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USA July 2020: Recovery (-16%) complicated by record infections, high unemployment, low inventories – Volvo (+10.3%) and Mazda (+3.5%) in positive again

U.S. Volvo V60 sales surge 158.6% year-on-year in July. Picture

Aggregate estimates by ALG, LMC Automotive and COX Automotive show a U.S. light vehicle market down -16% to 1.178 million units in July, leading to a year-to-date tally off -22.2% to 7.659 million units. Fleet shipments remain particularly weak at -60% to just 78.300 units or 6.6% share vs. 14% a year ago according to J.D. Power, in a depressed economy with reduced need for rental cars. July figures show a market recovering from the lows of April (-50%), May (-33%) and June (-27%) but now trailing its Canadian neighbour (-4.9%) by a significant margin. The seasonally adjusted annualised sales rate (SAAR) is down -14.6% year-on-year to 14.53 million according to Motor Intelligence, vs. 17.02 million in July 2019, 8.81 million in April this year, 12.06 million in May and 13.18 million in June. In July, the U.S. recorded more than 1.9 million new infections, more than double any other month with April (880.000) being the previous monthly high. Totals now surpass 5 million including 163.000 lives lost and that latter count is predicted to rise to 300.000 by year-end, keeping the U.S. well above any other country in the world. The virus is now equally widespread among city and rural regions, mostly in the South and West which are key regions for new vehicle sales. As a result, J.D. Power estimates that in July, just 8 of the top 100 U.S. markets for new car and light-truck sales are expected to see year-on-year gains, including Detroit MI, Buffalo NY and Milwaukee WI, all located northeast of the U.S.

US coronavirus cases by county. Source: New York Times.

U.S. Daily new Covid-19 cases. Source: Johns Hopkins University

States’ reopening status as of August 9. Source: New York Times

Initial weekly unemployment claims. Source: New York Times

This worsening sanitary situation, coupled with new unemployment claims stuck at an exceptionally high weekly level and uncertainty about much of the U.S. economy ranging from government benefits to rent suspension is weighing heavily on potential buyers. Many choose to stay away from showrooms while older consumers remain fearful of the virus and a potential infection and are delaying car purchases. And it looks like it’s getting worse, hampering sales prospects for the remainder of the year. Indeed, according to a July 28 study by Cox Automotive, the ratio of active shoppers in the market to purchase a vehicle with the next 6 months has continued to drop: from 20% during lockdown (late March-April), to 17% during the reopening phase (May-mid June) to 15% currently. 29% are delaying their purchase, stable on last month, 55% of them because this is an “uncertain” time to buy a vehicle. In addition, low inventory and rising prices are making good deals harder to find. On July 28, as much as 23% of all dealers are reporting an increase in retail pricing of new vehicle compared to February, 43% in the case of used vehicles. These figures were 5% and 2% respectively in early May…

Lean inventories reflect weeks of downtime and halting restarts at North American assembly plants and they are dragging down many carmakers. J.D. Power estimates that 41% of all vehicles sold in July spent fewer than 20 days on dealership lots, up from 35% a year ago. According to Cox Automotive, Toyota and Subaru have the tightest inventory levels among major brands in July, both under 40 days of supply, with Lexus at 41 days. Chrysler, Dodge and Ford averaged 90 days of supply while Buick and Jaguar had the most stock, at nearly 130 days worth of inventory. The average transaction price is up 2% year-on-year or $749 but down -1.2% or $463 on last month to $38.378 according to Kelly Blue Book. Average incentives per unit remain at record high levels up 4.1% year-on-year to $4.236 according to J.D. Power while ALG estimates them up 3% to $3.813. GM ($5.249), FCA ($4.773), Nissan ($4.517) and Ford ($4.196) are among the most generous, while Subaru ($1.773), Hyundai ($2.447), Honda ($2.491) and Toyota ($2.549) are the most stringent, but compared to July 2019 Honda (+24.9%), Subaru (+22%), Daimler (+16%) and Nissan (+15.1%) are the ones increasing their average incentives the fastest. Last piece of statistic: light trucks, including pickups, SUVs and crossovers, are estimated by J.D. Power to account for 75.5% of total sales, which is a new July record.

Like Volvo, Mazda manages a second consecutive year-on-year gain. Picture

Since 2019, only a handful of carmakers still go to the trouble of communicating U.S. sales monthly, which has made this market one of the least transparent in the world. Among them, Volvo (+10.3%) stands out with the only double-digit gain, marking a second consecutive uptick and helped by crossovers that account for 81% of the brand’s July volume. Mazda (+3.4%) and Acura (+2.5%) also sport sizeable positive results, Mazda for the 2nd straight month, while Hyundai (+0.6%) manages a much smaller gain, its first since pre-pandemic February, thanks to crossover volumes up 16% whereas cars are off -16%. Kia (-1.7%) only edges down and sets a new July record for retail sales thanks to a 13% light trucks surge. In contrast, Toyota (-20.7%) endures a steep fall, handicapped by low inventories and car sales down -30% while light trucks drop a slimmer -13%. Similarly, Subaru (-19.7%) is hampered by low supply of four key models: the Forester, Outback, Crosstrek and Ascent, while Genesis (-20.7%) and Honda (-12.6%) also drop by double-digits.

The Hyundai Palisade soars 88.3% to a new monthly volume record.

The Toyota RAV4 (-8.4%), Honda Civic (-13.6%) and Toyota Camry (-16%) are the highest selling models with official July sales, distancing the Honda CR-V (-39.2%), Toyota Highlander (-18.8%), Corolla (-42.7%) and Tacoma (-14.7%). The Subaru Forester (+4%) is the only among the Top 10 to improve year-on-year, and this despite availability issues (see above). The Honda Pilot (+1.4%) is the only additional Top 19 model up, giving it a dreadful 17 down 2 up ratio. As it celebrates one year in market, the Hyundai Palisade surges 88.3% to a new all-time record volume (8.404), joined in the record-breaking aisle by the Kia Seltos (4.504) and Mazda CX-30 (3.787). Other year-on-year gainers include the Acura RLX (+219%), Volvo V60 (+158.6%), V90 (+91.2%), Toyota Supra (+60.9%), Subaru BRZ (+59.3%), Acura NSX (+50%), Volvo S90 (+40.3%), Kia Cadenza (+33.3%), Kia Stinger (+30.7%), Lexus UX (+22.7%) and Hyundai Kona (+11%). We welcome the new Kia K5 in the U.S. charts with 1.268 sales.

Previous post: USA First Half 2020: Pickups (-10%), Mazda (-7%), Lincoln (-8%) resist market collapse (-23.5%)

Previous month: USA June 2019: Mazda (+10.9%), Volvo (+4.5%) ignore crisis, SAAR down -24.2%, fleets off -68%

One year ago: USA July 2019: Hyundai, Ram, Mercedes lift market to first uptick of the year (+1.9%) – Detroit 3 stop monthly reports

Full July 2020 figures for selected 6 groups, 10 brands and 95 models below.

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