New vehicle sales are expected to be up Q4 versus Q3, according to analysts.

Despite surging cases of COVID-19 that have led to lockdowns in California, new car sales are expected to finish the year with a solid showing.

Edmunds.com analysts predict automakers will sell 4,036,744 new cars and trucks in the U.S. in the fourth quarter of 2020, reflecting a 2.8% increase in sales compared with the third quarter but a 5.7% decrease from Q4 2019.

They also estimate that 14,416,447 new vehicles will be sold in 2020 — a 15.5% decrease in sales from 2019. Although this will put 2020 on track to be the lowest sales year for the automotive industry since 2012, the website’s experts say the number is much stronger than expected given major disruptions created by the coronavirus pandemic.

(Global auto sales expected to rebound next year — but may need til 2025 to reach pre-COVID levels.)

Dealers are looking for some holiday cheer in their showrooms this December.

“Thinking back to the dire state of the market at the outset of the pandemic, it’s such a testament to the incredible durability of the entire automotive industry — and the resilience of the American consumer — that we’ve seen such a healthy rebound in new car purchases this year,” said Jessica Caldwell, Edmunds’ executive director of insights.

“A big comeback story of 2020 is without a doubt the recovery of retail vehicle sales, which have nearly returned to pre-pandemic levels,” she added. And she’s not alone in her optimism.

Jonathan Smoke, chief economist of Cox Automotive, noted, “Last week was the worst week thus far in the U.S. for the pandemic, but consumer sentiment actually improved.

“The vehicle market thus far in December is holding up, but the trends definitely favor more momentum in the new market versus used,” Smoke added.

(Impact of pandemic on auto sales is short term, not permanent, study suggests.)

Cox analysts also found auto dealers in the U.S. are less optimistic about the market than they were in Q3, but business is profitable and inventory worries have faded. In all, dealer sentiment is returning to normal after a wild ride in Q2 and Q3. However, those positive vibes could quickly dissipate if the pandemic’s second wave continues for too long.

Analysts did note that auto dealers are less optimistic about the market now than they were in Q3.

Edmunds analysts anticipate the average transaction price, or ATP, for new vehicles will surpass the $40,000 mark for the first time on record in December as consumers continue to show no qualms about upsizing their purchases in favor of bigger vehicles with more amenities.

“It’s certainly not much of a buyer’s market right now: Inventory is still in short supply in certain areas, and automakers and dealers aren’t faced with the pressure to use big discounts to clear out their lots like they normally do at this time of year,” said Caldwell.

“Although that’s not stopping higher-earning consumers from continuing to enter the new market like they have throughout 2020, car shoppers who are a bit more price-sensitive might want to skip holiday shopping and wait until next year if they’re looking for big bargains.”

(Ford looks at consumer life, post-pandemic.)

Caldwell added if we face another wave of retail shutdowns, the good news is that dealers are far better prepared now for selling virtually than ever before. “And vaccines on the way should only help keep consumer confidence high.”

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