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Thursday, 02 April 2020 18:01

Detroit 3 Gain Big Market Share as COVID-19 Infects Sales, April Looks Worse

Written by Henry Payne, The Detroit News


With March auto sales infected by the coronavirus, Detroit automakers are bracing for an unprecedented spring of empty showrooms as analysts predict 2020 sales could be down as much as 30% from forecasts.

The U.S. industry's first quarterly sales reports since the the COVID-19 crisis shut auto plants and many showrooms delivered declines for every automaker. Declines were particularly acute in the last week of March as 80% of the country---39 states---issued shelter-in-place orders, resulting in sales declines of 61%, according to forecasting firm J.D. Power.


New York City and Detroit were the hardest hit metro markets. Yet, even as Fiat Chrysler Automobiles NV reported sales declines of 10% for the first quarter of the year and General Motors Co. was off 7%, the Detroit Three were poised to weather the downturn better than their peers due to healthy pickup sales.


Buoyed by truckloads of incentives, GM, FCA and Ford Motor Co. gained a whopping 11 points in U.S. market share thanks to their most profitable vehicles. Ford isn't scheduled to release its detailed January-March sales numbers until April 2.


The sales pain spread across all sectors of the automotive market. Toyota and Hyundai saw first quarter sales decelerate, with the Japanese giant dropping 35.3% in March alone. Including its abysmal 43% March decline, Hyundai reported an 11% drop in the first quarter.


Luxury automakers were particularly hard hit, with Porsche first-quarter sales chopped 20.2% from a year ago (after a record 2019) and BMW off 15.3%.


The industry is bracing for difficult months ahead with March a passing rainstorm compared to the coming April hurricane. With states expected to be in lock-down until April 30, J.D. Power predicts an 80% decline in sales.


After a record five years of annual U.S. sales over 17 million units, sales were expected to slow in 2020, according to J.D. Power forecasts, to a still healthy 16.8 million units. But with automakers poised for the spring selling season beginning in March, COVID-19 has changed the landscape. 


Assuming sales pick up after July, annual sales should stabilize between 12.1 million and 14.8 million units for the year----down 10% to 30% from their 2019 projections.


"It's going to get much worse in April as uncertainty rises and the potential that regulations will stay in place," said Thomas King, chief product officer for J.D. Power. "We expect 1.6 million to 2.4 million unit sales lost from March though July." 


According to a University of Michigan survey, consumer sentiment tumbled last month to its lowest level since the 2008 Great Recession and is projected to hit its largest two-month decline ever. Not surprisingly, given COVID-19's impact on seniors, the 57-years-and-up demographic saw the biggest decline---67%---in auto shoppers.

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