The impact of the coronavirus could mean millions of fewer vehicles sold this year than earlier projections.
But a new report from J.D. Power says the industry can recover, although any recovery will be influenced by a “highly uncertain” post-virus economic environment as well as any potential government stimulus and whether automakers offer any discounts.
And the decision by Ford, General Motors, Fiat Chrysler Automobiles and other automakers to suspend production could have an impact on the industry’s ability to catch up on production levels depending on the length of that suspension.
J.D. Power says the industry could see a decline of up to 3 million in retail vehicle sales for the year, and that total sales are likely to finish fall in a range of 14 to 16 million vehicles as “our pre-virus outlook” of 16.8 million in sales is not attainable.
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The report released Wednesday about the impact from COVID-19 on the auto industry is expected to be the first of a weekly series of such reports. It used data from China, where the outbreak began in earnest but which has shown progress in beating back the disease, as a baseline.
“Unlike airline seats and food, vehicles are durable goods and have historically demonstrated an ability to recoup sales lost due to short-term disruptions. As such, the auto industry has the potential to recover from virus-related sales disruption,” the report said.
March sales alone were already down by about 38,000 vehicles. The decline gained steam throughout the week and was expected to continue through the month. That decline was felt in varying ways, from an 18% loss in Seattle and 17% in San Francisco and Sacramento to places like Detroit and Minneapolis, which at least through Sunday had not seen a “discernible impact,” the report said.
But sales will be under pressure.
“Very soft business during the weekend is expected to be followed up by even weaker demand in the remainder of March,” the report said.
One bright spot for the industry could be vehicle leases, 1.8 million of which are set to expire between March and July. Many of those customers could be headed back to showrooms, the report noted.
Contact Eric D. Lawrence: firstname.lastname@example.org. Follow him on Twitter: @_ericdlawrence.