COVID-19 and 2008 Recession

During the 2007 to 2009 recession, the retail auto sales sector was one of the most severely impacted market segments. New vehicle sales fell as much as 40 percent, leading to unemployment for many workers in the industry and bankruptcy for many dealers.

How does that compare to the situation we currently find our economy to be in? As of March 2020, vehicle sales had declined 35 percent and struggled to reach the target for projected annual sales of 14.8 million. Of the few automakers still reporting monthly sales numbers, Hyundai motors, Mazda North America and Subaru of America each stated their sales in April were down lower than 38 percent of what they were at that time last year in 2019.Chart as of May 1st, 2020 https://www.goodcarbadcar.net/2020-us-vehicle-sales-figures-by-brand/

Many dealerships that had to close showrooms because of COVID-19 have responded by implementing stronger online sales tactics. Increased marketing of online sales and ‘contactless deliveries’ may help dealerships continue to attract consumers and stay afloat in the market. Companies such as Tesla and Kia have been regularly selling vehicles online since 2017. Their results show that consumers are willing to buy vehicles costing $75,000 and more without any previous experience driving them. If every brand can introduce reliable online sales and delivery systems, the future of sales may drastically change in the direction of electronic purchases as a result of the COVID-19 pandemic.

Analysts are predicting sales declining an additional 15 percent by the end of the year if state-mandated business closures continue. If we were to follow the trend that was displayed in 2008, it would take 18 months for this current recession to disappear and auto sales to return to what they were before the decline. However, we still do not know exactly when our economy will reopen. There is a possibility that this car sales slump may last even longer.