U.S. new vehicle sales could drop as much as 9% due to the impact of the coronavirus.
As the number of Americans identified as having the coronavirus rises, automotive analysts are predicting that new vehicle sales will fall.
In fact, Morgan Stanley is predicting that sales will fall 9% compared with last year’s results. Prior to the outbreak, the U.S. industry was expected to fall about 2%, according to analyst predictions.
Adam Jonas, Morgan Stanley auto analyst, wrote that “demand shock” triggered by the spread of the virus may cause a delay in large purchases, i.e. new vehicles, by consumers. As a result, he suggested that U.S. sales could drop to 15.5 million vehicles, from 17.1 million in 2019.
(Auto industry waiting for impact of coronavirus in U.S.)
Across the board, predictions for the U.S. in 2020 ranged from 17.1 million at the most optimistic end of the scale to as low as 16.6 million at the bottom end. However, LMC Automotive revised its forecast down to 16.5 million to account for the coronavirus.
Automakers were largely unaffected by the coronavirus in February, but the longer-term impact could be substantial.
The group said the outbreak could drive global vehicle sales this year down 4% to 86.4 million, from 90.3 million in 2019. LMC previously had expected relatively flat global sales of 90.1 million.
The impact on U.S. sales has been minimal to this point — as far as anyone can deduce as many automakers, i.e. General Motors, Ford, Fiat Chrysler and Toyota, no longer report sales monthly. The quarterly sales reports will come in early April.
Stephanie Brinley, principal auto analyst at IHS Markit, noted that February sales weren’t affected by the virus, but the focus going forward is “going to be more on consumer attitudes than on supply” of cars or car parts.
(New York Auto Show postponed until August due to coronavirus.)
However, some believe the impact of the virus is something that is yet to come.
Morgan Stanley Analyst Adam Jonas predicts sales could drop to 15.5 million units in 2020.
Carla Bailo, CEO, Center for Automotive Research in Ann Arbor, Michigan, noted the numbers can be understated, as a lot of Chinese auto parts and components first go to Mexico which then uses them for goods that ultimately come to the U.S. However, she believes that the other shoe is going to drop.
“There will be an impact on (U.S. vehicle) production with a month, month-and-a-half, but sooner on the parts and service side,” she said. However, it’s already happening to some extent on the production side.
The Hyundai Palisade, the brand’s new three-row SUV, is now down to a 28-day supply, noted Cox Automotive. The plant in South Korea that makes the Palisade was recently closed a second time due to a worker testing positive for COVID-19. The first closure was due to a parts shortage caused by supply chain disruptions.
(Cadillac pulls plug on April debut of Lyriq EV due to coronavirus concerns.)
As the virus spreads, it will continue to have a negative impact on the auto industry, said Jeff Schuster, LMC president of global vehicle forecasts, adding, “volatility will remain with us until there is evidence of containment globally, and the lasting effect could spill into 2021.”