Not a Great Summer for Sales
Although some people thought that the industry was “back” based on the improved sales in May and June compared to April, coronavirus hasn’t gone away so reduced sales may be back
Aristotle once quipped, “One swallow does not a summer make.” He was not talking about a gulp but a bird. And his point was simply that it takes more than a small sample to indicate a trend.
That occurred to me based on observations that Cox Automotive chief economist Jonathan Smoke made this past week about the vehicle market.
And sales personnel at OEMs might want to take a big gulp of something.
Smoke observed that May and June seemed as though things were getting back on track. Admittedly, that would be two months, not one swallow.
But Smoke went on to say that given the multiple outbreaks in COVID-19 across the country—especially in the southern half, which includes major markets like Miami, Dallas, Phoenix and Los Angeles—it would be a challenge for July’s numbers to be as good as those in the two preceding months.
Citing data from Morning Consult, Smoke noted that consumer sentiment is severely declining in many instances.
Consumer sentiment takes into account people’s attitudes about their personal finance and spending, as well as the business climate.
Simply: If you feel that you may lose your job (or if you’re one of the 19 million making an unemployment claim), odds are you’re not going to go out and get a new SUV—and while 0% APR financing certainly helped move metal in May and June, that may not be enough—after all, there are the non-trivial things like down- and monthly payments to take into account.
As COVID-19 cases continue to rise, odds are that people are going to have more on their minds than vehicle shopping.
To be sure there are a variety of factors--ranging from people needing to turn in their leased vehicles to people not wanting to rely on public transportation to simple demographic changes--that are going to drive sales. Some sales. Not the sort of sales that would be characteristic of people thinking, “Well, let’s take that road trip to the Grand Canyon this year—and get a new set of wheels to do it.”
But there is a long way to recovery, no matter how much wishful thinking there is.
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