2020 Virus Impact: Lang Aftermarket iReport’s Flash Analysis 1 – ‘Dashed new vehicle sales’

“The 2020 Virus is a ‘Black Swan’ event (see N. Taleb’s The Black Swan) that will have immense consequences for the aftermarket during 2020 and for many years ahead. Vehicle sales in the U.S. are one of the first business casualties of the 2020 Virus, and they will plunge faster and farther over the next few months than they did in the early months of the 2008 Great Recession.

“The aftermarket impact of falling new vehicle sales during the balance of 2020 will be different from what occurred during the first year of the 2008 Recession and, in some important respects, will be more profound.”

— Jim Lang, publisher, Lang Aftermarket iReport


Aftermarket Impact of the Virus to 2023 and Beyond: In-Depth Report coming in June
“This iReport, along with more special iReports focusing on the 2020 Virus through May, will provide a preview of the comprehensive and detailed report to be published in June by Lang Marketing, with six monthly updates of key developments to be issued from July through December.”


Vehicle Sales Collapse

Annual vehicle sales for 2020 will fall by a larger percent than the 2008 vehicle market plunge, which totaled 18%.

At this early stage of the 2020 Virus, we will limit projections of its impact on the new vehicle market to this year, but our in-depth Report coming in June will provide analysis for 2023 and beyond.

Fallout of the Plunge in 2008 Vehicle Sales

There were two direct consequences of the dramatic plunge of 2008 vehicle sales: changes in vehicles in operation (VIO) and the loss of approximately 3,000 Dealer locations across the country.

The aftermarket was significantly impacted by these developments for many years.

Changing VIO Age Profile

The plunge in 2020 vehicle sales will boost the average age of cars and light trucks in operation and send the age of key VIO segments to record-high levels.

The share of older cars and light trucks on the roads will also climb during 2020, particularly those 14 years and older.

Both of these developments are favorable for aftermarket product use.

Changing VIO Mix

Falling new vehicle sales will have several consequences for the VIO mix.

First, Electric Vehicles (particularly nameplates other than Tesla) will suffer greater 2020 sales losses than ICE vehicles. Their relatively high selling prices and the current rock-bottom pump prices will stymie EV sales and their VIO share growth.

Second, plunging 2020 new vehicle sales will eliminate the possibility of significant VIO growth during the year. Since rising VIO numbers are a major factor in driving aftermarket product growth, this will create headwinds for aftermarket sales levels during the year.

Third, although March sales have shown an uptick in domestic nameplate share, there is a strong possibility that foreign nameplates will expand their portion of the new vehicle market and their VIO share during 2020. It will take several more months of sales data before a trend will emerge.

Dealer Impact of Plunging Vehicle Sales

One of the major aftermarket consequences of the 2008 Great Recession was the closing of thousands of car and light truck Dealers across the U.S.

This gave Independent (non-Dealer) repair shops an unprecedented opportunity to expand their repair market share. Independent repair outlets were major aftermarket winners as the result of the 2008 Great Recession and Dealers were major aftermarket losers.

Dealers More Resilient in 2020

The Dealers today, most of whom experienced the never-before-seen decimation of the new vehicle market by the 2008 Great Recession and adapted to it, are much better equipped to deal with the plunge in new vehicle 2020 volume than they were 12 years ago.

The impact of the 2020 Virus on the repair market balance between Dealers and Independent (non-Dealer) could be much different from what happened 12 years earlier when the 2008 Great Recession abruptly shrank the Dealer population and shifted billions of vehicle repair volume into the service bays of Independent (non-Dealer) repair outlets.

Read more about these repair market developments in an upcoming special iReport, with in-depth analysis in Lang Marketing’s comprehensive report in June: Aftermarket Impact of the 2020 Virus to 2023 and Beyond.

Six Major Takeaways

  • The 2020 Virus is a “Black Swan” event that will reduce this year’s vehicle sales in the U.S. more than the historic drop in the new car and light truck market that occurred in 2008 during the Great Recession.
  • Significant changes in the age profile and the mix of vehicles on U.S. roads will result from plummeting vehicle sales.
  • Falling 2020 vehicle sales will have significant VIO consequences involving Electric Vehicles, VIO growth, and the share of domestic and foreign nameplates on U.S. roads.
  • The Dealer population, which fell by over 3,000 outlets during the 2008 Great Recession, will be more resilient in facing the 2020 Virus.
  • The closing of Dealers during the 2008 Great Recession created an unprecedented opportunity for Independent (non-Dealer) outlets to gain market share, an opportunity that probably will not be repeated in 2020.
  • Analysis in this iReport, along with additional special iReports focusing through May on the 2020 Virus is a preview of the detailed report that will published in June by Lang Marketing, with six monthly updates of key developments to be issued during July through December.

Copyright 2020 by Lang Marketing Resources, Inc.

NOTESpecial thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.