Autos

The coronavirus pandemic isn't hurting US auto sales as much as feared, J.D. Power says

Key Points
  • Sales of new vehicles to U.S. consumers declined less than expected during the first 12 days of April.
  • J.D. Power reports that domestic retail sales at the start of the month fell by about 55% compared to its pre-pandemic forecast.
  • If that trend continues, it would mean sales of about 597,000 units for the full month.
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Sales of new vehicles to U.S. consumers declined less than expected at the beginning April despite the coronavirus outbreak and state orders keeping most dealer showrooms closed across the country, according to J.D. Power.

After U.S. auto plants closed and most states enacted "stay-at-home" or "shelter-in-place" orders last month, J.D. Power expected sales to decline by as much as 80% this month compared to its pre-pandemic forecast. While still significantly down, sales through the first 12 days of April were only off by about 55% — indicating that sales for the full month might not be as bad as feared, the firm said Wednesday.

"This is obviously much better than the previous worst-case scenario that we had. This reflects the demand is showing some resilience," said Thomas King, president of the data and analytics division and chief product officer at J.D. Power.

If that trend continues, it would mean sales of about 597,000 units in April compared to J.D. Power's pre-pandemic forecast of nearly 1.1 million vehicles for the month.

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Shelter-in-place coronavirus orders hurt auto sales, dealer stocks

Any relaxation of "stay-at-home" or "shelter-in-place" orders that have closed many dealer showrooms would provide a further uptick in sales, according to King.

J.D. Power reports 24 states that represent 44% of 2019 retail sales allow dealership sales operations to remain open. That compares to 23 states that represent 51% of retail sales allowing only online or remote sales. Only Pennsylvania, Kentucky and Hawaii have now banned all sales. Some states such as Michigan initially banned all sales to later allow them online.

Long-term financing terms and 0% interest offers continue to assist sales during the pandemic, according to J.D. Power. 

The narrower declines won't directly impact automakers' balance sheets, but they will assist in clearing the inventories of franchised dealers and allow them to order more vehicles from automakers once U.S. production resumes. Most U.S. plants have been down for several weeks. Some are expected to resume production by early-May.

J.D. Power expects U.S. auto sales this year of about 12.5 million to 14.5 million vehicles, down from an estimated 16.5 million to 17 million vehicles prior to the pandemic. The new forecast includes retail sales of about 11.2 million to 12.5 million cars and trucks.

Retail sales do not include sales to fleet customers such as the government or businesses. They are typically more profitable than sales to fleet customers.