The U.S. auto market is bouncing back nearly as fast as it fell, making the hope of a V-shaped recovery real.
New vehicle sales and used vehicle prices are recovering in May and June almost as fast as they declined in March and April, according to JPMorgan. “We didn’t call it, nor did we expect it, but numerous data points all suggest the U.S. auto industry is in the midst of a once fabled but clearly no longer mythical ‘V-shaped recovery,’” JPMorgan analyst Ryan Brinkman wrote in a report.
That rebound prompted JPMorgan to raise its 2020 U.S. light vehicle seasonally adjusted annual sales rate (SAAR)—a closely watched sales measure—by one million, to 14.5 million. The figure, materially above implied estimates from IHS Automotive of 13.2 million, also pushed JPMorgan to raise earnings per share estimates for automakers and suppliers, and led to higher price targets for Tesla, General Motors and Ferrari.
“The comeback in sales and prices has been faster than most anyone presumed,” Brinkman said. “And because the shutdown of production lasted as long as it did amidst the more resilient than expected demand, inventories are now lean (even sparse), supporting an even sharper rebound in production, which comes as a relief to the entire supply chain.”
—Bloomberg News
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June 20, 2020 at 01:20AM
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