Auto Sales Better Than Feared, But Still Pretty Terrible; Factories Think About Restarting

Car dealers around the country are doing better than expected at selling cars online, seeing customers by appointment only, and making home deliveries, to comply with stay home orders aimed at slowing the spread of the COVID-18 pandemic.

If anything, analysts are already looking ahead to when stay home orders are eventually lifted. There have been several postponements, but some factories are talking about resuming limited production in May, J.D. Power said.

“We could see vehicles being produced in early May but at very small volumes,” said Tyson Jominy, vice president of data and analytics at J.D. Power, in answer to a follow-up question after an April 15 webinar.

“Production restart will be dependent on two things: the implementation of health safety guidelines, and the supply chain. Once those two issues are addressed, minimal production will gradually ease into greater production,” he said in an email.

But for now, better-than-expected sales are still pretty terrible. According to J.D. Power data, the auto sales rate over the last couple of weeks ran on average 55% below expectations — a big improvement over previous results, which showed U.S. auto sales were down as much as 80%.

“This is obviously a lot better,” said Thomas King, president of the J.D. Power Data & Analytics Division, and Chief Product Officer, in an April 15 webinar. “While it’s still a very significant decline, … the good news is, it’s considerably higher than the worst-case scenario.”

The upshot is, dealers on average are still managing to sell 45% of the amount J.D. Power had previously forecast. That’s despite the fact that 23 states, representing 51% of 2019 auto sales, have restricted sales to online or remote delivery. Another three states (representing only 5% of 2019 sales) banned auto sales altogether.

Not counting New York and Michigan, where sales are restricted but not banned, and Pennsylvania, were sales are banned, J.D. Power said sales in the last couple of weeks were down “only” 45%.

It’s also highly relevant to point out 24 states, representing 44% of 2019 sales, are allowing dealership sales operations to remain open as essential businesses, even though most of those states have stay home orders. Around the country, most jurisdictions have also allowed dealership parts and service operations to stay open, subject to social-distancing rules.