As the new-vehicle sales forecast plummets to 10.7 million units, consumers show no sign of renewed confidence in the short term, according to a survey of 1,000 consumers conducted by Lightico, a digital consumer experience platform.
In fact, 71% of consumers considering a new car purchase in the next three to six months have reconsidered, spurred by health concerns about visiting an auto lender or dealer in person, Lightico Chief Executive Zviki Ben-Ishay told Auto Finance News. In all, 42 states have implemented shelter-in-place directives.
Additionally, 51% of consumers are concerned about their ability to repay their auto loans in the next few months, according to the survey. Credit losses are expected to increase after lenders’ various relief options expire.
“Consumers’ financial concerns have spurred many to consider deferring, freezing or refinancing their auto loans,” Ben-Ishay said.
The new-vehicle SAAR in the first quarter dropped below 12 million units to 11.2 million units for the first time since 2011, when a tsunami off the coast of Japan disrupted supply chains in the automotive industry.
Consumer sentiment has been dwindling as the pandemic’s effects on the economy rapidly accelerated in mid-March, and there has been concern that consumers will be unwilling to make big-ticket purchases once shelter-in-place orders are lifted.
Already, auto lenders like Bank of America have clocked in “tens of thousands” of loan deferrals, and over half of the leases scheduled to mature in March were extended, according to JD Power. That number is expected to increase in April.