Consumers’ newly formed purchase patterns and priorities are the results of the pandemic. As a result, the automotive industry has been working very hard to adjust to this new reality. Automakers faced dropping car sales earlier this year.
This is due to the fact many people are working from home. Many face financial uncertainty. They are driving much less for leisure activities earlier this year. The auto industry is now preparing for a robust recovery. Many analysts are predicting an upbeat Q4 as lockdown restrictions ease and consumers eye on new car purchases.
“September sales got a boost in part by the Labor Day holiday weekend. Many dealerships offered discounts to lure customers, but the overall performance points to the strong underlying demand for new vehicles,” said Thomas King, J.D. Power’s President of Data and Analytics.
With the start of the COVID-19 pandemic, new car purchases dropped dramatically 50% year over the year (YOY). According to Experian’s recent Q2 2020 State of the Automotive Finance Market report, until June new car sales began to slowly balance out. They show just a 10% drop in sales. Entering into Q3, as showrooms opened and shoppers became more lenient with their spending habits.
Then automakers began experiencing heightened sales. Experian’s report highlights positive trends throughout the auto industry. These state that consumers now view cars as “safe spaces.” In turn, compared to the purchase of new vehicles to travel alternatives such as public transportation, flying, or services like Uber and Lyft.
According to Elaine Buckberg, GM’s Chief Economist, “The pandemic has also created savings from foregone vacations, entertainment and restaurant meals that some buyers are applying to new car purchases. And some city residents have increased interest in owning a vehicle as some seek to move to the suburbs and others want to escape the city on weekends.”