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First Cut: Sales of motor vehicles fall to near 50-year lows in April

Sales of all motor vehicles fell to 8.6 million units (SAAR) in April after dropping to 11.4 in March, the lowest since 7.8 million in December 1970. It would appear that consumers are not only avoiding auto showrooms due to stay-at-home orders, they are sufficiently uncertain about the future that only absolute necessity is resulting in a motor vehicle purchase.

It isn’t clear whether a lack of inventory or a preference for US built vehicles is driving the trend, but in April 79% of purchases were from North American automakers, only just below the peak of 80% in the prior month.

Consumer continued to exercise their preference for vehicles in the light trucks category – including SUVs, minivans, and crossovers – with purchases of 6.634 million units compared to 1.948 million units for passenger cars. This was a record high share of 77% of the motor vehicles sold in a month. Consumers may be a little more tempted to buy a larger light truck while gasoline prices are unusually low. This is also a time when dealers are going to offer deals on pricier vehicles in an effort to reduce inventories in anticipation that future choices may be more frugal while consumers are less confident.

Purchases of heavy trucks fell to 259,000 in April after 382,000 in March, the lowest since 259,000 in January 2011. Like consumers, businesses are just not buying equipment unless it is the only viable options.

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