Car Sales Plunge 33 Percent in the 2nd Quarter Despite Deals

Mish

General Motors, Toyota, and Chrysler all report steep declines in auto sales. On the plus side, the results were better than many expected.

Despite Deals and Covid-19 Stimulus sar sales plunged a record amount. But due to factory shutdowns and stimulus offers, dealer inventories are lower than normal. 

Second-Quarter Sales Drop 

Auto sales in the second-quarter are down by about a third according to the Wall Street Journal.

General Motors Co.reported a 34% drop in second-quarter sales compared with a year ago, with demand picking up in May and June. Toyota Motor Corp.’s sales fell by about a third while Fiat Chrysler Automobiles reported a 39% decline. 

The drop wasn’t as steep as feared, and sales have improved steadily since late March. Heavy sales promotions and federal stimulus checks that went out to millions of Americans this spring spurred car demand despite spiking unemployment and stay-home orders across many states, dealers and analysts say.

In recent weeks, retail sales, or sales to individual buyers, have tracked just 4 to 6% below pre-Covid-19 forecasts, according to research firm J.D. Power.

The market and the retail consumer continue to recover beyond anyone’s expectations,” Bob Carter, Toyota’s sales chief for North America, said recently.

Summer Test Coming Up

Heavy incentives with stimulus check flying led to a 33% decline "recovery beyond anyone's expectations."

OK. Let's let's see the consumer encore and fleet sales in the midst of a Hertz bankruptcy.  

If dealers return to pre-covid inventory levels, there will be a pick up in manufacturing.

Meanwhile ponder consumer spending changes.

The Recovery Will Have Many Shapes, Not One

Autos are another example of why The Recovery Will Have Many Shapes, Not One.

Mish

Comments (28)
Zardoz
Zardoz

The only incentive that I saw was for free interest on an eight year loan for a $50,000 pickup truck.

I didn’t buy a new pickup.

Tony Bennett
Tony Bennett

"On the plus side, the results were better than many expected."

...

The incentives unheard of ... 72 months @ 0.0% + 3 months no payments ... talk about bringing demand forward. Way forward.

bubblelife
bubblelife

Heavy sales promotions aren't enough to entice me to go on a test drive with the salesperson.

anoop
anoop

there's pent up demand, just not enough supply because of the factory shutdowns.

PecuniaNonOlet
PecuniaNonOlet

I have been told to work from home indefinitely along with many of my coworkers, why would I need a car now? I get almost everything delivered and there is nowhere to go anyway. If you multiply my situation by 10,000 or 100,000 you begin to see the depression coming.

davebarnes2
davebarnes2
  1. Our driving is down from 4500 miles per year to about 1500.
  2. Our 2007 Audi only has 55K miles on it.
  3. The choice in BEVs is still very limited. Our next car will be a BEV. I am so over pumping dino pee into my car. Our electric utility (Xcel Energy) is moving to 100% renewables (slowly, but moving). Air pollution is still an issue in Denver.
  4. Not buying until we have greater choice.
Bam_Man
Bam_Man

Oh, there is pent-up demand alright.
But no pent-up purchasing power.

Russell J
Russell J

I bought a used pick up last month and they were like zombies in there, no kidding 1000 yard stare. The guy you sign the paperwork with was trying hard to sell me the warranty and when he finally gave up his voice was breaking when he said" what are you one of these guys that just doesn't buy a warranty!". I felt bad for him. When we were done signing he didn't say thanks, congrats or anything just stormed off. I wished I had laughed at him then.

I've been trying to buy a new work truck for weeks but they don't want to deal with you if your not financing. I've talked with 3 dealerships and can't get a quote. I made an appt last Monday and showed up and was passed to 3 different people before walking out of there. And I made an appt for a commercial truck build/quote. I think they make their money off financing and warranties, if you're not buying those you're not getting a truck. This is the easiest sell, I know what it costs and I got the money and I need to buy. I don't have anything to depreciate.

Something is seriously wrong with those people. I can't believe I'm gonna have to travel to the Bay Area to buy a truck...hopefully. I might just wait, my current work truck only has 91k.

Herkie
Herkie

I also just watched a youtube vid that said millions of dine in restaurants will not reopen, ever. As many as 40% of all restaurants in business in January will never reopen. And it pointed out that 56 million Americans are involved either directly in the restaurant industry or will be impacted by this sad fact.

On the other hand the auctions for restaurant liquidations should be just freaking awsome for the next couple years. It would be a great time to buy equipment for pennies on the dollar if you have a place to store it till it is in demand again.

And on the downside, it will be the mass production low end restaurant chains with the credit to withstand till things get better that will eventually survive. The report said that most stand alone owner operator restaurants will just never be back. And those that do survive will only survive through sharply reduced menu choices and higher prices. What a crime against humanity to have to eat at schlock chain restaurants where the "chef" only needs to know how to run a microwave oven. And get scalped at the same time. When I think of all the great meals in great restaurants I have had and how that will now be history I just want to cry.

It is not just business that is in a new Great Depression, it is our lives.

Six000mileyear
Six000mileyear

That report was the past. My brother is in the car industry and says his staff is back on the road selling sales software/services. He confirms dealers have been working off used car inventory and will be getting cars at auction. Manufacturers will be feeling a slower/delayed recovery.

One of the paradigm changes his company supports is ordering a car online. The car buyer arranges for a test drive without a sales person. The sales person role is being re-purposed as scheduler / paper processor. At the end of the test drive, the car buyer buys or returns the car. The expectation is the sales to test drive ratio will go up because people usually try the car they want the most. Advertising is now more important than ever in getting the customer to want to try your car first.

mrutkaus
mrutkaus

Bought a new VW last October online from a MD dealer, I am in VA. Easiest most pleasant car purchase in 55 years. They delivered it, we signed the papers, all smiles.

MiTurn
MiTurn

Some models must still not be moving. My son, an electrical contractor, just bought a brand new 2019 Dodge Promaster utility van (for his work) at a 19% off list. It was still on the lot. He was delighted, as his he old work truck (another Dodge +250k miles) needed to be replaced.

El Capitano
El Capitano

Folks, wait for the greater depression to pick up steam before buying a 30,40,50k USD vehicle. There is over capacity right now and when the bottom drops out the deals will be serious. 60 or 70% off. Wait for it.


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