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November 17, 2020 03:51 PM

North American auto sales stabilize in wake of COVID-19

Erin Pustay Beaven
Rubber & Plastics News
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    Hyundai new car-main_i.jpg
    David Phillips, Automotive News
    New vehicle sales are returning to normal levels as the fallout from the COVID-19 pandemic stabilizes.

    In a year full of bad news, its months defined by uncertainty and disruption, Bernard Swiecki is seeing the silver linings.

    For the North American auto industry — and the U.S. in particular — things are looking up. The numbers, once incomprehensibly dire are more and more encouraging.

    "What we are really going for here is not necessarily a return to 2020 looking like 2019," Swiecki, director of the Automotive Communities Partnership at the Center for Automotive Research, said during a webinar CAR hosted Nov. 17. "It is really about one, being the best 2020 it can be; and two, now that we have had this pandemic twist thrown in, how much can we recover?"

    Light vehicle sales in the U.S. were close to 17.5 million units last year. Analysts expected 2020 to fall short of those numbers, long before the coronavirus pandemic took hold. Still, the impact of COVID-19 was drastic for the industry overall.

    In April, the seasonally adjusted annual rate for the U.S. dropped to 8.5 million vehicles before rebounding to about 14 million in July. By October, the SAAR hit 16.2 million and looks to be holding steady, if not increasing slightly, as the year comes to a close.

    "So far this year, we are down about 2.4 million units," Swiecki said.

    Some vehicle segments fared better than others. CUVs captured the largest market share this year, accounting for about 40 percent of overall sales. Pickups, meanwhile, account for 20 percent, while SUVs hold right around 8.5 percent of the market share.

    "(Seventy) percent of the market is trucks or truck-like," Swiecki said, "which is representative of a substantial shift in consumer preferences."

    Sales seemed to have rebounded, especially as production—which fell to nearly zero this spring—has returned to more normal levels, allowing dealers to keep up with demand across the most popular segments.

    Bernard Swiecki

    Overall, Swiecki said, it seems as if the pandemic delayed rather than curtailed the purchases of new vehicles in 2020. That's because those likely to purchase vehicles were able to maintain more stable finances during the pandemic. Many were able to transition to work-from-home models or they had enough savings to support them through a financial crunch.

    "This pandemic didn't really hit folks equally," Swiecki said. "Folks that really were the new car contenders weren't hit as hard. … They were spared the brunt of the impacts we saw in this pandemic. By now, those things have been sorted out."

    As a segment, sedans have been the hardest hit in 2020.

    For small cars, which hold about 9 percent of the market share in 2020, sales are down 34.3 percent compared to 2019. Mid-size and luxury cars account for about 8.5 percent and 3.6 percent of the 2020 market share, respectively, while overall sales for those segments are down about 22 percent and 26.7 percent from last year.

    It's tempting, Swiecki admitted, to declare the segment obsolete, but he contends that it plays a significant role for the North American industry.

    "Small cars remain that buffer between the used car universe and the new car universe," Swiecki said. "This is not a new subject. Earlier this year, I was going through some old work files and I found a column I had written, and this column was titled 'Is this the death of the sedan?' And I wrote that column back in 2006.

    "The news of the death of sedan has been with us for a very long time now, and yet they remain," Swiecki said. "They are going to decline, and they are still going to stick around."

    There are some auto makers who have mastered the art of manufacturing sedans with broad appeal, and it's likely that expertise will help the segment continue to thrive in its own way.

    "There are auto makers that are very, very good at small cars," Swiecki said. "Honda is a perfect example of an auto maker that knows how to make those vehicles work."

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