ALG Provides Updated 2020 New Vehicle Sales Forecast Based on Projected Short-Term and Long-Term Impact of COVID-19
ALG projects that in a quick recovery scenario, where the economy and auto industry recover by the end of
In a scenario where COVID-19 is prolonged with a longer-term economic slowdown, ALG forecasts that new light vehicles sales will reach 14.5 million, down -2.4 million or -14.2% from ALG’s initial 2020 forecast and down -14.9% from 2019 sales.
“In the rapidly moving, highly volatile global economic environment caused by the COVID-19 pandemic, we believe it’s prudent to provide a revised range of auto industry projections to new vehicle sales for 2020. The range is based on various scenarios provided by expert third party forecasts of macro-economic impacts from the Coronavirus outbreak,” said
ALG is also reducing residual values in its latest Residual Value Book. This update is based off current third-party economic outlooks in COVID-19 impact and other key factors such as the stock market declines and drops in oil futures.
“Short term market volatility does not necessarily translate into long term changes,” said
- Key impacts of residual value reductions are COVID-19, stock market performance, and drops in oil futures
- COVID-19 will have impacts on both vehicle inventory availability and consumer confidence, affecting supply and demand.
- COVID-19 will have immediate short term impacts due to reduced income and reduced commerce in general.
- In the extreme case, COVID-19 could also halt sales in the short term if auction houses and transportation companies have temporary shutdowns, but this is not reflected in the current ALG longer term outlooks.
- Long term, COVID-19 and poor quarterly results will most likely result in higher unemployment rates through 2020 and into 2021. Prolonged bear markets generally lead to more layoffs.
- Low oil prices have traditionally been good for the economy, but increases in domestic oil production and extremely low prices are detrimental to the US economy in the short term.
- Government intervention strategies and election results will impact the US economy throughout 2020 regardless of how quickly COVID-19 recedes.
- Change in Percent of MSRP
- The impact varies by segment and term of the forecast. As probability increases, the impacts are greater in the shorter term with positive recovery forecasted for the long-term.
ALG will update its forecasts in response to major new developments.
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TrueCarand ALG PR Contact: Shadee Malekafzalishadee@truecar.com 424.258.8694
Source: TrueCar, Inc.