Mike Furman and the “hotter than a pistol” mid-engine C8 Corvette.
Criswell ChevroletAuto sales may be poised for a significant rebound, as pent-up demand and some of the realities of Covid-19 are putting Americans in a buying mood. These days, many car sales are taking place online—without the buyer ever visiting a showroom—and there’s evidence that the trend may continue even after the pandemic abates.
Alex Vetter is CEO of Cars.com, which is tracking online auto sales and interest, including at the high end of the market. “In the last seven days, luxury searches on our site are up 25%,” Vetter tells Penta. “The bounce is becoming very apparent.”
Vetter said that in normal times, the bulk of car shoppers are looking for a purchase under $20,000, but in the past month the searches for cars over $30,000 has nearly doubled—from 11% to 20% of total site users.
The Cars.com data also shows evidence that because of the necessary proximity to drivers and other people, some buyers aren’t currently comfortable with ride sharing and hailing, or mass transit. “These trends may be durable post-pandemic,” Vetter says. “We’re seeing that 20% of the people who don’t own a car are now considering buying one.”
A Toyota getting a full disinfection at DCH Toyota in Torrance, Calif.
DCH Toyota of TorranceAnother interesting fact from Cars.com research: “Nearly 60% of parents and 45% of non-parents have resurrected the leisurely Sunday drive as an activity to get out of the house.” This also reinforces the notion that people are viewing their cars as sanctuaries safe from infection.
Many luxury dealerships now have shuttered showrooms, but open-for-business service departments are classified as essential. A sampling of such dealers contacted around the country declined to comment on their current arrangements.
Queens, New York-based Paragon Honda and Acura, in the most hard-hit part of the country, has definitely lost business due to the coronavirus. Service is off 30% and sales 60% since the pandemic, Brian Benstock, general manager and vice president, told Penta.
But Paragon has been innovative in keeping both these parts of its business afloat. “Since the pandemic started, we’ve sold 200 cars without customers ever coming to our store,” Benstock said. Servicing mostly involves pickup and delivery to destinations such as parking garages, and appointments can be scheduled using cell phone voice commands. Paragon’s waiting rooms are closed.
Benstock confirms that his customers are expressing reluctance to ride the subways or use services like Uber and Lyft.
Meanwhile, when a car model excites the public—and has been long anticipated—even a pandemic doesn’t appear to dent sales. Mike Furman, national Corvette specialist at Criswell Chevrolet in Gaithersburg, Md., said he sold 45 of the new $59,995mid-engine C8 Corvettes in March, many to out-of-state customers. “The car is hot as a pistol,” he said. “I’m signing deals for three to four cars per day.”
Furman, who has personally owned 21 Corvettes, said that the brand’s enthusiasts have long been waiting for the first mid-engine model, and now that it’s here, there’s no stopping them. “The car is the star,” he said. “Corvette people have been dreaming and hoping for this forever.”
The trend toward pickup and delivery for servicing (often with loaner cars), pioneered by Tesla, was apparent long before Covid-19. The antipathy of consumers to service department waiting rooms was already well-known. Motorists fear they’ll be “upsold”—pressured into buying a part or service they don’t need—and get bored sitting in uncomfortable chairs reading dog-eared copies of Car and Driver.
There’s no question that consumers are getting very interested in buying cars again. A new COVID-19 report from the digital automotive strategists at PureCars.com, released April 22, found that, while the market remains volatile day to day, “new car shoppers are not only (re)engaging with dealership websites, but performing actions indicative of buyer stage and not just researchers and browsers.”
Week-over-week engagement among shoppers for imports and brands currently lacking aggressive incentives is moving upward for the first time since mid-March, the company’s data shows. States that have been in lockdown for more than 30 days are showing the strongest increases in new car sales.
The year started out strong for national auto sales in January and February, then took a dive in March as home sheltering began. Will pent-up demand end up erasing the sales losses incurred during the lockdown? Nobody’s predicting a total recovery of that magnitude. “We’re seeing a strong acceleration of demand, but it’s hard to say where we’ll be on a full-year basis,” Vetter said. “I expect we will see a very healthy market post-Covid-19.”
For the year, sales will definitely be down. ALG, a subsidiary of online car-shopping service TrueCar, predicted earlier in April a best-case scenario of a 23% decline for 2020. That scenario is dependent on government restrictions on movement being lifted in May, and government stimulus and relief packages having their full effect. U.S. vehicle sales would total 13.1 million in that case, down significantly from the just over 17 million sold in 2019.
If the virus returns in the fall, as many health experts predict, and recovery is slow, that would result in a worst-case scenario of 11.3 million sales—down 34% from 2019, ALG said.
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May 03, 2020 at 10:08AM
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Pent-Up Demand Likely to Increase Luxury Auto Sales - Barron's
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