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        home > news > Automakers > U.S. New Vehicle Sales Expected to Drop by Half in April

        U.S. New Vehicle Sales Expected to Drop by Half in April

        Coronavirus pandemic causes sales to plummet.

        Joseph Szczesny
        Joseph Szczesny , Executive Editor
        April 29, 2020
        Two new U.S. auto sales forecasts confirmed what many knew: April will be awful and likely to set a new record for low sales.

        With the economy closed from coast to coast, ALG Inc. analysts are predicting that sales of new vehicles will decline by more than 50% in April to their lowest points in 40 years.

        ALG, a subsidiary of TrueCar Inc., expects total new vehicle sales will reach 638,092 units in April 2020, down 54% from a year ago when adjusted for the same number of selling days. This month’s seasonally adjusted annualized rate or SAAR for total light vehicle sales is an estimated 7.7 million units. A normal month’s rate in recent years has ranged between 16 million and 17.5 million units.

        Excluding fleet sales, ALG expects U.S. retail deliveries of new cars and light trucks to be 577,280 units, a decrease of 49% from a year ago when adjusted for the same number of selling days.

        (Post-pandemic, global auto sales still likely to remain tanked through 2021.)

        “Like most industries in the U.S., the automotive industry has also suffered significantly from the coronavirus pandemic,” said Eric Lyman, chief industry analyst at ALG.

        New vehicle sales in April will drop to a level not seen since 1981, according to a new sales forecast.

        “By the beginning of April, a majority of the states had enacted ‘shelter-at-home’ orders along with closures of many businesses in an effort to limit the spread of the virus. Public health concerns mixed with job losses and economic decline led to a dramatic drop in automotive sales,” Lyman said.

        Lyman said most automakers saw big declines in sales, the domestic brands such as GM and Ford, which don’t release monthly sales days, probably had a smaller percentage of loss than imported brands when compared year-over-year.

        Some of that is attributable to the generous incentive offerings from the domestics, and some of it is due to the higher mix of imports in the states that were initially hit hardest compared with the states that were impacted later, Lyman said.

        (2020 vehicle sales outlook looking grim, analyst predicts.)

        “As ‘shelter-at-home’ orders continue during the month of April, consumers and dealers have shifted their behavior and leaned heavily into an online approach to car buying,” added Lyman.

        Jim Farley, Ford’s chief operating officer, said during a call with analysts that 25% of Ford’s sales during the lockdowns, which began in March, came through online portals. Cox Automotive also is expecting April 2020 to be a record-setting month, with sales down 53% compared to April 2019 and down 37% compared to last month.

        Online sales of new cars and trucks accounted for 25% of Ford sales during the past six weeks.

        If there is a silver lining here, it can be found in the fact that sales are showing signs of some recovery in recent weeks, after deeper drops in early April. As Senior Economist Charlie Chesbrough notes, “April is likely to be the sales bottom for the vehicle market during this crisis.”

        Nonetheless, historic lows are expected in April as the full effect of COVID-19 is felt all across the U.S. According to a forecast released by Cox Automotive, new light-vehicle sales volume is expected to finish near 620,000 units.

        The auto industry has consistent, reliable data reaching back to 1976. In that timeframe, the single lowest sales month was marked in January 2009, in the depths of the Great Recession. Total sales fell to 655,000, and the SAAR fell to 9.6 million. The lowest sales pace in the past 40-plus years was 8.8 million, which occurred in December 1981 during the “Double Dip” recession period. Given the massive impact of this pandemic, it seems very likely that the resulting market response in April 2020 will be history making.

        (U.S. car sales tumble sharply — but not as bad as originally feared.)

        “April is likely to be the sales bottom for the vehicle market during this crisis. Recent sales data suggests demand is starting to recover modestly after the initial shock in March and early April. Year-over-year daily declines, while still high, are consistently showing improvement over recent weeks. Some people want to buy a vehicle or need to buy a vehicle, even in a pandemic,” Chesbrough said.

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