The global auto market is in taters. How bad is just starting to come into focus.
Edmunds has painted a dismal picture on how things are, at least in the United States. Due to the coronavirus, automobile sales tanked. April was the first month where the country was basically shut down.
The forecast for April is that there will be 633,260 new vehicles sold or an annualized rate of 7.7 million. That is more than a 50% decrease from a year ago as well as a 30% drop from March.
One of the main challenges with these numbers is that the automobile market has been in a downtrend for the last couple years. The latest situation is only pushing it off a cliff.
For the United States, it looks like April is going to be the low. With some parts of the country opening up, Edmunds is optimistic that things can get better from here.
But how much and how quickly remains to be seen.
With unemployment still expanding, it is not likely the masses are going to head out to buy a vehicle. Also, with travel being restricted, rental car companies are going to be suffering for a while. This means that fleet sales will remain sluggish for the foreseeable future.
To me, there is also the question of construction. How that is answered will impact the automakers pickup truck divisions.
The numbers put out by Edmunds, if correct, will end up being the worst month on record. This will eclipse, on the low side, January 2009 when 655,000 vehicles were sold.
Such a slowdown is causing inventory problems. Just last week a ship was kept out of port for 5 days, filled with cars. This is highly unusual as cargo ships are normally sent through. The port had no place to store the vehicles hence the delays.
Manufacturers are renting properties to store their excess inventories since dealerships are packed to the hilt with their own inventory.
Over the next couple months, we should get an idea of what the annual numbers are going to look like. It should be mentioned that, at present, all United States automobile plants are shut down. Hence, it will be worthy to watch how quickly they ramp back up.
My view is it will be a slow recovery for the automakers. The worst is not behind them.
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