State lockdowns and layoffs have put the American economy in a tight spot. And, while some are optimistic that once quarantine is lifted the market will bounce back, others fear we could be headed for another recession. If that’s the case, what does that mean for both auto-dealers at large, and you as the consumer?
The economic outlook for auto-dealers
As plants stay closed and millions of consumers stay home, economists and auto experts fear 2020 could be the start of a new auto-sales recession. According to new reports from IHS Markit, global vehicle sales are slated to drop 22% in 2020, with a 26.5% decline expected in the US. To put those into real numbers, that’s an expected drop from 17 million auto sales in the US to around 12.5 million.
As executive director of global autos demand forecasting at IHS Markit, Colin Couchman noted, “The unexpected and sudden nature of the impacts of the pandemic are hitting the autos sector hard, with unprecedented levels of uncertainty around prospects for meaningful global recovery. Market fortunes are expected to be mixed, as delayed and destroyed demand interacts with massive global supply disruption.”
How auto-dealers are responding
Faced with hard economic times, many auto-dealers around the country are responding to a potential recession by offering consumers once-in-a-lifetime deals.
For the people fortunate enough to have the means of buying a new or used car, they’re looking at a buyers market. One Ford dealership in California is offering new buyers three months payment covered, and three months deferred on all new purchases. A Chevrolet lot in Cincinnati started a “Covid-19 Guest Protection Plan”, which provides home deliveries and a staggering 84 months with no interest – on top of a free lifetime warranty.
After lockdowns end and more people are able to get back to work, experts predict that overall auto sales will trend heavily toward used cars, as opposed to new. On this new trend, Chief economist for Cox Auto Jonathan Smoke said that in the long term, demand for used vehicles will likely have a stronger recovery as more people aim to spend within a smaller budget.
What this means for you
While it may be tempting to purchase a new car given all of the new offers and deals out there, now may actually not be the best time to get that new vehicle. We recommend holding onto what you have – at least for the time being.
Keeping your current car can come with several benefits – the most obvious that you’ll be saving money. In an uncertain economy, every little bit saved counts. Even if you do have some repairs or updates that need to be made, fixing up your current car is much more cost-effective than trading in for a new one. Plus, many auto repairs, like headlight updates, can easily be done at home.
There are several reasons now might be the best time to hold off on purchasing a new car. Aside from saving money, holding onto your current car ensures that you won’t have to get out and potentially risk exposure by visiting a dealership or showroom in person.
If you’re looking for creative ways to spend your stimulus check, we’ve got you covered with several affordable DIY car projects you can do at home.