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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"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.
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.