SHOPSMART AUTOS – CUSTOMER INFORMATION – COVID-19 to Remain X Factor in 2021 Auto Retailing
Despite promising news about effective vaccines in the pipeline, 2021 is still going to be all about the ongoing COVID-19 pandemic and its equally continuing effects on the U.S. economy in general, and the U.S. auto industry in particular. The 50,000-ft. view on the economy, consumers and auto sales is what experts call a two-tier, “K-shaped” recovery in 2021 from business shutdowns in the spring of 2020. In a K-shaped recovery, higher-income households who can afford new and nearly new vehicles continue to prosper, relatively speaking. That’s the upper-right leg of the “K,”. Experts believes that’s the most likely scenario, as opposed to a quick and uncomplicated “V-shaped” recovery; a more prolonged “U-shaped” recovery; or an up-and-down “W.” In total, experts latest full-year sales forecast is 14.5 million for 2020 U.S. new light vehicles. That’s a big improvement over the forecast of only 13.2 million last spring, but obviously still way below the 2019 total of 17.1 million, and short of the pre-pandemic forecast for 2020 of 16.9 million. The forecast for 2021 is 15.5 million. The news isn’t all bad, because new and nearly new vehicles and the “resilient” consumers who buy them are the prime target for most of the franchised, new-car dealership world, and that world probably will continue feeling relatively secure economically in 2021. According to analysts, rather than use the high level of incentives to save money, many buyers simply bought more truck than they would have bought otherwise. Low-income households are bearing the brunt of coronavirus-related job losses. Those households, and the vehicles they buy, are on the slower-recovering, lower-right leg of the K-shaped recovery. High average transaction prices for new and nearly new vehicles are driving those customers to older used vehicles, or out of the market entirely, he says. In automotive terms, he says the “haves” include pickup trucks, late-model used-car values and niche luxury brands such as Tesla. “Have-nots” include airport rental fleets, sedans, commuter cars whose chief virtue is fuel efficiency(above)
and brick-and-mortar dealerships that are not equipped for remote, digital sales or other innovative purchase options. In case anyone needed reminding how serious the pandemic remains, effective Nov. 17, California Gov. Gavin Newsom placed 28 counties, representing 94% of the state’s population, into the most restrictive tier of coronavirus social distancing. That limits businesses, including dealerships, to 25% indoor occupancy. Having said all that, new- and used-vehicle sales really did bounce back in 2020, considering how low U.S. light-vehicle sales fell in the worst three months of business and factory shutdowns. Make It A Champion Day!
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