New Auto Gross sales Up in 2021, However Lengthy Approach Earlier than Full Restoration

A pair of 2021 Ford Mustang Mach E are displayed on the market at a Ford vendor on Thursday, Might 6, 2021, in Wexford, Pa. U.S. new automobile gross sales rebounded barely final yr from 2020′s dismal numbers, however forecasters anticipate them to be greater than 2 million beneath the years earlier than the coronavirus pandemic.

AP Photograph/Keith Srakocic, File

DETROIT (AP) — U.S. new automobile gross sales rebounded barely final yr from 2020′s dismal numbers, however have been nonetheless about 2 million beneath the years earlier than the coronavirus pandemic.

The rationale? Though there are many prospects who wish to purchase new autos at hefty costs, there nonetheless aren’t sufficient laptop chips for the trade to totally crank up its factories. So provides are quick, costs are excessive, and many purchasers cannot get what they need.

Gross sales hit simply over 15 million autos in 2021, up 3.4% from 2020, the yr the pandemic took maintain within the U.S.

“Demand isn’t off in any respect,” stated Michelle Krebs, govt analyst for Cox Automotive. “What’s off is gross sales, as a result of the stock would not exist.”

Cox expects 2021 gross sales to be 14.9 million autos, up 2.5% from 2020, the yr the pandemic hit the U.S. and compelled the trade to close down for eight weeks. However over the 5 years earlier than the pandemic, gross sales averaged 17.3 million.

Among the many hardest hit by the chip scarcity was Normal Motors, which was unseated by Toyota final yr because the nation’s top-selling automaker for the primary time.

GM on Tuesday reported that final yr’s U.S. gross sales fell 13% from 2020 ranges to simply over 2.2 million. Toyota, then again, noticed its gross sales rise 10.4% to simply over 2.3 million.

Like different automakers, GM was pressured to quickly shut factories in the course of the yr because it struggled to get semiconductors, particularly early within the yr. Krebs stated she isn’t certain if GM will have the ability to dislodge Toyota this yr as a result of Toyota has managed the chip scarcity higher and has a sooner distribution.

GM diverted restricted chip provides to higher-margin pickup vehicles and full-size SUVs, boosting the corporate’s backside line, spokesman Jim Cain stated. Early final yr, GM forecast pretax earnings of $10 billion to $11 billion, however expects to complete the yr round $14 billion, he stated.

The corporate, Cain stated, expects the chip scarcity to ease this yr, with extra accessible within the second half.

Amongst different automakers reporting full-year gross sales numbers have been Ford with a 7% year-over-year decline, Stellantis with a 2.2% drop, and Subaru with gross sales falling 4.6% beneath 2020. Honda posted an 8.9% enhance, whereas Hyundai noticed a 23.3% bounce. Nissan gross sales additionally rose, by 8.7%, whereas Volkswagen Group posted an 11.7% enhance, in accordance with Motor Intelligence.

Analysts and trade executives say though chip provides are enhancing, its not sure after they’ll get again to pre-pandemic ranges. The common gas-powered automobile has about 1,000 chips, and electrical autos can have greater than double that quantity.

IHS Markit analyst Phil Amsrud, who follows automotive chips, stated provides will not enhance instantly.

“We’re seeing 2022 as being an enchancment over 2021, nevertheless it’s not going to begin January third or fourth,” he stated, including that the second half ought to be higher than the primary.

There are indicators that the quantity of autos on vendor tons is rising, although. It rose to greater than 1 million final month for the primary time since August, Krebs stated. However that is nonetheless 1.5 million beneath 2020 and a pair of.5 million fewer than in 2019.

Cox is predicting that U.S. new automobile gross sales gross sales will enhance by greater than 1 million this yr, to round 16 million.

Amsrud attributed the automobile stock progress extra to automakers managing the chip scarcity higher, fairly than any dramatic progress in chip provides. Like GM, many have allotted chips to construct costlier fashions.

David Kelleher, proprietor of a Stellantis dealership in Glen Mills, Pennsylvania, close to Philadelphia, stated he would not see a lot change in auto gross sales and costs this yr or subsequent, however he is proud of that.

He is making document earnings, promoting nearly each automobile he will get at sticker value, whereas prospects are pleased to search out autos. They’re additionally getting excessive costs for trade-ins as a result of used automobile costs have skyrocketed.

Homeowners have a median of $10,199 price of fairness of their trades, 83% larger than a yr in the past, J.D. Energy stated.

“The buyer proper now simply needs the (good) expertise and the automobile,” Kelleher stated. “In case you have the automobile and also you get them the automobile, they’re going to be proud of you.”

In regular occasions, Kelleher would have 750 autos on the market on his lot. Now he is acquired 12. However he is not paying curiosity on the stock and has been in a position to minimize promoting 30%.

Randy Parker, Hyundai’s U.S. gross sales chief, stated sellers acquired higher at promoting over the web when the pandemic began, and so they’re expert at getting prospects to attend till the precise automobile they need arrives from the manufacturing unit. “We have gotten loads higher at pre-selling our inbound pipeline,” he stated.

Due to robust demand and low provides, J.D. Energy says the common new automobile value rose to $45,743 in December, 20% larger than a yr in the past and the primary time it completed above $45,000.

Gross sales of absolutely electrical autos rose 87.9% for the yr to almost 489,000, however they nonetheless accounted for less than 3.2% of the market.

Sedans undoubtedly aren’t driving new automobile demand. J.D. Energy experiences that SUVs and pickup vehicles accounted for a document 80.2% of latest automobile gross sales in December.