A squeeze in vehicle inventories could affect budding car sales across the U.S. following pandemic-spurred shutdowns, the Federal Reserve System (FRS) reported in the July edition of its Beige Book.
The FRS Beige Book tracks 12 different U.S. districts and categorizes them by cities with corresponding federal reserve banks in each region.
For instance, Texas and portions of New Mexico and Louisiana fall under the scope of the Federal Reserve Bank of Dallas. The report has been released eight times per year for the past 50 years and compiles data on economic factors affecting auto, retail, mortgage and other markets in each district. The last Beige Book report came in May.
The Federal Reserve Banks of Atlanta, Cleveland, Chicago and St. Louis — which cumulatively cover areas in 14 midwestern states — all logged increased automotive sales and strong consumer demand, “with some firms reporting year-over-year increases.” Auto dealers in Atlanta’s region — spanning Florida, Tennessee, Georgia and Alabama — reported increased sales since the last report. And the Federal Reserve Bank of Texas reported a spike in consumer interest and sales of ATVs.
Auto lending, however, still remained below prior year levels for the Federal Bank of Richmond, which oversees the Carolinas and Virginias, although specifics were not mentioned.
Despite a leap in May and June vehicle sales, inventories are expected to strangle the auto economies in the third quarter for the Federal Reserve Banks of Kansas City, Richmond and San Francisco — which oversee the East and West coasts, part of midwest. “In the Mountain West [Federal Reserve Bank of San Francisco], retail sales beat expectations in June and auto dealers saw strong demand over the past two months,” the report states.
Kansas City looks to be optimistic about third-quarter sales, according to the FRS, although this growth may still be contingent on changes in future COVID-19 cases. San Francisco’s district “anticipates a fall-off in sales over the next several months” as vehicle inventories fell to rock-bottom levels in June, and are expected to continue their decline into the fourth quarter.
Originally published on Auto Finance News