As the U.S continues to take measures to respond to the ongoing coronavirus (COVID-19) pandemic, different industries are starting to feel the results. One which is especially being hit is the auto industry, as sales continue to drop, with no clear indication of when things may turn around.
39 states have issued stay-at-home or “essential business” mandates as of Wednesday in order to help slow down the spread of the virus. These mandates affect 265 million Americans, which is 80% of the nation’s population. Even at the federal level, the White House recommends people spend as much time indoors as they can. Furthermore, 25 states have either completely banned car sales during this time or have heavily restricted them.
All of this means people are either unable to buy cars or are prioritizing other things. Effectively, sales from January and February have been wiped out as sales drop in a drastic fashion. In March, which is usually a good month for auto sales, is expected to have a 35-40% decline in total sales. Furthermore, many experts think it’ll be quite some time before things start to turn around.
Initially, auto analytic companies such as J.D. Power anticipated that 2020 would be slower, but still respectable year for auto sales. Initial estimates figured there would be 16.5-17 million auto sales for the year. Now, new projections are hitting near-2008 recession numbers of 12.1-14.8 million.
The issues for the auto industry don’t end here. Many automakers have had to halt production due to the virus, and enacted emergency savings plans in an effort to retain some extra money. However, while the second quarter is expected to be rough, some are optimistic for a strong rebound afterward. Factors such as cash injections via the recent $2 trillion stimulus package, 0% federal interest rates, low gas prices, and special financing options could draw many consumers back to car buying.