DesRosiers Automotive Consultants (DAC) is getting a lot of requests for an updated new and used vehicle forecast given the COVID situation. We are trying to work up something but there is so much uncertainty and no historical comparison so it is very difficult. In some respects it is a WAG … (wild ass guess). We actually have put a lot of thought into this so are trying to stay away from the WAG approach but again the current situation is unprecedented so whether we like it or not any forecast is to a degree a guess and you should view it as such. Sorry. We have run various scenarios through our model and come up with a very wide range of possibilities.
We were originally (mid-march) estimating an annual loss of about 600K units but that was not a final number since we had absolutely no data. I came in yesterday and put the attached very rough table together. It looks back at the previous four downturns (in yellow) and what happened with them. I was hoping to get some insights …
That didn’t help much so we also contacted about a hundred dealers over the last couple weeks and have talked to just about anyone who has an opinion and most are telling us that for the next quarter they expect the new market to be down 60 to 70 percent … the following quarter down in the 30 to 40 percent range and the last quarter flat to up a little.
There will be a big difference between car and light truck that should follow similar patterns from the last few years. That would bring the market in at about 1.35 million units for the year and down about the 600K units that we originally forecast. But this could change quite radically for the better or for the worse depending on the availability of additional data points. We will have April numbers in a couple weeks and that will help a lot but until then we are sticking with our earlier estimates. If you an optimist you could add upwards of 150 to 200K to these numbers and vice versa if you are a pessimist. Or at least that is what our model is telling us for best case and worse case scenarios.
If your business is more focus on light trucks than passenger cars (dealers out West for instance, or in rural areas) then you will fare better than metro and suburban dealers and certain regions across Canada that are more focused on passenger cars. Our light truck forecast is down about 15 percent on an annual basis while our passenger car forecast is down about 35 percent again on an annual basis.
We have not broken out specific market segments but logic would tell us that the luxury/premium side of the market will be the hardest hit. It was in March and likely will be for the rest of the year and indeed will also likely be one of the segments to return to some sort of normalcy on a later schedule than the mass market for light vehicles. We believe commercial use and fleet vehicles will return fairly quickly provided the economy responds since business will in many cases have no choice but the come back to the market quickly especially if their existing vehicles we on some sort of buy-back contract and thus they would lose use of their existing vehicles. Off-lease vehicles for consumers will also come back quickly … again, it is very hard to extend a lease so these consumers have little choice but to re-enter the market or not have personal use transportation.
I have never sent out a spread sheet before which allows individuals to fiddle with the numbers but make an exception in this case. The two input lines are marked with green. Change any of the assumptions on these lines and the whole forecast changes. Individual market intelligence may be different from ours so adapt as you see necessary.
And if you have any up to date information or forecast from other sources let me know, I’d love to know what others are thinking.
We are also working up an all new forecast for the used vehicle market and for the aftermarket for parts and service and will keep everyone in the loop as we get a handle on these windows into the automotive sector. The F & I side of the industry has a direct relationship with the new and used vehicles market so it falls out of these forecasts when we get both up to date.