The auto industry is getting crushed right now due to the ongoing physical distancing measures for containing the spread of COVID-19. The pandemic is obviously impacting many industries right now but not many people are aware of the impact of the Coronavirus on the car industry. The car production has been shut down, factories are shut down, supply chains are disrupted as there is lower demand for cars right now. Let’s look at the state of the auto industry.
State of the Auto Industry
We all know that new cars are getting more and more expensive and it is not feasible for the average middle class person to be buying brand new cars. In addition to the already high prices, the auto industry has been impacted greatly by the COVID-19 pandemic. According to the latest numbers released by goodcarbadcar, the sales of all major automotive brands were down during the first quarter of 2020. See table below to compare quarterly sales performance of all major automotive brands sold in the United States. The sales numbers from first quarter of 2020 are compared to the same period of last year. The percent change in the sales numbers is also included so that you can see which brands are growing and which ones are declining.
The Ford Motor company experienced a sales drop of 12.3% during Q1 2020 compared same time during 2019. Toyota experienced a drop of 7.9% and Honda sales were down by 18.9%. Out of the top ten car manufacturers, Nissan experienced the biggest drop as sales were down by 30% during Q1 2020. It is important to note that Tesla was the only car manufacturer whose sales increased by 72% during this time period as the electric car manufacturer sold almost 52,800 cars compared to 30,600 during the same period of last year. Tesla has been able to avoid the impact of COVID-19 mainly due to their online sales model, which allows the customers to purchase the cars directly from Tesla’s website. Interesting, Kia, Land Rover, and Ram were able to maintain their sales numbers during Q1 2020.
| Brand | Q1 2020 | Q1 2019 | Change (%) |
|---|---|---|---|
| Ford | 489051 | 557884 | -12.3 |
| Toyota | 439402 | 476925 | -7.9 |
| Chevrolet | 429529 | 451742 | -4.9 |
| Honda | 270253 | 333402 | -18.9 |
| Nissan | 232048 | 331536 | -30 |
| Jeep | 182667 | 212804 | -14.2 |
| Subaru | 130591 | 156754 | -16.7 |
| Hyundai | 130875 | 147585 | -11.3 |
| Ram | 140486 | 137013 | 2.5 |
| Kia | 137945 | 136596 | 1 |
| GMC | 118718 | 125579 | -5.5 |
| Dodge | 88656 | 110517 | -19.8 |
| Volkswagen | 75065 | 85872 | -12.6 |
| Mercedes-Benz | 75265 | 78667 | -4.3 |
| BMW | 62152 | 73888 | -15.9 |
| Mazda | 67670 | 70831 | -4.5 |
| Lexus | 56345 | 66791 | -15.6 |
| Buick | 33870 | 51865 | -34.7 |
| Audi | 41371 | 48115 | -14 |
| Mitsubishi | 35563 | 42070 | -15.5 |
| Acura | 28531 | 36385 | -21.6 |
| Cadillac | 30323 | 35996 | -15.8 |
| Infiniti | 25556 | 34315 | -25.5 |
| Chrysler | 29945 | 31591 | -5.2 |
| Tesla | 52800 | 30600 | 72.5 |
| Land Rover | 0 | 25028 | -100 |
| Lincoln | 25562 | 24874 | 2.8 |
| Volvo | 19485 | 22058 | -11.7 |
| Porsche | 11984 | 15024 | -20.2 |
| Jaguar | 0 | 10222 | -100 |
| Mini | 5236 | 8905 | -41.2 |
| Alfa Romeo | 3702 | 4286 | -13.6 |
| Genesis | 3955 | 4203 | -5.9 |
| Fiat | 1128 | 2214 | -49.1 |
| Smart | 0 | 231 | -100 |
| Bentley | 0 | 0 | 0 |
| Maserati | 0 | 0 | 0 |
Looking at the US sales numbers of the top 50 models, we find that Ford F-series truck experienced a drop of 13.1%, Chevrolet Equinox sales were down by 17%, Honda CR-V sales dropped by 18%, Toyota Corolla was down by 12%, and Honda Civic sales were reduced by 18%. Nissan Rogue sales were down by 36%, which correlates with the overall sales reduction of 30% for Nissan as the Rogue is most popular model in their lineup. It is important to note that Chevrolet Silverado sales were up by 25.7% and Toyota Rav4 sales remained strong with an increase of 16.5%. Finally, Tesla Model 3 sales were up by almost 98.4% with total sales of 44500 during Q1 2020 compared to 22425 Model 3s sold during the same period last year. The popularity of Model 3 clearly helped Tesla to increase their overall sales by 72% during Q1 2020.
