Recovery Continues, Pace Slows

By Staff Writer August 26, 2020 326
Toyota had less than 40 days of available inventory in the latter part of the month Toyota had less than 40 days of available inventory in the latter part of the month

August has been another step forward in the market’s recovery, although the pace of sales improvement now appears to be slowing, according to a forecast this week by Cox Automotive.

“While the market continues to slowly improve, there are a number of factors preventing more robust gains,” stated Charlie Chesbrough, senior economist at Cox Automotive.

Charlie Chesbrough
Charlie Chesbrough

“Limited inventory for some brands, as well as the ongoing high unemployment and low confidence from the pandemic, continue to keep sales from rebounding more quickly. There’s been a noticeable pull-back in incentives as well. These problems will likely persist, at least in the near term.”

Available inventory continues to plague much of the market and was the key story in August. Some brands were wrestling with significant shortages. Toyota, Lexus, and BMW all had less than 40 days of available inventory in the latter part of the month, far below the current industry average of 60.

“Obviously, you can’t sell what you don’t have,” added Chesbrough. “The lack of inventory likely kept some potential buyers out of the market.” Low inventory means less choice when it comes to vehicle color or trim package. It also means higher prices. Recent research from Cox Automotive notes nearly 20 percent of dealers have raised retail prices since the start of the pandemic. A similar percent of consumers admit they are putting the vehicle purchase on hold, waiting for a better deal.

New vehicle sales are forecast to finish at 1.30 million units for August, down nearly 20 percent compared to August 2019. When compared to last month, sales are expected to rise nearly 90,000, an increase of 7 percent. The SAAR in August 2020 is forecast at 14.9 million, far below last year’s 17.1 million level, but an improvement from last month’s 14.5 million pace.

While all major segments are expected to see increased sales compared to last month, SUVs and pickup trucks will continue to outperform.

 

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Last modified on Thursday, 27 August 2020 14:45

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