COVID-19 has hit the auto sector hard, with large manufacturers reporting second quarter vehicle sales down in the 30% range. Some dealer lots are nearly vacant of cars and trucks, as dealers advertise to buy second-hand vehicles for resale.
The consumer pullback is expected to have long-term implications for car ownership, according to recent survey data of consumers by Deloitte. Chipmakers that sell into auto supply companies and major automakers are also expecting declines in revenues.
“Companies up and down the value chain are feeling the pressure of supply and demand disruption, and public concern for health and financial well-being has slowed global economies,” Deloitte said in a new report, “How the pandemic is changing the future of automotive.”
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Auto makers “have to entice consumers back into the new vehicle market despite strong evidence to suggest that vehicle demand was already headed for a downturn,” Deloitte said. New vehicle sales in 2020 are expected to reach just 70 million globally, down by 18.5 million light vehicles from January estimates. That decline is roughly equal to light vehicle sales expected in the UK, US and Japan combined.
Survey data from Deloitte found that 37% of consumers are delaying large purchases such as vehicles. Nearly half (47%) of US consumers are planning to keep their current vehicle longer than expected. Deloitte called the findings “an obvious challenge for manufacturers looking to kick-start new vehicles and casts a shadow over expectations for the shape of the demand curve going forward.”
Deloitte added, “a growing affordability issue may cause consumers to stay out of the market longer than expected.” A full demand recovery may take years, the company said.
Deloitte’s findings are based on biweekly surveys of 1,000 consumers in each of a dozen countries.