Reports: Impact of COVID-19 on the U.S. auto industry in 2020 was four times greater than on the overall economy, but is 2021 looking better?

It is well known that U.S. GDP dropped in 2020 as the pandemic ripped through the economy, but the impact of COVID-19 on the U.S. auto industry was considerably worse.

Sales of cars and light trucks in the U.S., as measured by new vehicle registrations, dropped nearly 15 percent in 2020 from their 2019 levels, according to a report issued by the German Association of the Automotive Industry. In terms of percentage change, that decline was more than four times greater than the 3.5 percent drop in U.S. GDP for 2020 reported by the U.S. Bureau of Economic Analysis.

At the level of individual U.S. automakers, the impact of COVID-19 on the U.S. auto industry was quite variable. Hit hardest was Ford, which on February 4 reported a drop of 22 percent in wholesale units sold in 2020 vs. 2019, while GM’s sales, according to the New York Times, dropped by 12 percent. Stellantis (formerly FCA) reported a decline of 17 percent for 2020.

As shown in the chart below from Statista, the automotive industry in some international regions was hit harder than the U.S., while others fared better. New vehicle registrations in Europe, for example, dropped by nearly a quarter, while China’s decline was just over 6 percent.

These figures on the impact of COVID-19 on the U.S. auto industry in 2020 may paint a bleak picture, but the industry is nevertheless waxing optimistic for 2021. The National Automobile Dealers Association, for example, is forecasting sales growth of more than 7 percent this year.

“While the coronavirus was something that no one in the auto industry expected, the industry rallied and adapted to the new state of play,” said NADA chief economist Patrick Manzi. “Looking forward, we are optimistic about the continued recovery of the new light-vehicle market.”

Cox Automotive, a conglomerate that owns the Manheim auto auctions, Kelley Blue Book, and a variety of other brands in the car buying and selling space, is similarly bullish.

“The expected month-over-month uptick in sales pace suggests the vehicle market is starting the year on solid ground even with so much uncertainty in the economy,” said Cox Automotive senior economist Charlie Chesbrough, in a press release reporting data from their January 2021 sales forecast.

Let’s hope these prognostications hold up. Granted, we can no longer take the old adage from the 1950s “as GM goes, so goes the nation” as gospel truth in a much more complex, 21^st Century world. But after the far-reaching economic harshness of 2020, signs of positive headwinds for the automotive industry in 2021 can only be welcome.