ALG Inc., a subsidiary of TrueCar Inc. and the industry benchmark for determining the future resale value of a vehicle, is providing a third revision of its initial 2020 new vehicle sales forecast to account for the quickly evolving Coronavirus (COVID-19) pandemic and the latest third-party economic outlooks.
13.1M (Optimistic): Probability Index: 10%
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- Movement restrictions slowly lifted nationwide through May
- Multiple stimulus packages deployed and having a positive impact
12.6M (Mixed): Probability Index: 45%
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- Movement restrictions slowly lifted nationwide through May
- Slow recovery through 2020 stimulus packages deployed and having a positive impact
- Moderate disruptions from subsequent localized movement restrictions
11.3M (Cautious): Probability Index: 45%
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- Second round of national movement restrictions in early fall
- Slower recovery through 2020 with increased unemployment
“COVID-19 continues to add pressure on economic health as many states extend stay-at-home restrictions well into May and unemployment and layoffs continue to expand into other industries, leading to a slower recovery,” said Eric Lyman, Chief Industry Analyst for ALG, a subsidiary of TrueCar. “This completely diminishes the likelihood of recovering 2020 sales to pre-Coronavirus sales rates.”
“We believe 12.6 million is now the most likely scenario,” added Lyman. “However, for the U.S. market to achieve that figure this year, multiple rounds of stimulus must bridge business and household finances through the initial spring lockdowns. We will also need a sharp decline in unemployment over the summer as businesses reopen under modified operating rules to accommodate continued social distancing in an effort to avoid secondary outbreaks.”
“Even in a contracting economy, the demand for new vehicles in the next three years will make up for many lost sales in 2020,” said Morgan Hansen, Vice President, Data Science at ALG, a subsidiary of TrueCar. “ALG forecasts a cumulative shortfall of new sales of three to nine million units over the next three years, based on varied vehicle ownership patterns, scrappage, and population growth. Even accounting for diminished driving habits, a quick recovery of 15.5 million sales by 2022 is extremely likely, outpacing the year-over-year sales growth rates in the early 2010’s.”
Added Lyman, “We know that the threat of COVID-19 is not going away in 2020 and new car sales will depend on consumers’ ability to adapt to new ways of conducting not just retail transactions but daily life. Automakers are extending financial support and providing various incentives to consumers. Dealerships are also quickly adapting with digital solutions during these times of social distancing.”
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SOURCE: TrueCar
