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The viral impact (Part II of II)

Come mid-March the supply shortage will be felt, but as we stated earlier the epidemic has had little impact on car sales during February for example. Many analysts get paid handsomely to forecast sales figures in tough times like these. The latest figures for total U.S. new car sales in 2020 have been lowered to 16.6 million. For reference, last year approximately 17 million were moved. The problem for the U.S. however could be exacerbated for several reasons. First, if China is unable to get things under control the shortage in parts will invariably have a deleterious impact on U.S. production. Nearly every American plant relies one way or another on some Chinese parts. Second, parts that arrive from other trading partners could slow mainly because many of them depend on the Chinese for things like bolts, nuts and other parts.

On the buy side, American buyers will certainly be more cautious in terms of going out to buy at dealerships as the virus spreads and more and more quarantines are ordered. And finally, the stock market, the stock market, the stock market. It all comes back to the market and a plunging market could trigger a disastrous meltdown that would invariably restrain U.S. sales. One area that has already displayed a slowdown is fleet purchases by rental-car companies. The lag in travel is affecting demand for rentals and this will definitely get worse sooner than later.

Coronavirus is slowing in China. However, it is picking up around the world. At the time your loyal scribe is writing there are 122,399 total confirmed cases. 80,921 are concentrated in China with Italy coming in second, but a far second with 12,462. Roughly 4,552 deaths have been confirmed, but 66,687 have recovered. This last number does not get publicized all that much and is important to keep in mind.

Tough times for all, please stay safe, maintain a low profile and we’ll hopefully all make it through this.

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