The U.S. new-vehicle sales figure for November witnessed a year-over-year decline amid the resurgence of coronavirus cases. This suggests that the continued recovery of the U.S. auto industry, since the sales hit rock bottom in April, has come to a close.
Backdrop of the Situation
The coronavirus pandemic has rattled the auto industry in the United States amid factory closures, low footfall at dealerships and supply-chain distortions. The industry bore severe brunt of the coronavirus outbreak in the latter parts of the first and the second quarters of 2020, with auto sales tanking in April.
Nonetheless, with the economy gradually recovering from the mayhem caused by the pandemic, auto sales in the country managed to rebound, encouraging major automakers to ramp up production and replenish weak inventories at dealerships.
U.S. Auto Industry Falters Yet Again
Amid the improving scenario, a second wave of coronavirus infection punched the United States hard, causing the speedy recovery in auto sales to lose momentum in November after two consecutive months of year-on-year gains. Auto biggies rolled out their monthly sales figures for November which further underlined the pandemic’s adverse impact.
Reportedly,
Toyota
’s
TM
sales dropped 1%, Hyundai’s sales slipped 9%,
Ford’s
F
fell 20.9% and
Honda
’s
HMC
sales slid 23.4% in November compared with the numbers recorded in the corresponding period last year. Sales figures for other auto biggies like
General Motors
GM
,
Nissan
NSANY
and
Fiat Chrysler
FCAU
are unavailable since the companies report quarterly sales figures.
Seasonality Dilutes November’s Sales Count
November’s seasonally adjusted annual rate (SAAR) calculation accounts for major seasonal adjustments this year. There were only 23 selling days this November compared to last November’s 26 days, along with one less selling weekend, making November 2020 a prime example of why accounting for selling day differences is crucial while calculating comparable sales performance.
Per Wards Intelligence, the seasonally adjusted annualized sales figure for light vehicles tailed off to 15.5 million in November, down from the 17.09 million in the year-ago period, and from last month’s 16.21 million. This represents a 9% decline from the prior year’s selling pace, due to the challenges currently faced by the U.S. economy, further magnified by a second wave of the pandemic and high levels of unemployment.
Nevertheless, the November sales count is encouragingly still almost twice the 8.58 million units sold in April, when the sales pace hit a historic low since December 1970 due to the pandemic-fueled lockdown restrictions.
Toyota’s sales dropped in November, but on a daily selling rate basis, which takes into account the discrepancy of selling days in November, sales of the company climbed 12.6% year on year. Toyota’s trucks and SUVs divisions witnessed a sales jump of 14.1% and 12.6%, respectively, based on the daily selling rate.
In fact, Hyundai’s sales climbed 4% and Honda’s sales dropped only 13.4% on a daily selling rate basis.
Thus, the November sales results underscore the continued strength of consumer demand after removing the impact of the quirk in the November sales calendar.
The consumer strength is further highlighted by the transaction prices hitting another record high in November. Per Kelley Blue Book, the average transaction price of new vehicles inched up 1.3% year on year this November. Though the average transaction prices are down from the last month, the same continue to be historically elevated in November. This shows consumers’ ability to pay premium prices for new vehicles, aiding automakers despite the year-on-year decline in sales. General Motors, currently sporting a Zacks Rank of 1 (Strong Buy), and Fiat Chrysler witnessed the largest price increases in their vehicles in November.
You can see
the complete list of today’s Zacks #1 Rank stocks here.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
