As outlined in NADA’s May Market Beat update, new vehicle sales began to show signs of recovery after falling to historic lows in April due the coronavirus pandemic. For the month of May 2020, new vehicle sales were down by 29% compared to May of 2019—a solid improvement compared to April 2020’s 48% decline.

By contrast, the coronavirus has hit fleet sales harder than retail sales. For several years, fleet sales have represented between 17% and 20% of all new light-vehicle sales with rental companies representing one of the largest categories of fleet sales. Coronavirus shutdowns across the country have led to a massive reduction rental car demand and forced many major rental car companies, such as Hertz and Avis, to significantly reduce their fleet orders. As a result, fleet sales were down year-over-year by a whopping 72% in May, while retail sales only fell by 17%.

Although retail sales for new vehicles are on track to recovery, fleet sales are expected to be significantly decreased for the remainder of 2020. Cuts to fleet purchases from Avis and Hertz, who last year purchased around 970,000 fleet vehicles combined, will reduce overall fleet sales significantly on their own. But there is still the risk of further cuts to fleet orders from state and local governments dealing with revenue shortfalls because of COVID-19. As we continue to watch new vehicle sales recover, it is important to consider both the headline sales numbers and the retail/fleet mix.