Steel Markets

Auto Sales Show Recovery in Third Quarter

October 2, 2020

The auto industry is expected to continue its quick pace to recovery with third-quarter retail sales up 27 percent from the second quarter of 2020, forecasts Tru Car and its subsidiary ALG, Inc.

Sales in September are forecast to reach 1,221,092 units, down 12 percent from a year ago and down 4 percent from August due to fewer selling days. Tru Car estimates the seasonally adjusted annual rate will be 14.8 million units, while Cox Automotive projects somewhat higher at 15.2 million.

“The automotive industry continues to perform better than initially expected with retail sales down just 6 percent compared with last year. We’re also seeing one of the best SAARs since March and used vehicles forecast to be up year-over-year for the fourth consecutive month,” said Eric Lyman, Chief Industry Analyst for ALG. “From a quarterly perspective, new vehicle retail sales are up 27 percent and used vehicle sales are up 26 percent quarter over quarter.

“Large truck sales continue to spike as many consumers gravitate toward home improvement projects to enrich their home environment where they are also working and spending more of their leisure time,” added Lyman.

General Motors and FCA said their sales in the third quarter were down 10 percent year over year compared to more than 30 percent in the second quarter. Toyota sales were down nearly 11 percent in Q3, but had a strong performance in September due to sales of SUVs.

Ford surprised with a decline of just 4.9 percent during the quarter. “The industry had a very sharp recovery from Q2 to Q3,” Mark LaNeve, Ford vice president of U.S. marketing, sales and service, told CNBC on Friday. “It’s been a crazy year, but the industry has been resilient and our dealers have done a great job.”

Ford announced changes in its leadership team on Thursday. Jim Farley will succeed Jim Hackett as president and CEO and John Lawler has been named chief financial officer.

The Detroit 3 and Toyota continue to be the market share leaders, but electric car manufacturer Tesla is expected to increase its retail market share from 1.6 percent in August to 2.1 percent in September due to its popular Model 3 and newly released Model Y.

Auto inventory remains low as manufacturers restock dealerships and new 2021 models remain scarce.

“Available Inventory is far below last year’s levels, yet sales continue to show surprising strength,” said Charlie Chesbrough, senior economist at Cox Automotive. “Going into the fourth quarter, the key question is: Can this continue? Clearly new vehicle buyers haven’t been hit as hard as other consumers during this recession, so demand is likely to remain stable over the near-term.”