Puerto Rico’s new car market showed a deeper contraction than that of the U.S. mainland from March to May — the peak quarantine months to curb the COVID-19 pandemic — but the local market has recovered much faster since then, according to a study by Abexus Analytics.
According to the firm’s research entitled “Economic Trends and the Auto Industry,” 2020 new car sales are expected to be close to 93,000 units in Puerto Rico — 98,000 on the optimistic end, and 88,000 on the pessimistic side — while 2021 sales could be as high as 107,000.
“Given the uncertainty of additional federal funds to mitigate COVID-19, expected low oil prices for 2020-2021, the uncertainty surrounding the elections, and subsequent waves of COVID, we maintain the base projections at 95,000 and the pessimistic prediction at 89,000,” said Adrián Alós-Pérez, CEO of ABEXUS, LLC.
Puerto Rico’s auto sales were up 11.2% year-over-year in September, in comparison to a 5% growth of new car sales in the U.S. mainland, according to the study that cited numbers from the Puerto Rico United Automobile Importers Group and the U.S. Bureau of Economic Analysis.
In 2021, the new car sales industry is facing several risk factors, such as the potential for a second wave COVID-19 contagions, a weak labor market, the possibility of no additional relief measures from the U.S. government, an increase in repossessed vehicles, and a drop in used car prices, the study predicted.
Physical distancing and unemployment are also cited as potential setbacks for growth in the local new car sales industry.
However, pent-up demand, local and federal government incentives, Community Development Block Grant (CDBG) Program funding allocations, low interest rates, and oil prices could offset the negative factors in Puerto Rico, according to the study.
New car sales in Puerto Rico have been on a rollercoaster ride since 2017, the year when catastrophic Hurricanes Irma and María hit, and a little more than 84,000 vehicles were sold.