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Auto sales drop amid COVID-19 crisis

Yahoo Finance's Rick Newman breaks down how bad the auto industry has been hit since the coronavirus outbreak.

Video Transcript

- You know, so much of GDP is kind of automatic. But you know, Rick Newman, the GDP that we end up noticing is the stuff that's on the margins-- how much you're spending at restaurants, how much I'm spending at restaurants. Any talks about gas OK, fine, but no one's buying cars. So I mean, it's kind of all just up in the air on what anything might look like.

RICK NEWMAN: Yeah, so let's talk about cars for a minute, somewhat overlooked here. We've been talking a lot about, obviously, retail and the travel industry. So we have auto sales for March. They were horrendous. The pace of sales-- this is at an annualized rate in March-- was 11.4 million sales. What's normal is about seven million, so way down from the normal pace.

But Oxford Economics is saying that, in April and May, we're going to go all the way down to an annualized pace of five million car sales per month in the second quarter. Just for comparison, the worst level during the Great Recession was nine million sales. So we're going to go way below the worst level of the Great Recession in car sales.

And that's a huge industry. I mean, this is very overlooked because it's not as sexy as Tesla and the technology companies, but it's still a very large industry, huge in the Midwest. And a lot of other industries depend on the auto industry. It has a very long supply chain there.

That is a devastating wipe out. Some of that will come back because those are durable goods. Those are things you can put off-- those purchases-- and make them later. Let's hope we do see a rebound in that industry, because that is a lot of families affected by that.

- Yeah, certainly. And as we know from the financial crisis, an industry that ended up kind of becoming a main part of the collateral damage, as if it were, from what happened, but that began in the financial sector. I think probably here ground zero is travel and leisure-- those sorts of things.

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