fbpx
Tuesday, 17 March 2020 21:28

ALG Provides Updated 2020 New Vehicle Sales Forecast Based on Projected Short-Term and Long-Term Impact of COVID-19

Index

“Short-term market volatility does not necessarily translate into long-term changes,” said Morgan Hansen, VP of data science at ALG. “While ALG expects a short term drop of roughly 2 percentage points of MSRP in wholesale used market values, our benchmark 36-month forecast only expects a decline of 0.7 ppts of MSRP. These values are based on current expert third party macro-economic forecasts that put the probability of prolonged economic downturn risk at 50%.”

 

Key impacts of residual value reductions are COVID-19, stock market performance and drops in oil futures:

 

  • COVID-19 will have impacts on both vehicle inventory availability and consumer confidence, affecting supply and demand.

  • COVID-19 will have immediate short-term impacts due to reduced income and reduced commerce in general.

  • In the extreme case, COVID-19 could also halt sales in the short term if auction houses and transportation companies have temporary shutdowns, but this is not reflected in the current ALG longer term outlooks.

  • Long-term, COVID-19 and poor quarterly results will most likely result in higher unemployment rates through 2020 and into 2021. Prolonged bear markets generally lead to more layoffs.

  • Low oil prices have traditionally been good for the economy, but increases in domestic oil production and extremely low prices are detrimental to the U.S. economy in the short term.

  • Government intervention strategies and election results will impact the U.S. economy throughout 2020 regardless of how quickly COVID-19 recedes.

 

Change in percent of MSRP:

 

  • The impact varies by segment and term of the forecast. As probability increases, the impacts are greater in the shorter term with positive recovery forecasted for the long term.

 

ALG will update its forecasts in response to major new developments.

 

Source: ALG

 

For a complete list of collision industry event cancelations and postponements, click here.


« Previous Page Continue reading

Read 411 times