US car sales fell by more than 30% in the second quarter. This is deemed the worst decline in sales since the Great Recession and auto bankruptcies in 2009.
Major automakers announced over 30% decline in US sales in the second quarter, the biggest plunge in sales since the Great Recession and the auto bankruptcies of 2009.
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The quarterly sales of several of the top automakers were released Wednesday. The weeks of pandemic-forced dealership closures made a negative impact.
Job losses also affected sales, with limiting spending money and mass work-from-home measures that halted commutes for a long time. Moreover, the closure of auto plants for much of the quarter narrowed the supply of new vehicles at the operating dealerships.
Automakers' reports
General Motors, the biggest US automaker, recorded a 34% sales decline. Last week, GM said it will slash 700 jobs at a Tennessee plant later this summer due to the drop in demand for the SUVs constructed there. Still, GM reported the decline of sales in April and manifested signs of recovery in May and June.
"GM entered the quarter with very lean inventories and our dealers did a great job meeting customer demand, especially for pickups," said Kurt McNeil, GM's vice president of sales.
"Now, we are refilling the pipeline by quickly and safely returning production to pre-pandemic levels," he said.
Fiat Chrysler (FCAU) announced a 39% drop in revenue, leading to the drop in rental fleet sales. Rental car companies usually purchase about 10% or more of US car sales in the course of a normal year.
With the slow demand for travel, car rental companies have virtually temporarily stopped their purchases.
Hertz applied for bankruptcy. Meanwhile, all the car rental firms are selling cars from their own fleets.
Toyota had a 35% drop in second quarter US sales, although it recorded an improvement as the quarter went on. June sales were off 22%, according to the company.
Jonathan Smoke, chief economist for Cox Automotive, said that despite the signs of progress later in the quarter, a swift increase in sales throughout the summer is not certain.
Delayed purchases
Cox is predicting a 35% decline in total US sales for the second quarter once all the automakers data are in.
In addition, a Cox survey revealed that one-third of individuals who plan to purchase a car said they will postpone their purchases. The causes of the delay are general uncertainty in the market and unemployment problems.
"The industry is facing the potential for a cruel summer for automotive sales," Smoke said in a recent presentation.
Another auto research firm, LMC predicts a 33% decline in sales in the quarter and a 22% drop over the course of the full year.
"There is still plenty of risk ahead, with the possibility of continued outbreaks," said Jeff Schuster, president of global vehicle forecasting for LMC. He noted that some of the sales are made by pent-up demand that could soon wither.
"Autos are among the industries coronavirus hit hardest and the pandemic adds to what were already substantial challenges for carmakers," credit rating agency Moody's note said. "We estimate vehicle sales will slump at least 20% in 2020 and will take several years to recapture 2019 levels."
