Car Sales Flatter Than Pandemic

Kathy Renwald

Remember when Porsche launched the all electric Taycan?  They commandeered Niagara Falls and brought hundreds of media in to see the unveiling of the $215,000 electric luxury car.

   In Germany Porsche spent about $800 million to build a stand alone facility just to make the Taycan.

  Well the future of electric cars, high horsepower cars and entry level luxury vehicles looks anything but rosy in the post pandemic future according to Dennis DesRosiers . 

   The long time automotive consultant predicts that those special segments of the car business will take the longest to recover. 

   Car sales were down a staggering 75 per cent last month, compared to levels of one year ago according to figures just released by DesRosiers Automotive Consultants Inc. 

  With showrooms closed due to Covid-19 restrictions, the blow to the automotive sector has been massive. When life gets back to a new normal people will be buying cars of course, but DesRosiers says it will be a slow recovery,  and the luxury car makers will suffer the most.

  I was at the spare-no-expense launch of the Taycan. In addition to journalists, Porsche brought in some of their premium customers too. DesRosiers says the one per cent of the population that can afford that vehicle will still have the money to purchase. But the relentless push to electric vehicles and autonomous vehicles will be pushed back 10 years he believes. Sales of EVs amount to about one per cent of the market. Will struggling car makers still invest in research and development for a product that few people buy?

   Entry level luxury cars will take a big hit too, DesRosiers predicts. In the last ten years that has been the faster growing segment in car sales, but the people who could barely afford “aspirational” cars as he describes them, are hard hit by Covid.

  “Those customers were having a hard time in good times,” he says. “Now the biggest hit from Covid is happening in the bottom half of the economy, I think that bottom half of the economy is pretty well wiped out in terms of their ability to enter in to the premium, luxury market place.”

   In 2018 I went to the launch of the Mercedes A-Class sedan at a nightclub in Toronto. The event was targeted mostly at potential customers. There were few over the age of 30 at the classy launch. The A-Class pricing is $40,000 and up. The crowd loved it, but how many could really afford it?

  DesRosiers says the crash in auto sales may reset the industry. The push for more power horsepower, bigger vehicles, expensive high tech options may be remembered as a time of unchecked excess.

  “I think the pandemic is forcing a lot of consumers to face the music, that they were living above their means. The longest this goes, consumers are going to be honest with themselves and say I wish i had never bought x, y, z, like, I needed a car but did I really need a $95,000 pickup truck? It will be good for society if we come back to reality in terms of our lifestyles.”