U.S. auto sales plunged in the second quarter as the COVID-19 crisis shut down production and severely curtailed consumer buying. The decline in sales was the largest since the Great Recession, falling by about a third from Q2 2019 levels. Results could have been worse, said analysts, if not for higher than expected sales in April and May.
The Detroit 3 reported that sales tumbled more than 30 percent during the quarter compared to a year ago: General Motors plunged 34 percent, Ford 33 percent and FCA 39 percent. Toyota reported a 34.6 percent decline year-over year for Q2.
“After falling into a deep recession in March, the U.S. economy has begun to recover as it reopens. Auto sales are benefiting from historically low interest rates that make now an attractive time to buy a vehicle for many customers. We expect continued sales recovery as businesses ramp back up, but recognize that the path forward may not be linear, as rising infections in many states may lead to steps backward in the reopening process,” said GM Chief Economist Elaine Buckberg.
According to Cox Automotive Senior Economist Charlie Chesbrough: “The auto market will have some major obstacles over the summer that will slow the V-shaped rebound we had all hoped for. Available inventory is likely becoming a drag on sales, and some pull-ahead demand may have occurred in previous months as a result of all the aggressive zero-percent financing offers, particularly those directed at pickup buyers.”
The pandemic shutdowns resulted in limited inventories in some markets. Automakers are ramping up production to meet shortfalls, but the restart of operations has been challenging. Plants experienced intermittent shutdowns as COVID-19 infections arose among workers despite augmented safety protocols. Resurging infections have also prompted some states to slow down reopening plans causing further economic uncertainty for consumers. The auto industry, however, remains optimistic regarding the second half of 2020.
“This quarter demonstrated the resilience of the U.S. consumer,” said Jeff Kommor, head of U.S. sales at Fiat Chrysler. “Retail sales have been rebounding since April as the reopening of the economy, steady gas prices and access to low-interest loans spur people to buy.”
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