Auto Journalist Comment On September 2020 US New Vehicle Sales
Atlanta October 2, 2020; The third quarter closed today, and auto sales are being reported by many automakers. In fact, the auto industry has been healthier than many sectors of our economy. Back in April, the whole thing felt rudderless, and our analysts were struggling to determine the direction the auto market would take. Now, it looks like the auto industry is on track to finish the year with unit sales of 13.9 million, a drop of approximately 16% versus 2019. It could have been much worse.
As we move into the final quarter of the year, we asked our analysts and experts to look back and weigh in on the market’s performance in Q3. Here’s what they said:
Jonathan Smoke, chief economist, Cox Automotive
With September now behind us, it looks like retail auto sales are better than August on a year-over-year basis, as forecast. But the market continues to be challenged by tight supply and high prices. Consumer sentiment will likely continue to lose ground if COVID-19 cases continue to increase amidst the non-stop political news and advertising cycle over the next five weeks. The recent debate, unfortunately, was just a preview of what’s to come.
The auto market enjoyed a strong and profitable third quarter, but with the economy losing momentum as fiscal support wanes, we can’t expect the sales pace to continue.
Charlie Chesbrough, senior economist, Cox Automotive
Vehicle sales appear to be coming in above initial expectations. Pandemic and recession be darned, Americans are out buying new wheels. Upper-income consumers dominate the new vehicle market, and this group has not been impacted severely by the recession, which is why vehicle sales have been rebounding from April so quickly. There are plenty of reasons to believe Q4 could be a more difficult period for the U.S. economy, leading the vehicle sales pace to moderate. Tight inventories, bad economic news, concerns as pandemic hotspots break out, and plenty of political uncertainty in the time of Presidential election – this is not an environment that supports strong auto sales. And yet, if Q4 is like Q3, American car buyers will keep on buying cars at a healthy pace.
Michelle Krebs, executive analyst, Cox Automotive
Q3 auto sales illustrate the strength and resilience of both auto dealers and new car buyers in America. New car buyers are a small slice of the general population, and clearly, for that group, a global pandemic, high unemployment, and general uncertainty about the economy are not holding them back. Out of necessity or want, they’re still out there buying. And according to our Kelley Blue Book data, they aren’t buying inexpensive cars. The average price of near $38,000 in September tells me the U.S. car buyer is doing just fine.
Brian Finkelmeyer, senior director of new car solutions, Cox Automotive
In the third quarter, the competition in the marketplace was less about the lowest advertised price and more about inventory management. As the saying goes, “Those who turn the most, earn the most.” In other words, the dealers able to keep inventory moving are the ones who are earning healthy allocations from their automaker partners. In the market right now, inventory is king. And this race for inventory is likely to continue for the foreseeable future as wholesale shipments to dealers in August and September only reached 83% of the expected norm for this time of year.
Read Brian’s latest post.
Brian Moody, executive editor, Autotrader
Overall new vehicle sales are down, but there are bright spots in the numbers. Like almost everything else in life right now, it looks like consumers are re-examining their needs. For example, sales of the all-electric Chevrolet Bolt are up. Is it possible that the lack of a daily commute is giving electric vehicles, the perfect cars for errand-running, a new lease on life? Another counter to the norm: Several sedans are doing quite well, specifically sedans and hybrid from Toyota and Lexus. It’s a similar story at Ford, while many discontinued models are dragging the average down, consumers are discovering, and buying, truly good utility vehicles like the Ford Explorer and Lincoln Aviator. In addition, more buyers seem to be giving Hyundai a chance – likely boosted by a fresh vehicle lineup.