Quick Sales Rebound? Forget It, Says Bank of America

Steph Willems
by Steph Willems

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]

Steph Willems
Steph Willems

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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.

  • JK I grew up with Dodge trucks in the US, and now live in Turin, Italy, the home of Fiat. I don't think Italians view this as an Italian company either. There are constant news articles and protests about how stalantis is moving operations out of Italy. Jeep is strangely popular here though. I think last time I looked at stelantis's numbers, Jeep was the only thing saving them from big big problems.
  • Bd2 Oh yeah, funny how Trumpers (much less the Orange Con, himself) are perfectly willing to throw away the Constitution...
  • Bd2 Geeze, Anal sure likes to spread his drivelA huge problem was Fisher and his wife - who overspent when they were flush with cash and repeatedly did things ad hoc and didn't listen to their employees (who had more experience when it came to auto manufacturing, engineering, etc).
  • Tassos My Colleague Mike B bought one of these (the 300 SEL, same champagne color) new around June 1990. I thought he paid $50k originally but recently he told me it was $62k. At that time my Accord 1990 Coupe LX cost new, all included, $15k. So today the same car means $150k for the S class and $35k-40k for the Accord. So those %0 or 62k , these were NOT worthless, Idiot Joe Biden devalued dollars, so he paid AN ARM AND A LEG. And he babied the car, he really loved it, despite its very weak I6 engine with a mere 177 HP and 188 LBFT, and kept it forever. By the time he asked me to drive it (to take him to the dealer because his worthless POS Buick Rainier "SUV" needed expensive repairs (yes, it was a cheap Buick but he had to shell out thousands), the car needed a lot of suspension work, it drove like an awful clunker. He ended up donating it after 30 years or so. THIS POS is no different, and much older. Its CHEAPSKATE owner should ALSO donate it to charity instead of trying to make a few measly bucks off its CARCASS. Pathetic!
  • RHD The re-paint looks like it was done with a four-inch paintbrush. As far as VWs go, it's a rebadged Seat... which is still kind of a VW, made in Mexico from a Complete Knock-Down kit. 28 years in Mexico being driven like a flogged mule while wearing that ridiculous rear spoiler is a tough life, but it has actually survived... It's unique (to us), weird, funky (very funky), and certainly not worth over five grand plus the headaches of trying to get it across the border and registered at the local DMV.