New and used auto sales are headed for a recession in 2020, thanks to stay-home orders aimed at stopping the spread of COVID-19. Cox Automotive’s chief economist Jonathan Smoke predicts U.S. sales of new light vehicles are headed for fewer than 12 million units in 2020, down from 17.1 million in 2019. That’s assuming stay-home orders begin to lift by around May and auto sales start to recover in the second half.
The question at this point is how long the recession lasts. “It all depends on the virus,” Smoke says. Zo Rahim, Cox’s manager of economic and industry insights, says retail sales in the last week of March were down 67% compared with a year earlier. The second quarter, Smoke says, will be even worse—”most likely historic.”
In that same scenario, U.S. used-vehicle sales, including dealer and private sales, are headed for fewer than 30 million in 2020, down from around 40 million in 2019, Smoke says. To put that in context, U.S. auto sales bottomed out in the Great Recession at 10.4 million, the lowest per-capita sales since World War II. Deliveries in 2010 were 11.6 million; in 2011, 12.8 million.
Meanwhile, for the month of March, the Manheim Used Vehicle Value Index was 141.9, or 4.4% higher than March 2019, the company says during the webinar. However, Manheim reports the usual seasonal “spring bounce” in used-vehicle values was cut short this year by a few weeks.