Auto Market Weekly Summary

Daily new COVID-19 cases have resumed an upward trend that hit a new record late last week. Hospitalizations are also at new records, leading to ICU capacity problems and state and local governments issuing new restrictions.

The impact on the economy is evident in weakening consumer sentiment, slowing jobs recovery and softening vehicle sales.

Consumer sentiment falters: Consumer sentiment had improved from Thanksgiving, but some of the gains reversed by late last week. The index of consumer sentiment from Morning Consult remained up 0.4% week over week but is now down by 5% compared to the end of October and down 22% compared to the end of February.

Jobs recovery slowed: November’s employment report showed another slowdown in the jobs recovery. It is highly likely that jobs may actually decline in December. About 20.2 million Americans are on some form of unemployment assistance, with 13.4 million people likely losing support at the end of December if a new stimulus package is not passed.

November saw 245,000 jobs created compared to October, according to the establishment survey. The prior two monthly numbers were revised up for a net increase of 11,000 more jobs than originally estimated. Not only was that growth lower than the 610,000 jobs created in October and the lowest gain since May, but also some key sectors lost jobs in November.

The largest job gains were in couriers and express delivery, administration and support, healthcare, construction and manufacturing. The largest declines were in retail and government. Auto dealers recovered 3,700 jobs, so dealership employment is now 6.4% below February’s employment level. The headline unemployment rate declined to 6.7% in October.

New-vehicle sales weaker: November total new-vehicle sales were down 15.4% from a year ago with three fewer selling day compared to November 2019. With those volumes, the November SAAR was 15.6 million, an 8% decrease from last year’s 17.0 million and a 4% decline from October’s 16.3 million.

Combined sales into large rental, commercial, and government buyers were down 29% from a year ago. Including an estimate for fleet deliveries into the dealer and manufacturer channel, we estimate that the remaining retail deliveries were down 13% from a year ago, leading to an estimated retail SAAR of 13.5 million, which was down from 14.4 million last November and down from October’s 14.4 million rate.

We estimate that fleet sales are down 38% in 2020 through November, while retail sales are down 12%, and the overall new-vehicle market is down 17% so far this year.

Inventories rise: New-vehicle inventories increased in November and came in around 2.8 million units. Days’ supply for November was 53, down 13 days year over year and down 3 days from October. Average car days’ supply came in at 55, down 3 days year over year and down 4 days from October. Light truck days’ supply was 52 last month, down 17 days from last year and down 3 days from the prior month.

Incentives higher: Average incentives increased 2% in November from October to an average of $3,778 per vehicle, which was down 9% from a year ago.

Check back on Smoke on Cars for a video that will include updated data.