By Desiree Homer
And Warn of Troubled Waters Ahead, Despite Reopening Efforts
It can be frustrating to routinely see data that reflects conflicting car-buying trends. Dealers everywhere are trying to grasp some idea of what to expect in the coming months. Mario Murgado, auto industry powerhouse and 40-year veteran, says, “you only think you know what’s going to happen next,” in a recent Dealer News Today podcast. So, when Edmunds says there could be troubled waters ahead and reports a drop in new vehicle sales for June, it’s clear that Murgado is right.
The Recent Edmunds New Vehicle Sales Prediction
As the June numbers roll in, Edmunds is showing a second down quarter for the year. The analysts are more specifically forecasting that sales of new vehicles will only reach 2,914,860, which is a 34.3% deficit from 2Q last year. The SAAR (seasonally adjusted annual rate) is expected to hit 12.8 million. This figure is up 3.6% from this May’s SAAR, but down 28.7% from last June. No one is surprised at some declines. After all, a majority of the industry was shut down, including the production lines. Despite the data showing a slow and steady growth, analysts are warning that the auto industry has experienced only some of the effects of the pandemic. More industry strains, in various stages, will begin to surface as consumers make their way back to the market. It can be easy to subscribe to optimism with increasing new vehicle sales right now. But incentives are less attractive, consumers are still struggling with unemployment and financial security, and there’s a chance COVID-19 isn’t done doing damage yet.
It’s Not All Bad
Jessica Caldwell, the executive director of Edmunds insights, says the “incredibly responsive and resourceful nature of the industry,” along with the strength of retail sales versus fleet sales, “speaks volumes.” Other analysts are also suggesting that while things are dismal, the current data is proving to be less damaging than what everyone originally predicted. Keep in mind too, different markets and regions of the country will respond at different paces. Most of the data coming from the analysts is designed to reflect the industry as a whole.
Why Following the Data Still Matters
As a dealer owner, you know the best leadership decisions are often rooted in reliable data. Keeping in tune with predictions and analyst suggestions can help you stay aware of potential pitfalls and build on emerging trends. It’s often helpful to see what other dealers have done or are doing, as well. Alternatively, processing the data means being objective and mindful of the lens through which you’re looking. A prediction of lackluster sales shouldn’t prompt you to throw in the towel or batten the hatches. Instead, heed the cautions of the experts and prepare for dynamic shifts that may arise. Forge ahead with your operational best practices and focus on the nuances of your market. Preparing for the worst and leading with your best will depend on the data, and will keep your operations sharp, both offensively and defensively.
The key takeaway with this recent Edmunds prediction is recognizing that while some of the numbers are climbing, dealers are charging ahead with reopening strategies, and markets are reopening; it’s not time to let down your guard. There could be rough waters around the corner. And the numbers serve as a cautious reminder that we’re not out of the woods yet.