ALG Provides Updated 2020 New Vehicle Sales Forecast Based on Projected Short-Term and Long-Term Impact of COVID-19
March 16 2020 - 9:00AM
ALG, a subsidiary of TrueCar, and the industry benchmark for
determining the future resale value of a vehicle, is providing an
updated 2020 new vehicle sales forecast to account for the quickly
evolving Coronavirus pandemic and the latest economic outlook.
ALG projects that in a quick recovery scenario, where the
economy and auto industry recover by the end of April 2020 back to
levels prior to COVID-19 disruption, new vehicle sales will reach
16.4 million, down -500,000 vehicles or -2.9% from ALG’s initial
2020 forecast and down -3.8% from 2019 sales.
In a scenario where COVID-19 is prolonged with a longer-term
economic slowdown, ALG forecasts that new light vehicles sales will
reach 14.5 million, down -2.4 million or -14.2% from ALG’s initial
2020 forecast and down -14.9% from 2019 sales.
“In the rapidly moving, highly volatile global economic
environment caused by the COVID-19 pandemic, we believe it’s
prudent to provide a revised range of auto industry projections to
new vehicle sales for 2020. The range is based on various scenarios
provided by expert third party forecasts of macro-economic impacts
from the Coronavirus outbreak,” said Eric Lyman, Chief Industry
Analyst for ALG, a subsidiary of TrueCar. “A quick recovery by the
end of April would lead to roughly half a million lost sales, while
a prolonged slow down through the end of the year would result in a
nearly 15% year-over-year sales decline in 2020. While
forecasts are changing day to day, our current likely scenario has
new vehicle sales for 2020 landing in the mid 15M unit range.”
ALG is also reducing residual values in its latest Residual
Value Book. This update is based off current third-party economic
outlooks in COVID-19 impact and other key factors such as the stock
market declines and drops in oil futures.
“Short term market volatility does not necessarily translate
into long term changes,” said Morgan Hansen, VP of Data Science at
ALG, a subsidiary of TrueCar. “While ALG expects a short term drop
of roughly 2 percentage points of MSRP in wholesale used market
values, our benchmark 36 month forecast only expects a decline of
0.7 ppts of MSRP. These values are based on current expert third
party macro-economic forecasts that put the probability of
prolonged economic downturn risk at 50%.”
- Key impacts of residual value reductions are COVID-19,
stock market performance, and drops in oil futures
- COVID-19 will have impacts on both vehicle inventory
availability and consumer confidence, affecting supply and
demand.
- COVID-19 will have immediate short term impacts due to reduced
income and reduced commerce in general.
- In the extreme case, COVID-19 could also halt sales in the
short term if auction houses and transportation companies have
temporary shutdowns, but this is not reflected in the current ALG
longer term outlooks.
- Long term, COVID-19 and poor quarterly results will most likely
result in higher unemployment rates through 2020 and into 2021.
Prolonged bear markets generally lead to more layoffs.
- Low oil prices have traditionally been good for the economy,
but increases in domestic oil production and extremely low prices
are detrimental to the US economy in the short term.
- Government intervention strategies and election results will
impact the US economy throughout 2020 regardless of how quickly
COVID-19 recedes.
- Change in Percent of MSRP
- The impact varies by segment and term of the forecast. As
probability increases, the impacts are greater in the shorter term
with positive recovery forecasted for the long-term.
ALG will update its forecasts in response to major new
developments.
About ALG
Founded in 1964 and headquartered in Santa Monica, California,
ALG is an industry authority on automotive residual value
projections in both the United States and Canada. By analyzing
nearly 2,500 vehicle trims each year to assess residual value, ALG
provides auto industry and financial services clients with market
industry insights, residual value forecasts, consulting and vehicle
portfolio management and risk services. ALG is a wholly-owned
subsidiary of TrueCar, Inc., a digital automotive marketplace that
provides comprehensive pricing transparency about what other people
paid for their cars. ALG has been publishing residual values for
all cars, trucks and SUVs in the U.S. for over 55 years and in
Canada since 1981.
About TrueCar
TrueCar is a leading automotive digital marketplace that
enables car buyers to connect to our network of 16,500 Certified
Dealers. We are building the industry's most personalized and
efficient car buying experience as we seek to bring more of the
purchasing process online. Consumers who visit our marketplace will
find a suite of vehicle discovery tools, price ratings and market
context on new and used cars -- all with a clear view of what's a
great deal. When they are ready, TrueCar will enable them
to connect with a local Certified Dealer who shares in our belief
that truth, transparency and fairness are the foundation of a great
car buying experience. As part of our
marketplace, TrueCar powers car-buying programs for over
250 leading brands, including AARP, Sam’s Club, and American
Express. Nearly half of all new-car buyers engage
with TrueCar powered sites, where they buy smarter and
drive happier. TrueCar is headquartered in Santa
Monica, California, with offices in Austin,
Texas and Boston, Massachusetts.
For more information, please visit www.truecar.com, and
follow us on Facebook or Twitter. TrueCar media
line: +1-844-469-8442 (US toll-free) |
Email: pr@truecar.com
Photos accompanying this announcement are available at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/d0691639-a73e-45ea-bd7b-5367268ef63f
https://www.globenewswire.com/NewsRoom/AttachmentNg/f832b84b-33d9-488f-9300-4ed531903fea
TrueCar and ALG PR Contact:
Shadee Malekafzali
shadee@truecar.com
424.258.8694
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