for you.  Miata, Boxster, Mustang, Corvette and Camaro; I only want manual but I can see both sides of the argument for a Mustang, Camaro or Challenger. Once you get past a certain size and weight, cruising with automatic is a better dynamic. A dual clutch automatic is smoother, faster, probably more reliable, and still allows you to select and hold a gear. When you get these vehicles with a high performance envelope, dual-clutch automatic is what brings home the numbers. 
  • ToolGuy 2019 had better comments than 2023 😉
  • Inside Looking Out In June 1973, Leonid Brezhnev arrived in Washington for his second summit meeting with President Richard Nixon. Knowing of the Soviet leader’s fondness for luxury automobiles, Nixon gave him a shiny Lincoln Continental. Brezhnev was delighted with the present and insisted on taking a spin around Camp David, speeding through turns while the president nervously asked him to slow down. https://academic.oup.com/dh/article-abstract/42/4/548/5063004