Pickup buyers took out bigger, longer-term loans in March and rolled in more negative equity from their previous vehicles.
An 84-month loan is “becoming a very mainstream offer very quickly,” Jominy said, going from 8 percent of sales during the second week of March to 23 percent in the fourth week. J.D. Power said 46 percent of light-duty pickup sales during the week ending March 29 were financed with 84-month loans, compared with 10 to 15 percent normally.
Fiat Chrysler Automobiles launched a new advertising campaign last week called “Drive Forward,” promoting 0-for-84-month loans, no payments for 90 days and “the ability to shop and buy from the safety of your home.”
“There are unprecedented deals available on pickups, at least the majority of pickups, at this time,” said Thomas King, president of J.D. Power’s data and analytics division. “Pickups are expensive vehicles. … That means that the savings you get from having a reduced interest rate are very, very powerful.”
In contrast, demand for midsize pickups plunged. The Chevrolet Colorado and GMC Canyon each saw sales fall 36 percent in the first quarter. The Toyota Tacoma declined 7.8 percent in the quarter, including a 30 percent drop in March.
“A lot of midsize trucks are either [for] small businesses or lifestyle buys, and we’re seeing right now that small businesses are really suffering in some areas,” Akshay Anand, executive analyst at Kelley Blue Book, told Automotive News.
Cox Automotive said March incentive offers were more chaotic than usual. New discounts normally appear in the first few days of a month and continue through the end of it, but about two-thirds of auto brands debuted offers in the middle of March as fallout from the coronavirus pandemic spread rapidly.
Brad Korner, general manager of Cox Automotive rates and incentives, said many March offers appear to be sticking around at least through early this month because automakers were still evaluating how consumers responded to them.
Among automakers that still report monthly, March sales fell 31 percent at Hyundai-Kia, 37 percent at Toyota Motor North America, 47 percent at Subaru and 48 percent at American Honda. Those numbers provide a glimpse of what the industry will face in April, May and potentially beyond that.
The second quarter will be the “real measure of COVID-19’s impact on the economy and the auto industry,” Charlie Chesbrough, Cox Automotive’s senior economist, said in a statement.
April is likely to produce further “historic declines” because of “lack of consumer confidence and substantial increases in unemployment,” Chesbrough said, and the trend could continue into “early summer, at best.”
