Could Increased Vehicle Sales Help Jump Start the US Economy?
Photo: Chevrolet
To say that the auto industry took a hit over the last few months would be an understatement. Thanks to the COVID-19 pandemic, production plants were shut down, auto shows were canceled, and showrooms were shuttered. With the ongoing quarantine and enforcement of social distancing, dealerships struggled to move vehicles. Now, as restrictions are beginning to lift, automakers are looking for creative ways to get back on track. If they play their cards right, increased vehicle sales could become a major part of restarting the stalled U.S. economy.
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The benefits of increased vehicle sales
While many states are still on some form of lockdown, many others are beginning the process of reopening. This includes a number of car dealerships that are now allowing customers to visit their locations. These dealerships have taken the necessary precautions to ensure the safety of their customers, and many are offering such perks as low interest rates and long repayment plans to get their businesses rolling again.
Economists are now speculating that increased vehicle sales could begin to heal the damaged American economy. The theory is simple: if consumers start spending their money on vehicles again, this will stimulate other businesses and industries to begin moving. For example, the economies of the Southeast’s auto-making states could start to improve if more vehicles are sold.
The risks and the future
However, this plan only works if consumers are willing to spend. If American drivers remain cautious of physical shopping or are remaining frugal amid the crisis, the auto industry could stagnate.
“The real test will come not in the second or third quarter. It is the fourth quarter and the first half of 2021 that will tell the tale,” Philadelphia-based economist Joel Naroff said recently. Christopher Low, chief economist for the First Horizon Bank, adds, “For the manufacturers, the difference between now and say the end of the year is the way the national economy is going to reopen.” In other words, each state will be tackling the easing of restrictions in a different way. These differences will play a big part in how the industry recovers heading into 2021.
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As America continues its gradual reopening, automakers and consumers will need to work together to help both the industry and the country rebound. With a little mutually-beneficial teamwork, the best days may yet be ahead of us.
The News Wheel is a digital auto magazine providing readers with a fresh perspective on the latest car news. We’re located in the heart of America (Dayton, Ohio) and our goal is to deliver an entertaining and informative perspective on what’s trending in the automotive world. See more articles from The News Wheel.