CoVid-19 Industry Updates

CoVid-19 Industry Updates (169)

In January, the unemployment rate fell by 0.4 percentage point to 6.3 percent, and the number of unemployed persons decreased to 10.1 million, according to the U.S. Bureau of Labor Statistics.

Although both measures are much lower than their April 2020 highs, they remain well above their pre-pandemic levels in February 2020 (3.5 percent and 5.7 million, respectively.

Among the major worker groups, the unemployment rates declined over the month for adult men (6.0 percent), adult women (6.0 percent), Whites (5.7 percent), and Hispanics (8.6 percent). The jobless rates changed little for teenagers (14.8 percent), Blacks (9.2 percent), and Asians (6.6 percent).

Among the unemployed, the number of persons on temporary layoff decreased in January to 2.7 million. This measure is down considerably from the recent high of 18.0 million in April but is 2.0 million higher than its February level. The number of permanent job losers, at 3.5 million, changed little in January but is 2.2 million higher than in February. The number of reentrants to the labor force decreased in January to 2.0 million. (Reentrants are persons who previously worked but were not in the labor force prior to beginning their job search.)

Due to the ongoing health emergency in the District of Columbia and around the world, the 2021 Washington D.C. Auto Show will be unable to open during the previously scheduled March 26 through April 4 timeframe. Show organizers are working closely with the District government and the Walter E. Washington Convention Center to find dates later in the spring to host the event.

“Nothing is more important to us than the safety and health of our loyal attendees, our participating exhibitors, and all those who work so hard to make the show a success every year,” said Washington D.C. Auto Show CEO John O’Donnell. “With that in mind, we are doing everything we can to host a show in 2021 that meets the high standards our visitors are used to, while ensuring that our region stays safe and finally defeats this terrible pandemic.” 

The Washington D.C. Auto Show is the District of Columbia’s largest annual indoor event and has been held every year since the end of World War II. The 2020 show, which commenced before the COVID-19 pandemic, was one of the best-attended shows in the event’s history and featured more than 600 new vehicles from nearly three-dozen auto manufacturers.

Further details about the auto show’s programming, including updates on scheduling, participating manufacturers, media and industry-related events, and much more, will be announced in the coming months. 

Contagion Busters Inc., recently formed in response to the pandemic threat, now offers auto dealers and repair shops the equipment and training to sanitize in minutes the interior of an automobile.

The Contagion Busters process employs UV-C frequency light, the same light used in hospitals and EMT vehicles to sanitize operating rooms, patient rooms and ambulance bays. 

Sanitizing a vehicle with UV-C in a shop environment presents special challenges. The process must be effective and fast, even faster than an oil change. That requires the irradiating power of advanced medical equipment, a level far greater than consumer UV lights can deliver.

Contagion Busters technicians upgraded components of the industrial units to deliver UV-C frequency with the irradiating power of hospital UV-C systems—systems that usually require unmanned and robotic equipment to deliver the extended exposure time necessary to assure every corner of the space has been adequately irradiated. The Contagion Busters lamp, the most powerful hand-held unit made, can safely sanitize a vehicle interior in minutes. It can neutralize pathogens as far as eight feet from the light source and, because it is aimed by hand, a trained technician can focus on critical touch points and quickly navigate any cabin configuration.

James Stevens, president of Contagion Busters, said Contagion Busters UV-C sanitizing may be added to the service menu as a courtesy service or as a service option.

TrueCar Inc. projects 16 million new light vehicle sales for 2021, an increase of 10 percent from last year. Retail sales are expected to reach 13.9 million, an increase of 9.6 percent from 2020.

"The year 2020 was a challenging one for the automotive industry and the economy at large, but the recovery came faster than most expected, providing strong momentum and pent-up demand going into 2021," said Nick Woolard, Lead Industry Analyst at TrueCar. "Retail demand is healthy and will remain the driving force for total vehicle sales in 2021. Fleet sales will also increase, but at a much slower pace, due to the uncertainty surrounding travel."

Q4 2020 saw record-breaking average transaction prices for new vehicles, as incentives eased and consumers opted for more expensive SUVs and trucks. The trend toward more expensive vehicles continues in 2021. Average transaction prices are projected to increase 3.1 percent year over year to $37,925. In previous years, the average transaction increased roughly 4 percent year over year.

