The COVID-19 crisis has suddenly taken a turn for the worse in the US, with the number of confirmed cases going from 6.000 to 35.000 in the space of just 5 days (data as of 5am ET 23/03/20). More States are announcing business shutdowns and shelter-at-home orders each day, meaning dealership activity has reduced drastically. If the first half of the month was relatively unscathed, US registrations fell off a cliff from March 13 onwards. According to J.D. Power sales tracking quoted by Wards Auto, US auto sales for the week ending 8/03 declined only -1% year-on-year. 9-12/03 (Monday through Thursday) saw a steeper -8% drop, followed by a -20% decline on Friday 13/03 and Saturday 14/03, a -36% freefall on Sunday 15/03 (J.D. Power says although dealerships are closed on Sunday in some markets, they remain open that day in others, particularly the West Coast, so this is a relevant figure), and a similar drop on Monday 16/03.
On March 18, J.D. Power modelled near-term U.S. new-vehicle sales, using the market conditions of China as a baseline and creating low/medium/high severity scenarios where the virus follows a 12-week cycle of escalation to recovery. Under these assumptions, retail sales declines from these scenarios would be 800.000 (low scenario), 1.7 million (medium scenario) and 3.1 million (high scenario) between March and July. When these were modelled, J.D. Power expected the medium scenarios to be the most likely. However the situation has aggravated significantly since the day this model was created (see infection figures at the start of this article), and it is now predicted that the US will surpass total China infections (81.454) by March 26 to become the most infected country in the world, with 100.000+ infections likely sometime before the end of the month.
To get an idea of what’s to come in April-May nationally for the US market, it’s worth having a look at the markets with the highest number of infection cases so far. Again according to J.D. Power sales tracking, Seattle which up to March 18 was America’s epicentre of the virus – it is now New York, saw its sales drop -18% so far in March, followed by San Francisco and Sacramento (-17%), Los Angeles (-16%), Chicago (-15%) and San Diego (-14%). Understanding that sales would particularly suffer if dealerships close by government order, some dealer trade groups such as the American International Automobile Dealers Association are lobbying for the government to declare dealerships as “essential businesses…” Given the new sales reporting was a “good news only” affair so far this year, it will be interesting to see how manufacturers swerve around negative March results in the quarterly reports next week.
Source: J.D. Power via Wards Auto