Consumer spending took a major hit during the start of the pandemic. One area that has shown surprising rebound is motor vehicle sales.
Tracking motor vehicle sales at the state or regional level is not as straightforward as it might seem. Sales data are in private hands and rarely shared. But some proxy measures suggest that car and truck buying has been robust recently.
For example, motor vehicle sales tax collections in Minnesota plunged in April along with the rest of the economy (Chart 1). But pent-up demand saw collections bounce back in May and post the highest totals in years in June and through the first three weeks of July.
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In Wisconsin, vehicle title and lien registrations saw a similar April decline and subsequent recovery; the trend appeared as though it would reach pre-COVID-19 levels by late June, but activity has recently plateaued below levels seen the previous two years (Chart 2).
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A dealership contact in the western part of the Ninth District confirmed that May and June sales were surprisingly strong for both new and used vehicles, something the dealership attributed to low borrowing costs and incentives from vehicle makers. While some signs of softening consumer confidence—in light of rising COVID-19 infections—are giving dealers pause, the biggest current complaint in the industry has more to do with low inventories than poor demand.