The American automotive industry is reeling from the coronavirus pandemic. As the industry and its consumers try to get their bearings, they"re forced to navigate additional political and social circumstances.
"We had been seeing improving customer sentiment until we got to Memorial Day weekend," Smoke said.
That was when COVID-19 cases began rising again in the U.S., and it marked the start of countrywide protests following the death of George Floyd.
Unfortunately, Smoke said, the road ahead doesn"t seem any less challenging.
"Americans are really challenged by the situation with schools [reopening] and that is influencing attitudes about the fall," Smoke said. "Plus, we are 13 weeks away from the most polarized presidential election that most of us have experienced in our lifetimes."
All of that will weigh heavily on the already slumping market. According to the forecasts presented by Smoke, Schuster and Wall, light vehicles sales this year should fall somewhere between 13 million and 14 million, well below the 17 million mark the industry hit last year. And it could be 2025 before sales hit that mark again, according to Schuster.
That slowing of auto sales — and, for that matter, production — also means that many automakers are delaying or even canceling the launch of new vehicles.
Coming into 2020, IHS Markit anticipated 350 new vehicle launches. By August, automakers had hit the brakes on dozens of those, Wall said, noting that he now expects about 295.
"This is something that transcends any one region, any one market," Wall said of the global pandemic and its far-reaching impacts. "This is something we will be wrestling with as an entire industry."
In evaluating the data of auto sales, Smoke noticed something else about the pandemic and its refusal to leave any part of the auto industry untouched.
When the coronavirus first took hold, pickup sales remained fairly strong, a bright spot in an otherwise dismal few weeks for the industry in March and April. Smoke attributes this to the virus hot spots.
"Because vehicles are not consistent in the way they are sold around the country, we could really see some differences," Smoke said.
Initially, COVID-19 flared up in regions that aren"t reliable on pickup sales but perform strongly for other vehicle types. That"s changed. Today, the Midwest and South — regions where pickup sales are strong — are battling coronavirus outbreaks of their own. So pickup sales are slipping some, while sales of other vehicles are picking up in regions that have seen COVID-19 recovery.
"If you drilled into the data, what you would see was that we had markets at various stages of recovery," Smoke said. "And so, at first, we only had a handful of markets recovering. Then, by June, that was really when we hit the best performance we have had all year from a market perspective."
June and July were particularly strong, Smoke said, because Americans were able to better gauge their financial situations. He also thinks the two-month period indicated a delay in new vehicle purchases. In a typical year, April and May are strong months for auto sales, but in 2020, many dealers closed their doors.
"July did end up delivering improvement in both new and used [vehicles] as we estimate them — over the month of June," Smoke said. "But I really think what we achieved in July will be difficult to maintain."
The government response to the pandemic also played a key role in reviving sales of vehicles. Further, it will be integral for sustaining new and used car sales moving forward. Smoke pointed to the initial stimulus package as proof. The used vehicle market, he said, began recovering almost exactly the same week that stimulus checks hit bank accounts.
That makes a second round of stimulus important for an industry rebound, the experts said, but it also depends on how its handled. For instance, a Cash for Clunkers type of stimulus might not be as beneficial for the industry this time around.