| Model Name | Q1 2020 | Q1 2019 | Change (%) |
|---|---|---|---|
| Ford F-Series | 186561 | 214611 | -13.1 |
| Chevrolet Silverado | 143698 | 114313 | 25.7 |
| Ram Pickup | 128806 | 120026 | 7.3 |
| Toyota RAV4 | 97631 | 83820 | 16.5 |
| Toyota Camry | 77188 | 81684 | -5.5 |
| Chevrolet Equinox | 73453 | 88500 | -17 |
| Honda CR-V | 71186 | 87280 | -18.4 |
| Toyota Corolla | 69214 | 78608 | -12 |
| Honda Civic | 63944 | 78185 | -18.2 |
| Nissan Rogue | 59717 | 93814 | -36.3 |
| Ford Explorer | 56309 | 61922 | -9.1 |
| Toyota Tacoma | 53636 | 58183 | -7.8 |
| GMC Sierra | 53008 | 40547 | 30.7 |
| Jeep Grand Cherokee | 50083 | 57749 | -13.3 |
| Ford Escape | 48116 | 60702 | -20.7 |
| Toyota Highlander | 47890 | 52621 | -9 |
| Nissan Altima | 47346 | 51480 | -8 |
| Honda Accord | 47125 | 64411 | -26.8 |
| Tesla Model 3 | 44500 | 22425 | 98.4 |
| Jeep Wrangler | 39667 | 49988 | -20.6 |
| Subaru Forester | 39080 | 40656 | -3.9 |
| Ford Fusion | 36937 | 41683 | -11.4 |
| Ford Transit | 36836 | 31841 | 15.7 |
| Chevrolet Malibu | 35284 | 34197 | 3.2 |
| Mazda CX-5 | 35211 | 37494 | -6.1 |
| Jeep Cherokee | 33675 | 49420 | -31.9 |
| Subaru Outback | 32615 | 41808 | -22 |
| Chevrolet Traverse | 30095 | 34223 | -12.1 |
| Jeep Compass | 29820 | 37306 | -20.1 |
| Ford Edge | 29599 | 30920 | -4.3 |
| Chevrolet Trax | 28242 | 24580 | 14.9 |
| Toyota 4Runner | 28072 | 32829 | -14.5 |
| Hyundai Elantra | 25745 | 36112 | -28.7 |
| GMC Terrain | 25292 | 25364 | -0.3 |
| Dodge Grand Caravan | 24931 | 35440 | -29.7 |
| Chrysler Pacifica | 24526 | 23274 | 5.4 |
| Honda Pilot | 23898 | 32957 | -27.5 |
| Nissan Sentra | 23879 | 56793 | -58 |
| Hyundai Tuscon | 23735 | 28831 | -17.7 |
| Kia Forte | 22359 | 21374 | 4.6 |
| Volkswagen Tiguan | 22176 | 26697 | -16.9 |
| Chevrolet Blazer | 22144 | 3023 | 632.5 |
| Toyota Tundra | 21658 | 25100 | -13.7 |
| Subaru CrossTrek | 21516 | 26197 | -17.9 |
| Chevrolet Colorado | 21429 | 33494 | -36 |
| Volkswagen Jetta | 21383 | 23089 | -7.4 |
| Ford Ranger | 20980 | 9421 | 122.7 |
| Lexus RX | 20847 | 23529 | -11.4 |
| Hyundai Santa Fe | 20658 | 28683 | -28 |
Advise for car buyers
With increasing prices of new cars, more people are leaning towards used cars. When it comes to used cars, it is a huge profit center for the dealers because used cars have higher profit margins compared to new cars. This is because you can only sell a new car within a certain price range without having to take a loss. New cars are sometimes the biggest loss leaders at a dealership just to get that customer to go to service, financing, etc. The dealers are usually taking in the used cars at much lower prices and marking them up to the market price before selling them to the customer. The used cars usually originate from trade-ins, auctions, rental companies, and lease returns. However, due to the current market situation, used car sales are plummeting with sales down almost 11.8% in the first half of April. Used car auctions are having prices fall significantly because people are simply not going to auctions and supply is outpacing the demand.
The drop in used car pricing creates pressure on automotive industry in four different ways. Firstly, new car prices have to be discounted heavily in order for new inventory to come in. Secondly, the car rental companies are getting hurt as they can’t offload their inventory due to loss of used car sales. Hertz might actually go bankrupt because of that. Thirdly, lease residual values are lower because used cars are not selling as much. Lastly, overall dealership earnings are impacted due to the low sales right now. If you are looking for a used car, the demand for used car market is very low so you can definitely get a good deal on the car, be prepared to walk away as you as the customer have the upper hand right now. When you do decide to buy a used car, don’t trade in your current car because the dealerships are not making any money so they will offer a very low price for your car. If you are looking for a new car, the manufacturer finance groups are creating incentives by offering payment deferrals or grants, so you can get a car with zero percent financing or payment deferral. We still recommend buying a 2-3 year old used car to take advantage of the current market and car’s depreciation.
Source: Goodcarbadcar
I am officially a tech addict and enjoy providing my views on matters related to this industry. I am always interested in trying out new tech gadgets and I have owned multiple smartphones including the legendary HTC One, SGS2, Nexus 4, iPhone 4, 5S, 6S, XR, Note 9. You can ask me any tech related questions in the comment section or on twitter @hookedNav