Low Inventory, Uncertainty Slow Recovery

By Staff Writer August 03, 2020 452

The growing number of COVID-19 cases and overall economic uncertainty continue to stifle a more robust recovery, according to a report released by Cox Automotive.

Cox forecasts that  the seasonally adjusted annual rate (SAAR) of auto sales in July is expected to be 13.3 million, up from last month’s 13.0 million pace, but down from last year’s 16.9 million level. Sales volume in July, forecast at 1.13 million units, will be down 19 percent from July 2019.

According to Charlie Chesbrough, senior economist at Cox Automotive, “The market has been making slow but steady gains since April’s low, but there are many headwinds hampering our recovery.” 

Consumer sentiment for the most part drifted downward throughout the month of July as surges in COVID-19 cases in the South and the West dominated the news headlines. Concerns over high unemployment, a troubled U.S. economy and the resulting severe recession also weighed heavily on potential auto buyers, keeping many out of the market. Shoppers who stayed in the market were likely impacted by a limited supply of product at dealerships.

Buyers are turning more to online shopping for cars
Buyers are turning more to online shopping for cars

Based on Cox Automotive analysis of vAuto Available Inventory data, there was only 67 days of inventory available in mid-July based on the current sales pace—far below the July 2019 level of 86 days. Lean supply can be a positive for dealers and automakers, as it often leads to less aggressive incentive spending and high grosses, according to Cox analysts. However, low inventory will also drive down market volume, as vehicle shoppers may not find the product they want. Toyota and Subaru had the tightest inventory among larger brands in July, both below 40 days of supply. At the other end of the scale, Chrysler, Dodge and Ford all had days of supply above 90 days in July. Mitsubishi had the most inventory on hand in July, with 135 days of supply.

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Last modified on Wednesday, 05 August 2020 13:16

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