What started out as a promising year with Edmunds 2020 Automotive Industry Trends Report forecasting a sixth straight year of U.S. auto sales in excess of $17 million, quickly soured with the coronavirus.
Millions have lost their jobs and stay at home orders as well as social distancing guidelines have brought the traditional face-to-face transaction most car buyers expect to a screeching halt.
Edmunds’ analysts recently said April would be the worst month in 30 years with a nearly 53 % projected decrease compared to April 2019. Further, annual sales could fall 26 percent to 12.5 million vehicles, although some forecasts of annualized sales show it tumbling to as low as 7.5 million to 7.7 million,which would be the lowest sales pace in more than 40 years. Definitive April numbers were not immediately available.
A survey last month by the New Hampshire Automobile Dealers Association revealed that 70 percent of respondents, which includes auto repair businesses, saw a decrease in sales in late March and early April with only 6% seeing an increase. The survey also said 30% of dealerships indicated they could fail within two months if nothing changes.
That said, New Hampshire dealerships are not throwing in the towel on the year or just waiting around for everything to return to pre-coronavirus business practices.
Many dealers have been able to build on their existing online presence to seamlessly move to a full online car buying experience in combination with curbside and home test driving and delivery.
“We have already done a lot online, so transition has not been that bad,” said Duane Coute, general manager of Littleton Chevrolet.
In Claremont, Lambert Auto developed a full, simple, online buying experience, accessible on its home page, if that is what the customer desires.
“We come to you and we can do a lot online,” said owner John Lambert, who was able to keep his staff with a Paycheck Protection Program loan.
Lambert Auto, which saw an overall decline in business – including new and used vehciles sales and service – of about 30 percent in April compared to last April, introduced on its web site what it calls a “virtual acquisition” which does not require a trip to the dealership to purchase a vehicle.
The process includes video with a 360-degree walk around and interior look at any vehicle the customer is interested in. From there it is delivered to the home for a test drive. Once an agreement is reached the financing and all the paperwork is also brought to the customer.
“Reality has changed, so we need to seek out new ways to allow shoppers to experience products from the safety of their homes,” Lissette Gole, head of Automotive Retail at Google, said during a recent webinar. “Online retailing is here to stay and this crisis has shown that consumers and dealers are ready to fully digitize their purchase.”
Though the number of potential buyers has decreased, Gole said those still in the market have “true purchase intent” and shifting to digital sales is seen as “necessary.”
Google search trends indicate that there are still buyers out there and in fact, showed an interest among new car buyers looking to capitalize on incentives such as 0 % financing for 84 months and no payments for 120 days. Gole cited one statistic showing a 900 percent month over month increase in the number of searches for “is it a good time to buy a car.”
“Despite significant loss in sales for March and April, people are still showing signals they are shopping for vehicles,” Gole said. “With so many similar deals it is getting more important to get your message in front of shoppers.”
Back in New Hampshire, Coute, who had to furlough all but 16 of his 50 employees but was able to bring them all back with a Paycheck Protection Program loan, said they are still getting a lot of leads from interested buyers. He said the dealership puts an emphasis on doing what the customer feels comfortable with when it comes to how a sale is handled and it is critical now more than ever to tailor the online shopping experience to the customer’s demands.
“We have to adapt to earn their respect,” he said.
At Hilltop Chevrolet in Somersworth, Nancy Notis, who does marketing for the dealership, said they have instituted a number of health-related protocols to give both employees and customers the feeling of being safe and are promoting the online transaction on the web site.
“For sales and service we can go to the customer,” Notis said. “If someone is interested in a car, we can deliver it. Whatever we can do; just working on the new normal.”
How long the slowdown in vehicles sales will last and how long before the numbers mirror the January forecast is a big unknown. Peter McNamara, president of the New Hampshire Automobile Dealers Association, said when the great recession hit in 2008, it was another four years before the number of car titles issued stopped dropping and three more years before they returned to pre recession numbers.
“Put in raw, estimated numbers for our near future, there could be 20,000 to 50,000 less cars that are sold and thus titled at the DMV in the next few years,” McNamara concluded from the data and survey results of NHADA members. “If titling shows a similar decline in this downturn as the great recession, we won’t see sales bounce back for 2-3 years.”
Lambert said the virus has made it tougher to be successful in the business.
“Going forward it is going to be more difficult,” he said.
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