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

No one should live their life in fear, simply because of the color of their skin.

OUR FULL STATEMENT x

Commentary & Voices

Cox Automotive Commentary: First-Half 2020 U.S. Auto Sales

Share

Facebook Share Twitter Tweet Linkedin Share Email Email

The U.S. auto industry is closing the books on the first half of 2020 today, and many in the industry are likely saying, “Good riddance.” It was a tough half for auto sales – to say the least. The Cox Automotive Industry Insights team has been tracking the industry’s progress throughout the ups-and-down of 2020 – remember, sales were up in January – and is sharing the following content and commentary for June and first-half 2020 industry sales results. Dig in; there’s plenty. And we hope you enjoy the playlist at the end. 

Read the Cox Automotive June and first-half auto sales forecast, which was shared last week. Our team of analysts was expecting U.S. auto sales to drop more than 24% in the first half of the year. Cox Automotive Senior Economist Charlie Chesbrough adds, “After a topsy-turvy quarter, first-half auto sales appear to be ending close to our forecast, down roughly 24% from year-ago levels. The vehicle market shouldn’t expect things to change much during the next quarter. Potential shortages on some products, a second wave of COVID-19 cases, and continued high unemployment will make Q3 challenging. However, we still believe the very worst of the crisis in terms of sales impact is behind us. The question for the rest of the year is the pace of the recovery, not the direction.”

The Cox Automotive team put together a deep-dive analysis of the industry’s performance in the first half of the year. You can download that material, which includes a look at both new- and used-vehicle performance in the first half as well as how the consumer fared during the worst part of the downturn.

Michelle Krebs, executive analyst at Cox Automotive, noted, “Consumers and dealers were amazingly resilient in the first half. Dealers quickly adjusted to accommodate nervous shoppers by doing much, if not all, of the sales process online and providing services beyond dealership walls, like pickup and delivery of vehicles. Sales were down significantly in the half, but without a lot of hard work and dedication by the U.S. auto dealers, it might well have been worse.” Cox Automotive’s consumer and dealer sentiment research was updated at the end of June and can be found here. Key takeaway: Fewer buyers are in the market for a new vehicle today and concern over COVID-19 is rising again.

Heavy incentive spending was a big driver of sales in the first half says Brad Korner, general manager of Cox Automotive Rates & Incentives. He adds, “We will likely see the major automakers using more employee pricing and “percent-off” pricing to package attractive deals on scarce inventory in July and August. The special 0%-financing deals are a proven winner and will stay around, but we expect to see fewer going forward. In the months ahead, the focus will be on marketing and messaging. There are plenty of good deals out there. Breaking through all of the noise will be the real challenge.” For more information on the incentive volume and spending during the first six months of 2020, check out this Data Point.

The data team at Kelley Blue Book is estimating that while sales in June were down compared to June 2019, the new-vehicle average transaction price (ATP) was up. In fact, at $38,530, ATPs in June 2020 are estimated to have increased by $1,141 (up 3.1%) from year-ago levels and are also up $160 (up 0.4%) from last month. Read the details here.

Karl Brauer, executive publisher of Autotrader and Kelley Blue Book,
 has been watching the truck segment carefully. “The first half of 2020 confirms it,” he notes. “Even when the vehicle market goes completely sideways, the truck market stays straight and true. Most brands are down between 20 and 30% this year, but trucks range from approximately half that decline. The Chevy Silverado is actually positive year to date in 2020. This is particularly good news for domestic brands like Chevrolet, Ford and Ram, all of which rely heavily on high-profit truck sales. This trend will likely continue as the economy recovers and consumers look to start delayed home improvements, relocations and other truck-friendly activities.”

Last word on the first half comes from Cox Automotive Chief Economist Jonathan Smoke. He shared this 8-minute video yesterday, summarizing the market during the last week of June, and adds, “The market is losing the upward momentum that it enjoyed in May and early June. The challenge ahead begins with the increasing number of COVID-19 cases that’s causing consumer sentiment to decline again. It also appears the pent up demand that gave us a much stronger recovery in May and June is waning. Dealer inventory remains challenged as well. When you add it up, it looks like the industry will be heading into an even more challenging sales environment in July.” 

Smoke, who is also a DJ and music aficionado, put together this playlist, ten songs that best reflect our industry as we roll into the hot days of summer. We hope you enjoy the music during a safe and relaxing 4th of July holiday weekend.

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.

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