It’s tough to be a restaurant owner in a state under lockdown, and apparently it’s also difficult to be a car dealer. But there’s one big difference. Car dealers hold hundreds of thousands, and even millions, of dollars in inventory, which makes any drop in sales painful.
According to an analysis by research firm J.D. Power based on data from dealership stores around the country, dealers under shelter-in-place orders reported a 40% drop in sales, and nationally car sales fell 22%. Some analysts expect the decline to reach 80% before this is over.
Tyson Jominy, vice president of data and analytics for J.D. Power, said:
“We expect to see a much broader and wider impact from these restrictions next week with sales declining 80% or more.”
Thomas King, J.D. Power’s president of data and analytics, said car buyers will likely bounce back after an extended shutdown, which will help the auto industry recover.
That would likely depend on the change in unemployment. Dealers have been courting sub-prime borrowers in recent years to bump sales. Those buyers are more likely to be in jobs affected by the shelter-in-place rules, and probably won’t be rushing out to replace their wheels anytime soon.