Most automakers have shifted to a quarterly release of U.S. new-vehicle sales data, but if they were hoping to limit the number of bad headlines during the Covid-19 crisis, perhaps a biannual or even biennial release schedule would be better. When automakers reported 2020’s first-quarter sales in early April, one optimistic message at the time was that we would have to wait until second-quarter numbers were released to get a better handle on the coronavirus’s true impact on the industry.

Well, the second quarter is here and the verdict is in: this thing is real, but the hard decline of April was mitigated by two months, May and June, that weren’t quite as bad. Fleet sales were hit hard, and supplies were low for most of the quarter, given that automakers did not manufacture many vehicles once Covid-19 had shut down factories around the world.

General Motors, the largest US automaker, saw a 34% sales drop. Last week GM announced it will cut 700 jobs at a Tennessee plant later this summer because of the drop in demand for the SUVs built there. Still, GM said sales fell most sharply in April and showed signs of recovery in May and June.

“GM entered the quarter with very lean inventories and our dealers did a great job meeting customer demand, especially for pickups,” said Kurt McNeil, GM’s vice president of sales. “Now, we are refilling the pipeline by quickly and safely returning production to pre-pandemic levels.”

Fiat Chrysler reported a 39% decline in revenue, pointing to the drop in rental fleet sales. Rental car companies typically buy about 10% or more of US car sales in the course of a normal year. But with the huge slowdown in travel, car rental companies have virtually halted their purchases. Meanwhile, Hertz filed for bankruptcy. And all the car rental companies are selling cars from their existing fleets, creating more competition.

Toyota also reported a 35% drop in second quarter US sales, although it saw an improvement as the quarter progressed. June sales were off 22%, the company said. Despite the signs of improvement later in the quarter, it’s unlikely there will be a rapid increase in sales throughout the summer, said Jonathan Smoke, chief economist for Cox Automotive. Cox is forecasting a 35% drop in total US sales for the second quarter once all the automakers report and the data are in.

A Cox survey showed one-third of those who intend to buy a car said they will delay their purchases, driven by factors such as general uncertainty in the market and continued unemployment concerns.

Todd Horwitz Chief Strategist
Stop being a prophet and make profits

Micro Mini Portfolio Management Recording: on Saturday we did a great webinar on our micro mini futures portfolio management. I have attached that report below.

Mini Micro Futures Portfolio Management Recording