By Desiree Homer
A Look Beyond Today, to the Rush of Car Buyers to Come
Many of the experts, leading automotive dealer executives, and consumer groups are speculating that once the quarantine restrictions are lifted for business, the flood gates of consumer spending will be open. Of course, no one can truly predict with any real certainty how long it will take to get to the other side of the pandemic mitigation efforts. Nor do the experts have a crystal ball to determine what kind of economic condition car buyers will be in once shelter in place recommendations are lifted. However, it’s clear there will be a surge to spend, travel, visit, and explore. And dealers should be ready.
What the Experts Are Predicting
Online shopping activity is keeping the economy alive, as many consumers are forced to forgo traditional retail spending. Much of the data being collected now, is giving the auto industry hope of the bounce back to come. Jonathan Smoke, chief economist with Cox Automotive, said earlier this week that they’re seeing “plenty of demand” for when business operations return to normal. While retail sales traffic is down, it’s not non-existent. Smoke suggests there are still consumers engaging for both used and new vehicles. An automotive marketing tech company, LotLinx, says its data regarding the consumer buying process, is also showing strong signs of interest in buying cars. CEO of LotLinx, Len Short, says the shelter in place orders are keeping many of the “low-funnel prospective buyers from completing purchases.”
Financial Assistance May Make the Difference
Sure, plenty of consumers will have amassed bills and will have been unable to work to earn money to pay those bills. However, with the robust financial assistance available now, and retroactive to make those individuals whole, there will be spendable cash. Unemployment rates right now are at a record high, but many are seeing increased payment amounts. Paycheck Protection Program loans for businesses are allowing furloughed workers to continue to collect benefits and paychecks. Add in the federal stimulus relief checks and any tax returns for those filing, many households will emerge from quarantine in a position to spend.
Predicting a Buyer’s Market
Jessica Caldwell, the Insights executive director for Edmunds, suggests it may be a strong buyer’s market for the “foreseeable future.” Plants are stalled, so inventory isn’t piling up. However, once the shopping restrictions are lifted, automakers will be eager to make up for lost volume. As previously reported, many of the car makers have already put strong buying incentives in place, including zero-interest loans, payment deferment options, and rebates. Many may offer additional incentives, once the public is free to return to normal life. Not all consumers will come through this pandemic without financial hardships. Automakers will more than likely keep buying incentives aggressive as a result. In more recent news, Ford is asking Washington for a return of a ‘Cash for Clunkers’ related incentive program. While only in talks now, a rebate platform like this could be a game-changer. Tune in to a podcast conversation, with CEO of Ganley Auto and Dave Cantin, about the potential comeback of this once popular incentive.
It’s hard to tell when the foot traffic will be allowed back in the showrooms. But it’s encouraging to know that the experts are seeing the consumer, car-buying pulse as strong. Once the stay-at-home orders are lifted, consumers will be itching to get out again. And many of them will be ready to buy new vehicles.