We project a drop in wholesale prices compared to a pre-COVID-19 baseline this summer/fall, as the US economy suffers through the effects of COVID-19. black book market research. We anticipate that wholesale prices will be 15% lower, on average, compared to pre-COVID-19 projections, during the remaining months of 2020: with a larger difference over the summer and some recovery early in 2021 - black book method.
The effects of the pandemic will continue to be felt, but we project that values will return to the pre-COVID-19 baseline as used supply declines due to cuts in retail and fleet sales throughout the remainder of 2020 and into 2021. In this scenario, we project a 24% drop in wholesale prices compared to a pre-COVID-19 baseline this summer/fall, with a very slow recovery in 2021.
Currently, retail prices are decreasing at a much lower rate compared to wholesale prices – we saw a decrease of about 5% from the peak in early April compared to last week. black book research. We expect retail prices to decline further, at a higher rate, as consumer demand weakens over the next several months, hence narrowing the gap between wholesale and retail prices.
During one of our dealer meetings, a dealer told us that he sold 100 units over the three-day weekend, which was significant considering his typical per monthly sales volume averages around 600 units. New demand continues to be fueled by the enticing new car incentives. However, it is leading dealers to be concerned about new vehicle inventory levels.
Dealers are anxiously awaiting new vehicle deliveries. Currently, deliveries are few and far between as the supply chain and assembly lines face challenges in resuming production and deliveries are only arriving from inventory produced prior to the shutdowns. Especially for smaller dealers, particularly ‘Buy Here Pay Here’ lots, the demand continues to be strong for under $10,000 units.
However, there is great concern in this community that once the benefits return to pre-COVID–19 levels, they will be forced to repossess many of the vehicles they recently retailed (black book). Our New Sales Outlook remains unchanged from last week. We anticipate a significant reduction in US new vehicle sales in 2020 (both retail and fleet sales) due to continued reduced consumer demand (black book market research).
Overall, new sales were down 21% during the first four months of the year, compared to last year (with a 47% YOY decline in April as most states were under shelter-in-place orders). Even as OEMs are restarting assembly lines, there are significant challenges to get back to a normalized production schedule: Supply chain issues, e.
Mercedes-Benz had to suspend production in Alabama again, due to a lack of parts and Kia did the same in Georgia. black book market research in 2020. Continuous safety concerns due to COVID-19, e. g. Ford was forced to close at least four plants in Chicago, Kansas City, and Dearborn due infections/outbreaks among workers who had recently returned to the plants - black book research.
7mm units. In a deep economic recession scenario, we project a 40% drop in new sales in 2020 to 10. 2mm units. black book market research in 2020. In the longer-term, we expect new sales volume to return to pre-COVID-19 levels within five years. The table below summarizes Black Book’s projections for new vehicle sales for the next several years under both economic scenarios.
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