March 1, 2021
The coronavirus pandemic slashed new car sales by 15%, forecast says

The coronavirus pandemic slashed new car sales by 15%, forecast says


Sales are up or down in December, depending on how you parse the data.


Craig Cole/Roadshow

The coronavirus pandemic turned so many lives and industries upside down. Predictably, it savaged auto sales, too, though according to a report from J.D. Power and LMC Automotive, it’s not all doom and gloom.

In the US, when adjusted for selling days, retail new-vehicle deliveries in December are expected to grow compared to the same month in 2019, topping 1.4 million units, a year-over-year increase of 1%. While hardly gangbusters, this is certainly good news given the current situation, however, when non-retail deliveries are factored in, sales are expected to post a year-over-year decline of around 5.1%, clocking in at around 1.6 million vehicles. This seems to indicate consumers are still happy to purchase new vehicles, even if fleet customers are not as eager. J.D. Power and LMC Automotive project total US new-vehicle sales (both retail and non-retail) in 2020 will reach around 14.5 million units, a 14.8% decline compared to 2019.

Retail sales in the month of December are projected to rise, and so is the average transaction price, which the two firms expect will eclipse $38,000 for the first time. This figure is 20% higher than in December 2015 when it was $31,849. There are several reasons for this climb, including the ongoing consumer shift from traditional cars to more expensive trucks and SUVs, lower discounts from automakers and strong demand for luxury vehicles, which typically have much steeper price tags. The average new-vehicle incentive in December is expected to be $4,014, down $585 compared to the same month last year.

Reduced discounts and higher prices are certainly not good for today’s cash-strapped motorists in the market for a new ride — and a reason why used car sales continue to boom — but this is great news for automakers and dealers. According to J.D. Power and LMC Automotive, retailer profits are at all-time highs. Additionally, this situation shows the industry’s resilience, its ability to build, transport and sell vehicles in a terrible economic situation.

Things may not be great today, but going forward, the situation should improve thanks to vaccines for COVID-19. And perhaps once global restrictions being to lift, demand for new cars will again rise further. We certainly don’t know yet, but we do know we’re ready for a fresh start in 2021.


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