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For
Bilto, who was laid off in March, and his fiancé Sabrina Moller,
28, a private chef, a car seemed a safer option to travel around
during the virus outbreak. Most importantly the truck's purchase
is a business expense for the couple to support their new
boutique mobile catering venture, platedate.
"We went specifically for the Gladiator because the model was
(being offered at) employee pricing and we also got free service
after 1,000 miles and a free repair offer for a serious
accident," Bilto told Reuters.
U.S. automakers are scheduled to report June and second-quarter
car and light truck sales on Wednesday. Analysts are forecasting
June sales will fall by 25% from a year earlier. That's an
improvement from the declines in April and May, reflecting a
slow recovery in retail demand hit by coronavirus shutdowns.
The second-quarter numbers reflect a peak for the U.S. auto
industry's efforts to use consumer discounts, low interest loans
and other incentives to prop up demand during the pandemic.
Since March, U.S. automakers have rushed to prop up demand with
rich incentives to keep sales moving. The deals have been good
enough and over the next few months, industry officials and
analysts say sales could be hurt because of tight inventory.
"The speed at which the (automakers) stepped in to support the
franchised dealer network as well as the retail consumer is
historically significant," auto retailer Lithia Motors' Chief
Executive Officer Bryan DeBoer said.
On a per vehicle basis, spending on discounts was at record
levels for June at about $4,441 per unit, a significant 12%
increase from $3,966 per unit for June 2019, according to
automotive consultancy firm J.D. Power.
In April, a month after automakers halted production due to the
coronavirus outbreak and a massive 40% decline in sales, per
vehicle spending peaked at about $5,000 for the year, jumping
about 40% from the same period last year.
"The top three automakers have packed in aggressive incentives
with extended financing at 0% rate for 84 months in addition to
payment deferrals for up to six months," said Tyson Jominy, vice
president of data and analytics at J.D. Power.
"Before COVID, only 7% of all sales represented loan terms for
84 months. That metric shot up to 21% during the peak," Jominy
said. "That's unprecedented."
Lower sales volumes mean automakers can offer hefty discounts
per vehicle, while still shrinking overall spending.
Total incentives offered by automakers since March until June
end are estimated to be down about 12% to $18.6 billion, from a
year earlier, as sales volume have fallen 28%, according to J.D.
Power.
Shares of General Motors Co <GM.N>, Ford Motor Co <F.N> and Fiat
Chrysler Automobiles <FCAU.N> closed up between 1.5% and 2.5% on
Monday.
(Reporting by Rachit Vats and Ankit Ajmera in Bengaluru; Editing
by Joe White and Shounak Dasgupta)
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