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COVID-19

Automakers roll out incentives to woo uncertain consumers

Jack Stewart Mar 24, 2020
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Automakers are offering deals, like six months of payment deferral, to entice people to buy during the global COVID-19 pandemic. Carl Court/Getty Images
COVID-19

Automakers roll out incentives to woo uncertain consumers

Jack Stewart Mar 24, 2020
Automakers are offering deals, like six months of payment deferral, to entice people to buy during the global COVID-19 pandemic. Carl Court/Getty Images
HTML EMBED:
COPY

This year was forecast to be a pretty good one for carmakers. Then came COVID-19.

Eric Lyman, analyst at TrueCar, had estimated new vehicles sales would total 17 million in 2020. But he’s adjusted that down — hard. 

“We’re expecting to land somewhere around 13.2 million, in the most likely outcome,” Lyman said.

Automakers need to keep sales up to keep cash flowing, so they’re offering big incentives. Not just cheap deals and low or zero interest financing, but flexibility. Like Ford, which is offering deferred car payments for up to six months for “peace of mind.”

Most mid-market automakers are making offers like Fords. 

“They’re very similar to what we saw back in 2009 and 2010, as the market crashed,” said Jim Houston, who monitors Consumer Lending and Auto Finance at JD Power. He said there’s a big difference this time. Back then, some finance companies were folding. For now, at least, lenders have plenty of available credit. 

Auto analyst Rebecca Lindland said carmakers are also making these finance offers, in part to support their local dealerships.

“If a dealer goes out of business, it really negatively affects the community in which that dealer usually worked,” Lindland said.

While these incentives could lead to great deals on new cars for some shoppers, Lindland also warns that buyers should tread carefully. Six months may not turn out to be much of a buffer for people who lose their jobs.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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