Source: Detroit News
Auto Industry Could See 'Cruel Summer' Amid Economic Uncertainties
There could be a "cruel summer" ahead for the auto industry amid an uncertain economic environment, low inventory levels and COVID-19 cases increasing in some parts of the country, Cox Automotive analysts said.
Almost halfway through 2020, automakers are just now returning to production levels equivalent to before the two-month shutdown resulting from the pandemic. They have offered 0% financing and other incentives to keep up sales, but the industry that represents nearly 4% of the national economy could be in for a long recovery more like Nike's swoosh than a "V" or "U," said Jonathan Smoke, Cox's chief economist.
"We know we're in for a rocky road on unemployment, consumer credit, consumer sentiment and oh, yeah, election politics," he said. The contentious circumstances of the election are sure to be a "wet blanket" because of the contributing uncertainty.
Cox now forecasts 12.9 million new-vehicle sales this year in the United States, a 24% decrease year-over-year. Contributing to that is major declines in fleet sales as rental and travel business subsides and is likely to do so for the remainder of the year, said Charlie Chesbrough, a Cox senior economist.