The coronavirus pandemic has been detrimental to various industries across the country, especially US automakers. As second quarter financial data comes pouring in, it appears that vehicle sales in the US fell by over 30%, as many consumers opted out of buying new cars, while factories and dealerships had to shut their doors in order to mitigate the spread of the deadly virus.
According to Edmunds and ALG, new vehicle sales in the country were expected to decline by approximately 34% by the second quarter, with 2020 being the worst year for automakers in wake of the coronavirus pandemic. Fiat Chrysler reported a 38.6% year-over-year reduction in sales, while Toyota saw a 34.5% decline, followed by a 34% decrease in sales for General Motors in the second quarter. In the meantime, Fiat Chrysler saw its shares fall by over 3% on Wednesday, while Toyota’s stock fell by almost 1%.
The decline in auto sales can also be attributed to a reduction in the demand for fleet cars. As many car rental companies are succumbing to the pressure imposed by travel restrictions, new fleet orders are expected to fall by approximately 56% in June, according to Cox Automotive. Then as outdated fleet is sent to the used car market, even further pressure is applied to the auto industry as a whole, causing a further reduction in vehicle prices. In 2019, fleet sales accounted for approximately 22% of total vehicle sales for General Motors.
Information for this briefing was found via CNBC, Wards Auto, and Cox Automotive. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.