Pandemic’s Impact on U.S. Car Sales Won’t Be Small: Morgan Stanley

This won’t be the last prediction you read that erases millions from the United States’ 2020 new vehicle sales tally.

Morgan Stanley now says the rapidly growing COVID-19 pandemic (the World Health Organization declared it one midday Wednesday) will send auto sales tumbling at a far steeper rate than initially forecasted. At the beginning of the year, of course, no one had heard of this illness.

As reported by Reuters, Morgan Stanley analyst Adam Jonas wrote in an investor note that the industry will close out the year with sales down 9 percent. That’s about 15.5 million units sold, versus the nearly 17.1 million new vehicles purchased in 2019.

Before the coronavirus outbreak hit China, and subsequently the world, the National Automobile Dealers Association predicted that this year’s U.S. sales would come in around 16.8 million. A modest cooling trend had been on the radar for years; this pandemic, however, came out of left field.

After bouncing around after reaching a record high of 17.55 million in 2016, U.S. auto sales fell roughly 1.6 percent, year over year, in 2019, but stayed north of 17 million — a somewhat unexpected result. While this year was expected to come in below 17 million, no one was expecting a figure below 16 million. Yet the quarantine and “social distancing” measures coming into effect right now all but guarantee a period of significantly depressed auto sales in most regions. How long those periods will last, and how long the pandemic will last, remains uncertain.

Unpredictability abounds. However, in 2021, Jonas wrote, the industry should recover somewhat to about 16 million units.

first published by TTAC