As Michigan auto dealers start selling online, April shows an uptick

Detroit — After hitting a late-March low, sales of new vehicles are on something of an upswing in April, defying dire predictions: With the nation’s car buyers under stay-at-home orders, analysts predicted sales would be off 80% this month compared to pre-pandemic levels. Instead, they were off just 51% through Sunday, according to J.D. Power. 

And around Detroit, where sales of new vehicles fell to next-to-nothing after Michigan's governor ordered dealerships to close, things have gotten a little better after the state began allowing online sales April 9: Sales were down only 85%, compared to the 98% hit they took the previous week.

Matthew Hargreaves Chevrolet in Royal Oak is among dealers that have begun selling cars online during the pandemic. The dealership's general manager says that when showrooms are allowed to reopen, it will proceed with caution.

Extreme Dodge Chrysler Jeep Ram in Jackson sells an average of 190 to 220 vehicles during a typical April. Last week, the first since online sales were allowed, the dealer moved 18 autos off the lot, according to general manager Mark Trudell. 

“It’s a far cry from what we normally do,” he said.

Adapting to online-only sales has been challenging. “It’s good to be back selling cars again, don’t get me wrong, it’s just very cumbersome right now,” Trudell said.

Customers have been calling to ask questions about the online sales process, but many have said they plan to hold off until the stay-at-home order is lifted. Said Trudell: “It seems like we would have a little bit better grasp on keeping everybody safer if the governor allowed us to come in the dealership and designate an area for the customer to come in and sign paperwork or meet with a salesperson, that we would sanitize every time it’s used.”

Like many dealers, Extreme lets customers test drive their new car when it's delivered to their home, before any paperwork is finalized.

Although Michigan dealers are seeing more online activity, most customers will still want to shop in person, believes Jim Seavitt, owner of Village Ford in Dearborn

“There will be a portion of people this will forever change,” he said. “But I think that’s a small percentage. I think online (sales) will still represent less than 10% of our business.”

Said Trudell: “People still want to test drive cars. They still want to come in and look at a few different vehicles. Negotiate. Put their hands on them."

All states now permit at least online sales during the coronavirus pandemic, with 24 allowing open dealership showrooms. Michigan was one of the last to relax the rules to allow online sales.

With record numbers of workers filing for unemployment and the economy in a tailspin, new- and used-car dealers alike are sweetening the pot. Serra Chevrolet in Southfield, for example, is trumpeting 0% loans for 84 months in online ads, while online used-car site Carvana is running TV ads promising seven-day trials.

All major metro markets, including heavily impacted New York City, are improving except for Denver, according to J.D. Power. That's due in part to low-interest loans, record incentives and extended 84-month loans as the industry moves toward May, typically one of the top sales months of the year and now more crucial than ever as states start to open up.

Late-March harbingers from early-shutdown states like California suggested sales might be off a staggering 80% this month. But against the odds, sales stabilized in the first two weeks of April and are now showing signs of recovery. As of Sunday, retail sales were down 48% for the week from the pre-virus forecast, an improvement of 3 percentage points from April 12 and 11% since the March 29 nadir, according to J.D. Power.

"The U.S. auto retail market is now in full recovery," said Tyson Jominy, the company's  vice president for data and analytics

April sales have been driven by Detroit Three pickup trucks which have been off just 16% in sales compared to the national average. Credit huge discounts averaging $4,700 per vehicle.

The Detroit Three were the first to launch 0% financing on 84-month loan offers – now at a near-record 19% of sales, three times more than pre-virus levels — with payment deferrals. Others including Hyundai, Nissan and Genesis have begun to follow.

In part due to pickup sales and long-term loans, average transaction prices are near record-high levels of $35,200 during the week ending April 19.

Despite the relative good news, J.D. Power still estimates total 2020 sales will be down to 12.6 to 14.5 million versus a pre-virus outlook of 16.8 million. The year 2019 was the fifth straight year of 17 million-plus annual sales, a record. 

But all is not well. Current owners are defaulting on their car loans. 

“Auto loans that are severely delinquent by 60 days or more are up,” said Jonathan Smoke, chief economist of Cox Automotive. “Subprime accounts that are severely delinquent are up to the highest level since at least 2006.”

Detroit-area dealers say they are tentatively preparing to reopen in early May, which is when automakers are hoping to restart factories and Gov. Gretchen Whitmer has said she intends to look at reopening sectors of the economy. Dealerships already are installing protective shields in showrooms, stocking up on sanitizers and thinking about how many customers they’ll be able to allow into a building at once. They expect customers will gradually act on pent-up demand after the state reopens for business

Still, caution abounds out of concern for employee safety.

“They’re trying to kill this virus,” said general manager Walt Tutak of Matthew Hargreaves Chevrolet in Royal Oak. “Why would you want to have it spike again?”

Henry Payne is auto critic for The Detroit News. Find him at or Twitter @HenryEPayne. Jordyn Grzelewski covers the auto industry for The Detroit News.