New vehicle demand has accelerated across the country amid the coronavirus crisis, driven by stay-at-home measures that have compelled many Americans to delay their auto purchasing plans, robust federal relief, and a growing shift to car ownership due to concerns about catching COVID-19 while using mass transit and ride-sharing, according to regional trends in TechnoMetrica’s Auto Demand Index, a monthly measure of Americans’ intent to acquire new vehicles in the next six months. The Northeast is leading the surge in new vehicle purchase intent, likely reflecting robust pent-up demand created by stringent restrictions imposed by states in the region, as well as the success these measures have had on containing the coronavirus spread, which has boosted consumer confidence. Meanwhile, demand is easing in regions that have generally been less restrictive and have reopened at a faster pace, such as the South and West. Thus, as states continue to ease restrictions and more Americans feel safe to venture out to dealerships, we anticipate a significant rebound in auto sales in the near term, driven largely by strong Northeastern demand.
TechnoMetrica Market Intelligence developed the Auto Demand Index, or ADI, as a way to measure the intent of consumers to buy or lease a new vehicle within the next six months. The ADI, which is conducted monthly, is based on the response to a key question posed to more than 1,200 adult Americans: How likely is it that you will buy or lease a new vehicle within the next six months?
All U.S. regions have displayed significant gains in new vehicle purchase intent since before the onset of the coronavirus lockdown, with the Northeast posting the largest jump in auto demand, likely spurred by the aggressive lockdown measures imposed by Northeastern states at the beginning of the crisis. Between February and August, Northeastern households have seen a 93.6-point surge in the three-month average of the Auto Demand Index, from 109.5 to 203.1. During the same period, the West has posted a gain of 55.8 points in purchase intent, from 106.7 to 162.5. Demand among Southern households has climbed 44.3 points since February, from 116.1 to 160.4. In the Midwest, auto demand has improved by 34.6 points, from 103.7 in February to 138.3 in August.
Recent trends in the index suggest a growing regional divide in purchase intent, with the Northeast continuing its upward trajectory and other areas seeing a pullback in demand, likely reflecting the current path of the coronavirus and regions’ efforts at containing the spread. Over the past month, the Northeast gained 12.7 points in the index’s three-month average, from 190.4 in July to 203.1 in August, its sixth straight increase. All remaining regions showed month-over-month declines in demand, as a resurgence in COVID-19 cases spreads throughout the country, particularly in the South and Southwest. The South posted the largest drop, from 170.6 to 160.4, a loss of 10.2 points. Demand levels in the West have dipped by 9.1 points since July, from 171.6 to 162.5. Midwestern households saw a 5.6-point deceleration in purchase intent between July and August, from 143.9 to 138.3.
As demand remains strong around the country, TechnoMetrica expects that momentum for auto sales will continue to grow in the months ahead. The Northeastern market will likely drive this growth amid the region’s successful phased reopening.
The Auto Demand Index is compiled from an online survey of 1,212 U.S. adults fielded from July 25 to July 28.