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Wednesday, 10 June 2020 21:20

Are Auto Sales Back on Track? May Depend on Automakers Throwing More Cash at Buyers

Written by Paul A. Eisenstein, The Detroit Bureau

Index

That said, the incentives hammered industry balance sheets at a time when they would have U.S. factories out of production by about two months. A separate study released by consultancy AlixPartners warned the industry is facing an extended “profit desert,” the pandemic being the primary reason.

 

Not surprisingly, automakers have been hoping to phase back on the lavish givebacks. A number of the 84-month, zero-interest loans so common from March through May have been dropped or reduced, as have other incentives.

 

So, “For the month of June, the question is how consumers [will be] responding to the step back in incentives,” said King.

 

If sales slow down again, he added, he expects “we could see a step up on incentives,” though rather than using a blunderbuss approach, the industry is “much more likely to see [programs] that are targeted” at products and market segments that show signs of weakness, he said.

 

While demand has remained stronger than many feared during the pandemic lockdowns, the industry will still see 2020 dip to levels not found since the early days of recovery from the Great Recession.

 

All in, Power anticipates full-year volumes of somewhere between 12.9 million and 14.2 million. That’s down from 17.1 million in 2019, and a pre-pandemic forecast for this year of around 16.8 million.

 

“It’s a big step back from where we should have been” if the coronavirus hadn’t struck, said King.

 

We thank The Detroit Bureau for reprint permission. 


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