In April alone, Virginia state tax revenue dropped by almost $37 million. Many wonder if this is a harbinger of a decline in auto sales worldwide.
Honing in on Virginia, on July 1st, state and regional gas taxes are scheduled to increase as part of a transportation funding package. Concerns over the auto industry and economy at-large have only increased as COVID-19 seeps into every facet of the workforce. The steady flow of automobile sales has now stopped. Don Hall, the President of the Automobile Dealers Association in Virginia noted his fear, saying, “Our business is struggling mightily.”
Gasoline taxes and license fees also fell in April nationwide. Notably, Virginia is likely to lose close to $1 billion in revenues by June 30th. People are spending less during the national emergency and consequences can be dire.
Interestingly, while people have stopped buying imported vehicles during the pandemic, they still seem to be buying American-made cars. Some automobile companies are recognizing the financial disparity and are lowering their car prices.
Some claim the reason for the lack of current purchases in the auto industry is that people make better financial decisions during crises such as national emergencies. Unemployment fears plague the general public, and therefore, people spend less. A notable reason for lack of purchase is also a lack of usage. People aren’t prioritizing the purchase of a new automobile when they rarely use it, and COVID-19 forces many people to work from home, only leaving their residences to purchase necessary goods.
After a disaster hits though, people tend to purchase in large amounts. One reason for the phenomenon is that people celebrate the conclusion of a disaster with the installment of the latest technologies that they had not updated for some time. Perhaps it is solely celebratory, or maybe people are updating their lives to prepare for the next possibility of a disaster. Either way, purchases rise, and the auto industry might see an increase in purchases after the COVID-19 pandemic.