Cox Automotive Commentary: April 2020 U.S. Auto Sales

UPDATED, May 4, 2020 – The sales numbers are in, and April’s results were bad but not as bad as expected. On a seasonally adjusted basis, April’s rate of 8.6 million was the worst back to January 1976.  However, based on pure volume, April 2020 still did about 50,000 better than the worst volume month which was January 2009.

Charlie Chesbrough, senior economist, Cox Automotive:

Sales, which had been tracking lower through most of the month, actually improved slightly over the last two weeks fo April. In some states, the opening of dealerships to sell vehicles, either in person or through digital transactions, clearly helped improve the sales pace through the month. Consumers also revealed that even in a pandemic there are some offers too good to pass up. Many of our daily tracking numbers were showing strong interest in 0% financing offers, as well as a lot of interest in pickup trucks.

Our expectation is that the worst sales declines are now in the rearview mirror. Sales in May should continue to show improvement over April; however, we are likely still months away from returning to the strong sales pace we started the year with.

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May 1, 2020 – With the full effects of COVID-19 felt across the U.S. auto market for the entire month, the U.S. auto market is expected to be down around 50% in April, according to the Cox Automotive forecast. While the industry continues to move away from monthly sales reporting, Cox Automotive is looking at some key sales indicators, including average transaction prices, incentives and who stayed in the market in April.

Charlie Chesbrough, senior economist, Cox Automotive:

Sales in April will finally reveal the full effect of the coronavirus on the vehicle market, as most of the country was shut down in some fashion and dealers were prevented from selling to consumers in some markets. As the month progressed though, many states started to reopen, and others made exceptions for auto sales and service. As a result of these policy changes, year-over-year daily sales started showing improvement since the beginning of the month, and we likely peaked during the last week of April. It’s fully expected that April will be a terrible sales month, possibly a record, but a strong finish to the month is a good sign for May.

Michelle Krebs, executive analyst, Autotrader: 

Cox Automotive data shows Middle America, with household incomes of $50,000 to $99,000, was the segment of buyers who stayed in market mostly for new pickup trucks and SUVs, while upper- and lower-income buyers shied away. The middle-class buyers were driven into the market by low-to-no interest financing for long terms, up to 84 months, deferment of first payments and other payment protection plans. And they favored doing much of the buying process online and having new vehicles delivered, practices likely here to stay.

Tim Fleming, analyst, Kelley Blue Book: 

Although auto sales are expected to drop more than 50% in April, average transaction prices held steady from the earlier months of the year and rose by 2% year over year, likely helped by the abundant incentive offers enacted by automakers and finance companies in March of this year. We observed a bit of a shift in the data this month as more price conscious segments increased more than normal. Car segments that were flat earlier this year showed increases across the board in April. At the same time, luxury segments took a dive, down nearly $1,500 from this time last year, as buyers shied away from these fast-depreciating models.

Read the April average transaction price press release from Kelley Blue Book.

Brad Korner, general manager, Cox Automotive Rates & Incentives:
The 0% offers and payment deferral programs were the leading incentives in the market last month, and some brands are extending current offers into the early days of May. The next move for the industry will be to put more money into certain markets that are in a phase 1 recovery. The practical approach would be providing dealer cash for local market promotions that motivate those dealers to order more vehicles from the factory and provides cash flow for the OEM.

Read Brad Korner’s post on the New Incentive Playbook from last week.

If you would like to speak with one of the expert analysts from Autotrader, Kelley Blue Book or any member of the Cox Automotive Industry Insights team, please contact us.