In around 10 minutes CarGurus Director of Economic and Industry Analysis George Augustaitis discusses what’s going on in the new vehicle market. Watch this video to learn:
- How new vehicles in different price buckets are recovering
- Where shoppers who’ve left the new vehicle market are going
- What you can do to adapt to today’s unique selling environment
Automotive sales, both used and new, typically follow a seasonal sales pattern. The first sales spike of the year occurs in March and is fueled by a combination of factors, including economic tailwinds (tax refunds and annual bonus payments) and increased OEM spend on incentives as brands close the fiscal year or react to the competition. CarGurus US used lead submission data has always followed a similar seasonality path.
However, it should come as no surprise that COVID-19 has completely changed seasonality in the markets. This year, lead submissions fell off a cliff at the end of March, with nearly every state hitting a low between March 27 and April 11. During that time period, jobless claims climbed to all-time highs, consumer sentiment fell 17.3 points to 71.8, and other economic indicators saw major disruption. Additionally, companies completed first rounds of layoffs, and businesses like dealerships shut down in many places due to state restrictions. All of this uncertainty and turmoil, plus the risk of contracting the virus, contributed to the steep decline in leads and sales.
But it’s not all doom and gloom. The data shows that most states rebounded quickly after reaching their trough with lead submissions beginning to recover mid-April and continuing until the middle of June. However, state-by-state recovery has been as unique as each state’s handling of COVID-19.
As a follow-up to the Consumer Sentiment Study we presented in April, CarGurus surveyed an additional 779 shoppers in June to see how their feelings toward car shopping have changed during the pandemic. Overall, the study shows that despite lingering near-term delays in car purchases, most sales are not expected to be lost in the long term. Here are the key takeaways for dealers – or you can read the full report here.
Historically, consumers have turned to the used vehicle market during recessionary times as an alternative to a new vehicle purchase. That’s because used cars tend to be more affordable, allowing consumers to avoid the burden of a high monthly payment when money might be tight.
But there’s another factor driving the current shift to the used vehicle market—in particular, Certified Pre-Owned vehicles (CPOs)—and that’s low days’ supply of new inventory. The shortage of new vehicles is a result of plants remaining closed, and it’s making it difficult for consumers to find the specific new cars they want. While new and used vehicle sales posted double-digit losses in June, CPO sales posted an increase of 8.5% as compared to June 2019.
Since the last week of March, most people in America (if not the world) have seen their life change in some way, shape, or form because of COVID. One such change has been consumer’s driving habits. For many, the daily commute has been eliminated along with frequent trips to the store, gym, school, childcare facility, etc. While many, if not most, will eventually return to their previous driving habits, the current decrease in driving and increase in staying home has the potential to impact shopping activity. In particular, I wondered about how such a significant shift in consumer behavior might be influencing shoppers’ search behavior for vehicles.
To answer this question, I looked at new vehicle search volume on CarGurus for the first half of 2020 and compared it to the search volume we saw for the same criteria in 2019.
Heading into the third quarter of the year, there are still questions about what recovery will look like for the automotive industry. In two recent Auto News articles, George Augustaitis, CarGurus’ Director of Industry and Economic Analysis, shared his analysis and insights into what he expects to see in the coming months. Check out the full articles below:
In the US, the automotive market’s recovery from COVID-19 will be as unique as the recession it spurred—and it will vary by state. The main reason for this is that consumer demand is highly affected by the increase or decline of COVID-19 cases in a particular state. Areas where the wave of infections came early saw a steep pullback in leads in late March and early April but have since started to recover. In contrast, states where cases of the virus are just now peaking are seeing leads decline rapidly and are at, if not below, early-February levels.
In this article, I’ll look specifically at two states, New York and Texas, and how COVID-19 has impacted each market.
CarGurus Director of Automotive Industry and Economic Analysis George Augustaitis recently joined Joe Overby of Auto Remarketing to discuss how the automotive and economic impact of COVID-19 is unlike any other crisis. In the podcast, they also delve into topics including:
- The ups and downs around supply and demand in the used-car market
- Auction trends and vehicle pricing
- How recovery varies across different vehicle age groups
As dealerships were forced to shut down their showrooms, auction lanes closed, jobless claims peaked, and car sales fell off a cliff in April, the industry was laser-focused on consumer demand. Fortunately, May brought incentives, stimulus checks, and pent-up demand, which drove consumers back to dealership lots. However, because inventory has not been replenished, the industry’s problem has shifted from demand to supply.
The COVID-19 pandemic has had a sweeping impact on the economy. Almost overnight, it brought businesses across the country to a near halt, resulting in a record number of jobless claims and a recession unlike any other.
In this presentation, I’ll take a look at many of the unique factors—decreased consumer confidence, supply chain disruption, and increasing pent-up demand—that continue to make this COVID-19-driven economic downturn so unique. I’ll also cover how the recession continues to evolve and what it means for the auto industry.