As California’s dealerships are now allowed to reopen, cautious optimism anticipates upward trajectory of sales as pandemic recovery progresses
Sacramento, Calif.—Early this year, California new vehicle sales were off to a solid start, then Covid-19 hit, and the industry took a downward turn overnight, like many other retail industries across the nation.
While 2020 new vehicle sales were projected to slightly dip from 2019 and reach about 1.82 million, the pandemic changed forecasting. According to the CNCDA’s California Auto Outlook First Quarter 2020 report, anticipated new vehicle sales for 2020 will only reach 1.54 million, a 26-percent decline from 2019.
“Going into 2020, we knew we had a year ahead of us that was going to be slightly down in the new car market with the potential for a continued shift to used car purchases, but no one could have predicted this,” said California New Car Dealers Association Chairperson (CNCDA), Mike Weseloh, owner of Weseloh Chevrolet-Kia in Carlsbad. “Like many industries across the country, we have a tough road ahead but will do what it takes to move forward in a safe, healthy and prudent manner to get back on our feet.”
Non-luxury SUV market strong
While Covid-19 and its impacts on the economy have taken a significant toll on vehicle sales, not all market segments are down. The non-luxury SUV market increased to above 30 percent during the first quarter of the year. This trend carries over from 2019, demonstrating the shift in consumer purchasing behavior leaning towards larger, more family-friendly vehicles.
California regional variances
Regional variances between Northern California and Southern California are nominal for the first four months of the year, with the north experiencing a decrease of 21.2 percent and the south seeing a decrease of 20.9 percent, according to the report. However, San Diego County experienced only an 18.6 percent decrease in sales and the San Francisco Bay Area saw a decrease of 23 percent. CNCDA states it’s possible this is a product of the early shelter-in-place orders that went into effect in Bay Area counties before similar orders were issued in counties down south.
Upward trajectory on horizon
“A rebound in the California automotive retail industry greatly depends on a number of factors including unemployment, consumer confidence, developments of treatments or vaccines for the virus and how health and safety mandates continue to unfold,” said CNCDA President Brian Maas.
“With all California dealerships now allowed to be open, we are confident that we are on an upward trajectory and hope market conditions stabilize over the course of 2020, but there is still much to be seen in this phase of recovery.”