For a deeper dive into the current state of the economy, it’s important to look beyond traditional economic and automotive data and look more generally at consumer behavior. In around eight minutes, I’ll walk you through the importance of a variety of indicators I’m keeping a pulse on, including:
- Gross movie sales
- OpenTable seated diners data
- Hotel occupancy rates
- TSA checkpoint data
- Gasoline consumption
- Public transportation turnstile entries
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.
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.