2020 Sales Expectations: Not Bad. But Not Good.

12,386,000. That’s the number of new vehicles that J.D. Power and LMC Automotive estimate will be sold in the U.S. in 2020.

All in, this is a decline of 9.5% compared with 2019 sales.

Given COVID-19, surprisingly good.

What’s more, the average transaction price—that is, the price that people actually pay, taking cash back, incentives and other means to persuade people to buy—is expected to be $38,077, up 9% from 2019.

According to the researchers, because of the higher transaction prices, the vehicle manufacturers are not going to take quite as big a hit as the 9.5% decline in sales might lead one to expect: It is estimated that the total value of new vehicles purchased will be off just 4%.

December sales provide a bit of a boost because this is when luxury sales tend to make an upswing.

And for this particular December, J.D. Power and LMC calculate that trucks and SUVs—which generally have a higher sticker price than sedans—will account for 79% of all retail sales, up 4% from December 2019.

But here’s a question: is this a sustainable situation given the number of people in the U.S. who are currently unemployed?

According to the most recent figures from the Bureau of Labor Statistics:

“Among the unemployed, the number of persons on temporary layoff decreased by 441,000 in November to 2.8 million. This measure is down considerably from the high of 18.1 million in April”—good—“but is 2.0 million higher than its February level.” Not good.

“The number of permanent job losers, at 3.7 million, was about unchanged in November but is 2.5 million higher than in February.” Think of this: those people aren’t getting their jobs back.

“In November, the number of persons who usually work full time rose by 752,000 to 124.3 million”—good—“while the number of persons who usually work part time decreased by 779,000 to 25.4 million.” Not good.

Given the number of unemployed people, is it not likely that there were some people who, after the lockdowns were lifted, went out and bought a new pickup because they figured that they might as well?

While sales in 2021 will undoubtedly be better than 2020 (yes, a not particularly high bar), one wonders: How many people are going to find that their vehicle payments and their income just aren’t getting along very well?

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