"As the K-shaped recovery takes shape in 2021, we expect higher-income households, who have not been financially impacted by the pandemic, to continue making new vehicle purchases," added Woolard. "Continued trends toward large trucks, SUVs, and a growing array of electric vehicles as well as additional safety and technology content will lead to even higher average transaction prices in 2021."

Kerrigan Advisors, a sell-side advisory firm to auto dealers in the U.S., has released The Kerrigan Index for December 2020/Year in Review. Comprised of the seven publicly traded auto retailers, the report hit record-breaking stock valuations, profitability and sales increases. In December, The Kerrigan Index increased 5.22 percent, outpacing the S&P’s increase of 3.71 percent for the month. For the year, The Kerrigan Index increased almost 30 percent.

Ryan Kerrigan is Managing Director of Kerrigan Advisors

“What’s really notable is that the auto retail stocks, and The Kerrigan Index, have traded at all-time highs throughout the final months of 2020. In spite of a historically crisis-driven and volatile year, the stocks are valued higher than ever before,” said Ryan Kerrigan, managing director of Kerrigan Advisors. “Clearly, Wall Street is bullish on auto retail, and comfortable that it will continue to evolve on pace with technology and consumer behavior.”

The Kerrigan Index increased 29.65 percent, significantly outperforming the S&P 500 Index, which increased only 16.26 percent, and all seven component stocks posted increases for the year, led by Lithia Motors (+127.18 percent), and AutoNation (+41.34 percent).

“This was the ultimate comeback year, and auto dealerships were its comeback kids,” said Erin Kerrigan, founder & managing director of Kerrigan Advisors.

The North American International Auto Show (NAIAS) announced it will not hold its 2021 auto show as planned. Instead, show officials revealed a “bridge to the future” with an event called Motor Bella.

M1 pace car

The new event will bring next-generation mobility and exciting vehicle debuts to media, show-goers and the automotive enthusiasts’ world while also addressing continued COVID-19 concerns about indoor events.

Motor Bella will be held from Sept. 21-26, 2021, at the M1 Concourse in Pontiac, Mich. Centrally located in the metro Detroit area, M1 Concourse, often referred to as an “87- acre playground for auto enthusiasts,” enables exhibitors to showcase key vehicles and technologies in an outdoor setting. 

Plans call for 1.6 million square feet of dynamic vehicle and technology display space including terrain ideal for showcasing off-roading capabilities. M1 Concourse also offers a 1.5-mile hot track on the grounds for technology and vehicle demonstrations.


“The pandemic has caused changes in our society and world in ways not previously imagined, and we all should be looking for new and highly creative ways of doing business,” said Executive Director Rod Alberts. “This new event captures that creative spirit. It will provide new mobility experiences and increasingly innovative approaches to tapping into the industry and its products.”

Alberts said attendees can expect a multi-sensory experience at the new event. “This all-outdoor venue, with adrenaline-pumping track activities and a full complement of OEM and technology exhibits, is going to offer the sights, sounds and even the smell of all that the new world of mobility has to offer.”

Rod Albert, Executive Director of NAIAS

As auto shows around the world are being reimagined and will continue to do so in the wake of the pandemic, NAIAS had been reimagining its position for some time. 

Event Chairman Doug North said the M1 Concourse was envisioned as part of the 2021 Motor Bella activities, so it was “a natural progression” to build upon it in light of the growing demand for experiential mobility shows and an increased appetite for outdoor events. Motor Bella was originally conceived as a celebration of Italian and British supercars and classic vehicles and was to have debuted at the June 2020 NAIAS.

“With our new program for 2021, we will take the Motor Bella concept to the next level with multiple brands and mobilities represented, from hometown to international nameplates, autonomous vehicles to high-performance supercars and everything in between,” North said. “It will be a mobility-filled event. One that will provide our show partners with a cost-efficient backdrop to share all of their brands, products and technologies in a fun and festival-like atmosphere that’s completely outdoors.”

Black Book released its Used Vehicle Retention Index for December 2020, showing it at 128.8, a 1.8-point decline from November’s 130.6.

