Amid the chaos and uncertainty that the COVID-19 pandemic has brought with its shutdowns and slowdowns and economic shakeups, there is a bright light on the horizon.
Jeff Schuster, LMC Automotive's president of Americas operation and global vehicle forecasting, is confident that light is more than a glimmer of hope. He sees it as a sign that the auto industry's recovery is coming quickly.
"We took a pretty deep decline this year, but I think the good news is the market is exceeding, and continues to exceed, expectations," Schuster said during a keynote presentation that kicked off the final week of the International Tire Exhibition & Conference. "There are still headwinds ahead of us, a lot of uncertainty ahead of us, but I think we are in a much better place than where we were expected to be if we just go back to the April-May time frame from where we are today."
ITEC 2020, organized by Rubber & Plastics News and held as a virtual event due to the pandemic, runs through Sept. 18. Registration for the program, which examines the latest trends and developments in the tire industry, remains open at itec-tireshow.com.
One sure sign that the auto market is recovering, and doing so quickly, is the fact that production has only slightly outpaced demand.
"Everything that has been coming back into the dealers from the plants in May has essentially gone out," Schuster said.
"Frankly, I'm wondering where these sales are coming from. In many cases, there is just not a lot of inventory out there, especially on the truck side of the market. I know from a personal standpoint, just talking to friends and neighbors, that many of them are still sitting on leased vehicles that are running month-to-month and have been extended because they just can't find a replacement vehicle."
In the U.S., especially, consumers have made moves to protect their investments and keep their payments low. Schuster noted that leasing has increased along with the number of long-term loans — those at least 72 months in length.
These sales and leasing figures are coming even as incentives continue to drop. At this point, automakers don't need to use them, Schuster said, noting that the average vehicle transaction price is at about $35,500.
"The market has not been able to get that inventory back to any normal type of level since that pullback in production back in April," Schuster said. "It is something the industry is going to be fighting for."