Sales of new vehicles have experienced a v-shaped recovery, increasing 36% in 3Q20 from the previous quarter. However, levels were 10% below the same quarter of the previous year. We expect total new vehicle sales to reach 14.5 million units in 2020, the lowest since 2012.
- Low interest rates, extended loan terms, a rebound in the stock market, higher personal savings, solid residential construction, and increasing preferences for car ownership have contributed to the resiliency of new vehicle sales.
- Yet, some segments like fleet demand remain subdued due to sluggish airline and tourism-related activity.
- Government support has helped consumers to repay auto loans, containing pressures on delinquency rates. Credit standards have tightened, nonetheless.
- Pandemic-induced disruptions in vehicle production put pressure on inventories of new units, directing demand to a better supplied used vehicle market.
- Electric vehicles declined by 41% yoy in 2Q20. Covid-19, the reduction of government incentives and the conflict between the federal government and the state of California over fuel economy standards will impact sales in the short-run.