icon-branding Events Icon Created with Sketch. Inventory Icon Created with Sketch. icon-mail-hovericon-mail Marketing Icon Created with Sketch. icon-operationsicon-phone-hovericon-phone Product Training Icon Created with Sketch. Sales Icon Created with Sketch. Service Icon Created with Sketch. icon-social-fb-hovericon-social-fbicon-social-google-hovericon-social-googleicon-social-linkedin-hovericon-social-linkedinicon-social-rss-hovericon-social-rss icon-social-twitter Created with Sketch. icon-social-twitter-hovericon-social-twittericon-social-youtube-hovericon-social-youtube

Smoke on Cars

Auto Market Weekly Summary


Facebook Share Twitter Tweet Linkedin Share Email Email

Article Highlights

  1. Jobless claims soar to nearly 16.8 million in three weeks.
  2. Consumer sentiment may be bottoming out with consumers reporting worsening conditions for vehicle, home sales.
  3. Cheap gas keeps inflation in check.

COVID-19 cases keep growing in the U.S., but the pace of increase slowed down last week even while the rate of testing increased. Stay-at-home orders are working. The related closures will lead to a substantial economic contraction in March and the second quarter.

Jobless claims rise: The damage to the economy is most clearly seen in jobless claims, which have totaled nearly 16.8 million in the last three weeks through Saturday, April 4. The employment report in April will set a record for job losses and could see the unemployment rate rise to levels not seen since the Great Depression. The rest of the year could see some recovery, but it will depend on how the pandemic plays out.

Consumer sentiment declines: Consumer sentiment and employment will lead what happens with auto sales. Sentiment is down year over year but improved slightly late last week.

The initial reading on Consumer Sentiment from the University of Michigan fell to 71 from 89.1 in March. The index has declined 29.7% from February, which was close to a 50% bigger drop than occurred in the fall of 2008.

The declines in sentiment are related to declines in both expectations and current conditions, but the drop in current conditions is the largest. Consumers reported worsening buying conditions for vehicles and homes. A timelier measure of consumer sentiment from Morning Consult shows sentiment as of end of last week down 27.6% since the end of February. The daily data from Morning Consult has shown an improving trend in recent days as growth in COVID-19 cases has slowed.

Vehicle sales drop: March already saw a 38% year-over-year decline in new-vehicle sales and an 18% decline year over year in used-vehicle sales. Cox Automotive’s daily estimates of retail sales showed that the sales decline increased as March progressed. The decline in sales bottomed last week, as we’ve seen seven consecutive days of improvement in year-over-year declines of both new and used through Wednesday, April 8.

The March used retail SAAR estimate was 17.3 million, down from 20.6 million last year and down from February’s 21.2 million rate. CPO sales declined 40.4% year over year and were down 33.4% compared with February.

Cheap gas pushed inflation down: Headline inflation in March fell for the first time in more than 10 years as falling gas prices helped pull the aggregate index down. Travel and apparel also contributed to lower inflation.

Manheim Used Vehicle Value Index declines: The Manheim Used Vehicle Value Index declined 1.1% month over month in March. This brought the Index to 141.9, which remains 4.4% up from a year ago. On a year-over-year basis, luxury cars and SUVs outperformed the overall market. Most other major segments saw year-over-year gains but underperformed the market. The market and underlying economic conditions deteriorated rapidly in the second half of March, but because of the strong start of the month, the Manheim Index only lost 1.1% of its value. The decline in April is likely to be much more severe.

Check back tomorrow for a video that will include updated data.

Sign up here to receive bi-weekly updates on news and trends dominating the automotive industry.