In the COVID-19 era, it can be tough to accurately predict what will happen next week, much less over the next six months.
Cases of the disease are rising in some heavily populated states, some businesses are having to close again, and there's talk of potentially more federal economic stimulus payments.
So what will U.S. auto sales look like in the rest of 2020, after falling 24 percent in the first half? Analysts are optimistic that demand won't dive the way it did in late March and early April but warn that the industry won't quickly return to what it looked like before anyone had heard of "social distancing."
"It isn't a rosy picture," said Michelle Krebs, executive analyst at Autotrader, which is forecasting U.S. new-vehicle sales of 12.9 million this year, a 25 percent drop from 2019. "Everything is about the virus. It has determined everything that's happened, and it will determine everything that will happen going forward."
Krebs said she expects fleet sales to continue to struggle in the back half of the year. On the retail side, she said consumers continue to delay purchases. While pickup sales are expected to remain robust, most other segments are struggling as joblessness remains high.
Vehicle inventories could remain a challenge, especially if virus flareups cause additional plant downtime. Because of fewer models on dealership lots, many automakers have pulled back on the big discounts they offered early in the crisis.
"For those thinking that the auto industry is down and they can find some killer deals, that's not the case anymore," Krebs said.
Jessica Caldwell, executive director of insights at Edmunds, said consumer demand could suffer if infections keep increasing and a significant amount of people don't get back to work.
"I'm not sure what a second wave would do to the American psyche," she said. "The longer a traumatic event goes, it usually affects consumers more."
On the other hand, she said a potential second round of stimulus checks could help spur sales, and that companies might be more prepared for whatever hits might come in the back half of the year.
"A second wave could play out a bit different than the first half of the year with some pros, but definitely some cons," she said.
Auto sales were stronger than expected in June, despite a reduction in incentive spending from April and May, said Tyson Jominy, vice president of data and analytics for J.D. Power. But that momentum is up against a resurgence of the coronavirus in Florida, Texas, California and other big vehicle markets.
"We are expecting a very strong retail environment in the second half of the year, all things equal. And there's a pretty big asterisk on that 'all things equal' right now," Jominy said. "Who knows where the virus is going to go from here? And as the loosening restrictions are put on hold and walked backwards, are we going to be back in tight lockdown situations again? There's a lot that remains to be seen. But if everything kind of holds with the virus and with our response, we should be looking at a stronger retail environment here in the second half."
