Nearly every car trip results in a transaction or some benefit to our overall quality of life.
The importance of this industry to the overall health of the American economy must never go understated – building 60 million vehicles requires the employment of about 9 million people. Then, there are an additional 50 million jobs estimated downstream which are all owed to the auto industry, according to ocia.net.
As with most other industries, this one rises and falls with our economy, but with a goliath-like impact.
Right now, it’s a rainy day in automotive. In January 2020, 158,657 people showed up to buy a car in Los Angeles. Three months later – only 66,928. A 57.8% decline in sales is totally catastrophic, the impact of which will be felt long after the pandemic has passed.
The U.S. as a whole lost about 4.6 million customers between March and April 2020 – a decline of 52.8%. According to Cross-Sell data, the average car sold for $23,451.07 (last 10 model years) in January 2020 so that means an economic loss of roughly $108 billion.
If we applied similar numbers to the amount of people who are employed in this industry, we’d see a loss of about 30 million jobs – and job loss has already arrived.
The auto industry is the single greatest engine of economic growth in the world and there are major implications if businesses don’t open – and fast.
After a review of April 2020 title and registration data, and the impact that COVID-19 has had on the auto industry, even dealerships who have long embodied online sales are struggling to perform. Longo Toyota, the Number 1 selling Toyota dealership in the U.S. sold 428 cars in April 2020 – a stark contrast to the usual 1,600. Worse over, Paragon Honda in New York City sold 37 cars in April 2020, a 93% drop from April 2019.
The state of Texas, which is responsible for about 6 million annual car sales showed a 58.9% decline in YOY sales according to Cross-Sell data.
In every gloom, there are glimmers of hope. April 2020 data shows the margin between domestic versus import vehicles sold is narrowing. Cross-Sell data from 24 states shows that 81,660 more imported vehicles sold in the month of February, but only 10,640 more imported vehicles sold in April. Of course, many Americans are employed by import franchises, but this type of trend will help keep the american economy humming.
Other trends show truck sales remaining steady throughout the pandemic. Two models in particular – the GMC Sierra 1500 and the Chevrolet Silverado have had consistent sales numbers. The GMC Sierra is down only 4.7% from March to April 2020 but up 4.8% for the year. Similarly, Silverado sales declined 14.1% from March to April 2020 but only 5.1% year over year.
With many states pushing to reopen, it’s hard to believe that car sales will drop again in May 2020 – but it will depend on the consumer’s appetite and ability to transact again.