Coronavirus Crippled U.S. Auto Sales in 2020 But it Could Have Been Far Worse
Sales of new vehicles in the U.S. are expected to close this year down at least 15%, which would mark one of the industry’s worst annual declines since at least 1980. CNBC reports that in any normal year, such a rapid fall would have meant an industry in crisis. But in 2020, the overwhelming sentiment is “it could have been worse,” according to Nick Woolard, director of automaker analytics at TrueCar. During the depths of the first peak of Covid-19 in the spring, sales of new vehicles collapsed as auto plants shuttered and many dealers were forced to close showrooms. J.D. Power forecast retail sales would decline by as much as 80% in April, leading to likely near-recession sales levels for the year. But retail sales to consumers rebounded far faster than anyone forecast. Sales during the second quarter declined by about 34%. They were largely driven by low – even 0% – interest rates, historically long financing offers and people wanting to hit the open road instead of taking public transportation or airlines. Read more here (Source: CNBC).
Trump Takes Aim at COVID Stimulus Bill, Raising Specter of Veto
Politico reports that President Donald Trump on Tuesday blasted the $900 billion coronavirus relief package passed by Congress, calling it a “disgrace” and asking for amendments to the bill to increase stimulus payments to Americans. While Trump did not directly threaten to veto the bill, his message raised the possibility that he might do so. In a video tweeted by the president Tuesday evening, Trump delivered a four-minute speech listing his many grievances with the bill — which would send much-needed aid to Americans struggling amid the pandemic. Trump specifically criticized the relief package for including “wasteful spending” on issues unrelated to Covid-19, only providing $600 to individuals and families, and not giving enough emergency aid to small businesses. Read more here (Source: Politico).
Some Mexican Automakers Want More Time to Meet USMCA Rules, Official Says
Some Mexican automakers are asking for more time to meet stringent content rules set out in a new North American trade agreement, and Mexico is making progress on changes in labor standards under the deal, a top official said. According to Automotive News, the United States Mexico Canada Agreement, which took effect in July, replacing the 1994 North American Free Trade Agreement, includes tougher content rules for autos. For vehicles, USMCA requires 75 percent North American content compared with a 62.5 percent threshold under NAFTA, as well as 40-45 percent content from so-called "high wage" areas. USMCA includes a provision to give flexibility to carmakers in order to be able to comply with the deal according to their production and investment plans in North America, Mexican Deputy Economy Minister Luz Maria de la Mora said in an interview with Reuters on Monday evening. Read more here (Source: Automotive News).
Consumer Confidence Fell in December
The Wall Street Journal reports that U.S. consumers’ outlook on the economy darkened this month as coronavirus cases climbed nationwide and local governments imposed new restrictions, according to survey data released Tuesday. The Conference Board, a private research group, said its index of consumer confidence dropped to 88.6 in the first two weeks of December, from a revised 92.9 in November. “Consumers’ assessment of current conditions deteriorated sharply in December, as the resurgence of Covid-19 remains a drag on confidence,” said Lynn Franco, senior director of economic indicators at the Conference Board. In particular, respondents grew more pessimistic about the labor market, with the share of consumers saying jobs are “plentiful” falling to 21.8% this month from 26.3% in November. “Overall, it appears that growth has weakened further in [the fourth quarter], and consumers do not foresee the economy gaining any significant momentum in early 2021,” said Ms. Franco. Read more here (Source: The Wall Street Journal).
Consumers Warm to EVs – But Most Aren't Ready to Plug In Yet
The coming year will be a big one for EV enthusiasts with a flood of new products, such as the Ford Mustang Mach-E, GMC Hummer, and Volkswagen ID.4, charging into showrooms. The Detroit Bureau reports that although interest is clearly growing, a new Consumer Reports study finds that the vast majority of American motorists aren’t yet ready to plug in. On the positive side, fully 78% of the millennials surveyed by the influential magazine said they’re open to buying a battery-electric vehicle, plus seven in 10 U.S. motorists overall showing interest in the technology. But the active phrase is “at some point,” with only a minority among any age group ready to purchase a BEV the next time they’re in the market. A variety of obstacles remain in the way of broader acceptance of battery cars and trucks, the survey found. Top of the list, the magazine was told over and over, is a lack of public charging stations. A majority of those in all age groups are open to buying an EV “at some point.” Read more here (Source: The Detroit Bureau).
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