By Desiree Homer
Easing back into the market may seem like the economic pace for automakers right now. But a recent Car Wars study is showing that most manufacturers have their eye on achieving record-breaking production numbers in the coming years. They have been aggressive, in recent years, about productivity and cranking out new vehicles in droves. Some analysts are wondering if this strategy, based on the numbers in this newly released study, will help pull the market out of pandemic conditions, or will the economic effects of COVID-19 hinder results?
The Car Wars Study by the Numbers
Senior auto division analyst with Bank of America Merrill Lynch, John Murphy, says, based on the numbers in the Car Wars study, automakers are expected to launch around 250 new model vehicles by 2024. Just to compare, this breaks down to an average of 63 new vehicles annually, a significant jump from the 40 per year average over the last two years. Of those predicted new vehicle launches, data indicates that nearly half will be crossovers, and roughly 28% will represent SUVs and pickups. For 2020, automakers are on pace to introduce 43 new models. But the models suggest they shouldn’t expect to see the new vehicle profits they typically do.
The Pandemic Effect on Production Objectives
In the more immediate future, John Murphy says dealers can expect the pandemic to obviously, hinder sales. Bank of America is forecasting sales to plunge near 25%, to about 12.7 million vehicles. However, a full recovery is on the horizon according to the numbers too. Sales should be back to 14.5 million, come 2021. Usually, new model introductions help automakers increase their market share. This year may be a bust for most due to COVID-19, but companies like Honda, Hyundai, Kia, and Ford are primed and ready for strategic positioning over the next few years’ worth of placement rates.
How Aggressive Production Affects Dealers
Dealers can take solace in knowing their brands have aggressive projections over the next few years. It’s those new model introductions that can serve as a lifeline for the retailers. While snail’s pace and tanked first-quarter numbers sound grim, the influx of new inventory selection that’s slated for future release can serve as a beacon of hope. Sales and economic recovery are real, and this recent Car Wars study shows just how revved the manufacturers are to get back to profits.
In a recent Dealer News Today podcast episode, Dave Cantin talks with Todd Skelton, CEO of Prime Auto Group. Skelton discusses how half of his 56 dealerships were closed, as others were attempting to reopen across various regions. And to navigate those uncertain times, he relied on data to drive his leadership initiatives and operational decisions. This Car Wars study is offering some inspiring predictions that dealer owners can leverage in their efforts to be data-driven leaders, like Todd Skelton. And it makes surviving this year’s pandemic slump of new sales and inventory that much more bearable in knowing that the next few years are predicted to be ripe with new models, and healthier profit margins.