Getting Back to Normal? Far From It - U.S. Rife With Gloomy Consumers, Young Car Buyers Lowering Their Expectations

Steph Willems
by Steph Willems

Consumer spending and confidence are not hitting record highs. Go figure. As the pandemic rages and a vast swath of formerly gainfully employed Americans find their financial future much hazier then before, new car sales are suffering. It doesn’t bode well for sales volume during the remainder of the year.

Of course, that pain is not spread evenly among all automakers, but let’s set the OEMs’ concerns aside for a moment. What are actual buyers and doing — and thinking?

According to a Cox Automotive consumer impact study of 1,000 U.S. consumers, the coronavirus has knocked numerous Americans out of the new car market, at least temporarily. For others, the new reality has led to a lowering of expectations. Maybe that next car doesn’t have to be quite as extravagant.

Even during the lockdown, as in the early stages of the pandemic, some 20 percent of survey respondents said they felt they’d be in the market for a vehicle in the next six months. That slice of hopeful consumers sank to 17 percent in the reopening phase (May to mid-June). At last report, following the first week of August, only 15 percent of consumers claim the’ll be looking to get into a new ride in the coming half-year.

For those who were planning to buy, it seems fewer people have an excuse to not look. At the height of the lockdown, in April, some 34 percent of respondents said they were delaying a new vehicle purchase or lease due to the virus, up from 17 percent in early March. That figure’s down to 26 percent on August 7th-8th, with Gen Z, X, and Boomers listing cost concerns and their own financial situation as the top reason. Millennials most often cited social distancing/staying at home for the delay.

Which isn’t to say everything’s rosy for Millennials during the pandemic. Employment is perilous, and government stimulus and employment insurance is not infinite in either scope or duration. At last check, some 53 percent of survey respondents reported some kind of employment disruption (reduced hours, pay cut, layoff, furlough, etc), down from 62 percent during the lockdown and 57 percent in late June.

Of note, the study found that some 23 percent of vehicle owners used a dealership service pickup/delivery service since the onset of the pandemic — your author included. Eighty-five percent of respondents claim they were satisfied with the service, with only 2 percent saying it sucked. Thirteen percent were neutral on the matter.

But back to buyers. With their broader fiscal stability, Boomers proved least likely to respond that they had adjusted their new vehicle price range (36 percent), while Gen Z and Millennials were most likely to opt for something cheaper (58 percent for both). Of those groups replying in the affirmative, 75 percent of Boomers said they were looking for a more inexpensive vehicle, with Millennials close behind at 73 percent. Some 65 percent of Gen Z buyers in the process of shifting their price window were looking to spend less.

For these same window-shifting respondents, 18 percent of Gen Z, 17 percent of Millennials, and 14 percent of Boomers were now looking to spend more. As for Generation X, 49 percent said they had shifted their price range, with 69 percent of that group saying cheaper was the way to go. Seventeen percent said a pricier vehicle was now in the cards.

“Affordability issues are paramount for shoppers who have been financially impacted, with Gen Z and Millennials the hardest hit,” said Cox Automotive. “That makes the potential for a second round of stimulus payments and the extension of additional unemployment benefits something to keep an eye on.”

It also leads us to keep an eye on entry-level products like compact and subcompact cars, both segments which have suffered greatly over the past couple of years, as well as sales of premium automobiles and high-priced pickups.

[Image: Toyota, Honda]

Steph Willems
Steph Willems

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  • Jeff S Jeff S on Aug 15, 2020

    What will happen in the short term the sales of used vehicles will increase and the prices will continue to increase. Long-term there will be less expensive newer vehicles from China and Vietnam after the trade war with China subsides. Small crossovers and small cars that are not selling as well will come back as an affordable option. If this does happen GM and Ford will import smaller and more affordable vehicles made in China and Vietnam and leave the higher profit vehicles to manufacture in the USA. There are still plenty of late model sedans that are available that are still more affordable than trucks, suvs, and crossovers but eventually the supply of cheaper sedans will dry up. GM and Ford might decide to re-enter the entry level market but they will more than likely import them from countries with cheaper labor such as China, Vietnam, and Mexico.

  • Jarred Fitzgerald Jarred Fitzgerald on Aug 17, 2020

    All I can say is, "Damn this pandemic!"

    • Highdesertcat Highdesertcat on Aug 17, 2020

      Nevertheless, it is here. Although it was never a question of “if”, but a question of “when” another pandemic would emerge, the way that China handled the Wuhan virus outbreak was akin to unleashing a biological weapon on the planet. Other virus outbreaks like HIV, West Nile, Ebola and Zika were handled effectively and contained. #BOYCOTTCHINA

  • Theflyersfan OK, I'm going to stretch the words "positive change" to the breaking point here, but there might be some positive change going on with the beaver grille here. This picture was at Car and Driver. You'll notice that the grille now dives into a larger lower air intake instead of really standing out in a sea of plastic. In darker colors like this blue, it somewhat conceals the absolute obscene amount of real estate this unneeded monstrosity of a failed styling attempt takes up. The Euro front plate might be hiding some sins as well. You be the judge.
  • Theflyersfan I know given the body style they'll sell dozens, but for those of us who grew up wanting a nice Prelude Si with 4WS but our student budgets said no way, it'd be interesting to see if Honda can persuade GenX-ers to open their wallets for one. Civic Type-R powertrain in a coupe body style? Mild hybrid if they have to? The holy grail will still be if Honda gives the ultimate middle finger towards all things EV and hybrid, hides a few engineers in the basement away from spy cameras and leaks, comes up with a limited run of 9,000 rpm engines and gives us the last gasp of the S2000 once again. A send off to remind us of when once they screamed before everything sounds like a whirring appliance.
  • Jeff Nice concept car. One can only dream.
  • Funky D The problem is not exclusively the cost of the vehicle. The problem is that there are too few use cases for BEVs that couldn't be done by a plug-in hybrid, with the latter having the ability to do long-range trips without requiring lengthy recharging and being better able to function in really cold climates.In our particular case, a plug-in hybrid would run in all electric mode for the vast majority of the miles we would drive on a regular basis. It would also charge faster and the battery replacement should be less expensive than its BEV counterpart.So the answer for me is a polite, but firm NO.
  • 3SpeedAutomatic 2012 Ford Escape V6 FWD at 147k miles:Just went thru a heavy maintenance cycle: full brake job with rotors and drums, replace top & bottom radiator hoses, radiator flush, transmission flush, replace valve cover gaskets (still leaks oil, but not as bad as before), & fan belt. Also, #4 fuel injector locked up. About $4.5k spread over 19 months. Sole means of transportation, so don't mind spending the money for reliability. Was going to replace prior to the above maintenance cycle, but COVID screwed up the market ( $4k markup over sticker including $400 for nitrogen in the tires), so bit the bullet. Now serious about replacing, but waiting for used and/or new car prices to fall a bit more. Have my eye on a particular SUV. Last I checked, had a $2.5k discount with great interest rate (better than my CU) for financing. Will keep on driving Escape as long as A/C works. 🚗🚗🚗
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