“The seasonally adjusted Retention Index has remained relatively stable since August,” said Alex Yurchenko, SVP, data science. “Nevertheless, due to record-setting summer months, the year ended with a 15.5-point (or 13.7 percent) year-over-year change in the Index. In fact, only the Minivan Segment did not have a year-over-year increase in the Index.”  

The Black Book Used Vehicle Retention Index is calculated using Black Book’s published Wholesale Average value on two- to six-year-old used vehicles, as percent of original typically-equipped MSRP. It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition.

The Index dates to January 2005, where Black Book published a benchmark index value of 100.0 for the market.

During 2020, it saw the largest drops and increases in the Index due to supply and demand pressures during the COVID-19 pandemic. 

 

Mitsubishi Motors North America Inc. (MMNA) saw its first year-over-year decrease in U.S. sales since 2012, breaking a string of seven straight years of sales growth. For the full calendar year, the company reported sales of 87,387, a decrease of 28 percent. For the fourth quarter of the year, MMNA sold 14,770 vehicles, a decrease of 42 percent compared with the same period in 2019. 

A key part of the company’s year-long effort was to focus on improving the overall and long-term health of the franchise dealer network and Mitsubishi Motors business by reducing both dealer stock (50 percent reduction compared to December 2019) and fleet sales. Actions undertaken throughout 2020 were instrumental in preparing Mitsubishi Motors dealers for what promises to be a strong 2021, with growth and improved profitability brought about by key new model launches in the first quarter of the new year.

Looking ahead in 2021, Mitsubishi Motors’ plan to reinvigorate its presence in the U.S. marketplace continues in full force. By the end of the first quarter of 2021, the brand will launch three considerably upgraded vehicles, the redesigned 2022 Eclipse Cross, redesigned 2021 Mirage and Mirage G4, and the all-new next-generation 2022 Outlander.

Edmunds forecast that 4,036,744 new cars and trucks will be sold in the U.S. in the fourth quarter of 2020. This reflects a 2.8 percent increase in sales from the third quarter but a 5.7 percent decrease from Q4 of 2019. Edmunds analysts also estimate that 14,416,447 new vehicles will be sold in 2020, which reflects a 15.5 percent decrease in sales from 2019. Although this will put 2020 on track to be the lowest sales year for the automotive industry since 2012, Edmunds experts say that the number is much stronger than expected given major disruptions created by the outbreak of the coronavirus (COVID-19) pandemic.

Jessica Caldwell

“Thinking back to the dire state of the market at the outset of the pandemic, it’s such a testament to the incredible durability of the entire automotive industry — and the resilience of the American consumer — that we’ve seen such a healthy rebound in new car purchases this year,” said Jessica Caldwell, Edmunds’ executive director of insights.  “A big comeback story of 2020 is without a doubt the recovery of retail vehicle sales, which have nearly returned to pre-pandemic levels.”

Edmunds experts note that the steady rise in average transaction prices (ATP) was another bright spot for the industry, because the increase also helped drive profitability for automakers and dealers.

“It’s certainly not much of a buyer’s market right now: Inventory is still in short supply in certain areas, and automakers and dealers aren’t faced with the pressure to use big discounts to clear out their lots like they normally do at this time of year,” said Caldwell. “Although that’s not stopping higher-earning consumers from continuing to enter the new market like they have throughout 2020, car shoppers who are a bit more price-sensitive might want to skip holiday shopping and wait until next year if they’re looking for big bargains.”

Edmunds analysts note there are still uncertainties ahead in 2021, but they remain confident that industry sales will continue at a steady pace without a dramatic decline like the one seen at the outset of the pandemic.

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.7 percent in October to 108.2 (2016 = 100), following a 0.7 percent increase in September and a 1.6 percent increase in August.

“The U.S. LEI rose again in October, with widespread improvements despite weakness from housing permits and consumers’ outlook on economic conditions. However, the leading index has been decelerating in recent months, which suggests growth will moderate significantly in the final months of 2020, slowing down from the unusually rapid pace in Q3,” said Ataman Ozyildirim, senior director of economic research at The Conference Board. “Furthermore, downside risks to growth from a second wave of COVID-19 and high unemployment persist. While The Conference Board projects the U.S. economy will expand in Q4, the pace of growth is unlikely to exceed 2.2 percent (annual rate).”