Although the coronavirus pandemic upended just about every major industry in the country last year, the auto industry was among the most severely hit.
During the height of the pandemic’s first wave in the spring, vehicle sales in the U.S. plummeted after manufacturing plants shut down, dealerships shuttered, and scores of Americans lost jobs or were forced to work remotely from home.
But now, less than a year later, the industry is already making a strong comeback. Sales among several automakers surpassed analysts’ expectations in the fourth quarter of 2020, and GM reports that industry sales in the U.S. are now back to pre-pandemic levels.
In our latest assessment of consumer sentiment around vehicle purchases we take a look at some of the factors that might be driving the auto industry’s impressive comeback. We also take a look ahead to consider who, at this point, is most likely to make vehicle purchases in 2021.
Americans’ Attitudes About Buying Cars Remained Steady in 2020
Thousands of survey responses collected over the last year by CivicScience suggest one reason for the auto industry’s speedy recovery is the release of pent-up consumer demand. Even though shutdowns and production stoppages prevented Americans from purchasing new vehicles during portions of 2020, consumer interest in new cars nonetheless remained steady throughout the year.
Last January, 10% of consumers said they were likely to purchase a new vehicle in the next 90 days. That number peaked in October at 13% and settled in December at 12%. The trajectory for used car buying was nearly identical.
Who Is Most Likely to Buy a Car in 2021?
Although consumer attitudes remained mostly steady throughout 2020, some groups are more likely than others to say they are likely to purchase a new car in the near future. Moreover, there are certain key demographic differences between those who say they intend to buy a new vehicle soon compared to those who say they intend to buy a used vehicle soon.
So far this year, those most likely to say they are planning on buying a new vehicle are parents, those between the ages of 35 and 54, and living in high-income households in cities.
Meanwhile, compared to those who say they intend to buy a new car, those planning on buying a used car are generally younger and less likely to be concentrated in cities.
A key takeaway is this: despite the age differences between intenders of new cars and used cars, both intenders are still more likely to be from affluent households.
Brand Reputation Hasn’t Increased Auto Sales
In general, brand reputation plays a key role in consumer purchasing decisions, and over the last month more than one-third of our survey respondents (37%) reported that, when shopping for a new car, the most important thing that motivates them to buy is the reputation of the manufacturer.
Nonetheless, having a favorable attitude toward a particular automaker didn’t lead people to say they were any more likely to purchase a new vehicle last year. Among those with favorable attitudes toward specific automakers, about 10-12% reported an intention to buy or lease a new car, which is roughly the same as in the wider population (10%).
That said, a few auto manufacturers — such as Honda, Ford, and Toyota — should be pleased, knowing that consumers like their vehicles and that those opinions have remained mostly unchanged throughout a difficult year.
For the Auto Industry in 2021, a Theme of Incomes & Inventories
For automakers looking to recoup a year’s worth of losses, the data presented in this report offer something of a mixed bag. Although the pandemic didn’t appreciably change consumers’ attitudes toward new car purchases last year, it’s anyone’s guess as to whether that will remain true.
In fact — and though it’s too early to know for sure — some of the data presented here suggest that enthusiasm for new car purchases might be starting to cool slightly as we enter a second year of dealing with COVID-19. In January 2021, the percentage of consumers who said they’re likely to buy a new vehicle in the next few months ticked down, albeit slightly, to a six-month low of 9%.
Yet, despite this, the outlook for automakers is arguably still rosier than the one for auto consumers. Until manufacturers are able to restock inventories, which are severely limited now due to last year’s production shutdowns, increased scarcity is going to drive up prices. In fact, it’s already been reported that, as many Americans choose to spend more on vehicles with expensive option packages, automakers are offering fewer models under $30,000.
If this persists, vehicle ownership will become more difficult for millions of Americans, many of whom lost jobs or suffered pay cuts during the economic fallout from the pandemic. At the same time, CivicScience tracking indicates a leveling out of consumer sentiment around major spending.
The story of the auto industry’s recovery seems likely, therefore, to be one of yet another “K-shaped” recovery, benefiting wealthier consumers while doing little for those of lesser means.