Call Us Now 1-480-470-1818

How COVID-19 will Impact US Automobile Sales

We are in uncharted waters as the COVID-19 pandemic is disrupting virtually every aspect of our lives. People of all ages will remember this period, much as people think back upon 9-11, the Kennedy assassinations, and previous generations remember Pearl Harbor. There is an uneasy feeling pervading the people of the United States and the world.

Our Federal, State, and Local Governments and representatives of both political parties are cooperating to a degree that seemed unimaginable just a few short weeks, perhaps only days ago. Their earlier recommendations have now morphed into declarations closing restaurants, bars, gyms, and all non-essential businesses. Our borders, both North and South, are currently closed except for essential commerce. California and New York residents have been advised to hunker down in their homes and to only venture out for crucial goods and services.

Many, in fact, most industries will suffer. The President and Congress are passing emergency legislation to support these businesses and their workers. The travel, hospitality, and restaurant companies are bearing the brunt of this downturn first. Others will surely follow, including the automotive industry.

COVID-19 and the Auto Industry

In China, auto sales declined by 80% in February as the pandemic ravaged the country. Prospects in the U.S. and globally are equally dismal. All three major U.S. automakers announced a total shutdown of operations in their manufacturing facilities. European automakers took similar action the week prior. These closures are in response to concerns for employee’s health, declining demand, and significant disruptions to supply chains. About 30,000 parts are required to build a modern automobile. If just 1% of those parts, even only one crucial component is unavailable, production cannot proceed.

Factors Impacting Demand for New Cars

The financial markets have been devastated. Experts tell us as much as $9 trillion of wealth has been lost, further eroding consumer confidence. When combined with layoffs and furloughs and lost paychecks in so many households, the impact on demand will be significant.

For those needing to buy a car, there is the concern of interacting with other human beings at the dealership. Social distancing will make transactions even more stilted and uncomfortable than usual. And, does anyone on either side of the deal want to do a test ride with a stranger, or sit in a cramped Finance person’s office? And why are the offices for the Finance department always so small?

How Automakers are Responding

Thanks to Carvana, Vroom®, CarGurus®, and CarMax®, people are becoming more comfortable with shopping for and buying a car online. In response to COVID-19 traditional dealers are adapting. While writing this article, I received the below email from my local BMW Dealer:

Many of these options are standard; however, there are some specific new features such as virtual test drives, delivery to your door, and deferred payments for 90 days. As the ad says, everything you need is online. Another automaker is offering 0% financing for 72 months and no payments for 120 days.

We anticipate further, possibly even more attractive incentives from car brands as the pandemic lingers.

Windshield Replacement Services in Phoenix, Arizona

The service departments at most major dealerships remain open in Phoenix, AZ like other states across our nation. Auto repairs are essential. Some dealers are offering to pick up your vehicle at your home, perform the necessary repairs at their shop, and return the car to your home. There’s no need to venture out or interact with others.

Should you fall victim to one of Arizona’s most common needs for auto repair work, a cracked or shattered windshield, we at Auto Glass Medix Windshield Replacement Phoenix AZ  are here to assist. We are Phoenix’s Windshield Replacement solution, offering Mobile Auto Glass Repair. We provide same-day mobile windshield replacement, at your location, with virtually no human interaction. We service auto glass customers all of the Phoenix metropolitan area and other major Arizona cities.

In Summary – Auto Sales will Recover

The American people are responding to this pandemic as we always do in times of crisis, we pull together, buckle down, and persevere. We will exit this uncertain time stronger and more resolved than ever. Hopefully, our leaders and we will learn valuable lessons to be applied in the future.

The NFL, NBA, NCAA, and Major League Baseball will return, although it’s uncertain when. And, eventually, you’ll be able to work out in your gym, dine at your favorite restaurant, and imbibe at your local pub. Things will return to pre B.C. (before coronavirus) levels.

Most people buy new cars out of necessity, which won’t go away because of this virus. Auto sales will recover later this year. Consider this period as a delaying action, not a cancellation of intent to purchase.