NADA Predicts 2022 New-Vehicle Sales of 15.4M, up 3.4%

Ken Zino of AutoInformed.com on NADA Predicts 2022 New-Vehicle Sales

Click to Enlarge.

The National Automobile Dealers Association predicted today 2022 new-vehicle sales of 15.4 million units – an increase of +3.4% compared to 2021. NADA is a trade and lobbying group comprised of 16,000 auto dealers. (See AutoInformed.com: First Place! Toyota Ousts GM as US Sales End 2021 at 14.9m, Significant 2021 Automotive Stories and Trends, Toyota Motor US Sales off -31% in December, +10.4% in 2021)

Whether such long-term predictions are of any use is an open question at AutoInformed given the volatility of the ongoing COVID pandemic. Consider that 2021 closed with new light-vehicle sales of 14.93 million units, an increase of 3.1% compared to 2020’s sales volume of 14.47 million units. However, December 2021’s SAAR totaled just 12.44 million units, a decrease of -23.7% compared to December of 2020. (Whither US Vehicle Sales in 2021? Is 14 Million a Stretch?)

Comparing vehicle sales to inventory  levels reveals that at the end of December 2021 it totaled 1.12 million units, up 7.4% compared to the end November 2021, but down -59.1% compared the end of December 2020’s total of 2.75 million units.

“The major theme for new-vehicle sales in 2021 was constrained inventory,” said NADA chief economist Patrick Manzi. “The coronavirus pandemic and resulting microchip shortage and production cuts significantly constrained new-car and truck inventory at dealerships across the country. Constraints further led to suppressed new-vehicle sales, as well as used-vehicle inventory shortages and increased vehicle prices.”

While microchip shortages, one of the causes for diminished inventory, are slowly improving, shortages are expected to last through at least Q2 of 2022. Auto Forecast Solutions projects that 11.3 million vehicles will not be produced globally as a result of the chip shortage.

At a thus far small percentage of market share versus internal combustion engine vehicles, alternative fuel powertrains accounted for 9.5% of all new-vehicle sales in 2021. Hybrid powertrain sales were 5.4% of all-new vehicles sales, up from 3.1% in 2020,. Plug-in hybrid vehicle (PHEV) sales were 1.2% of all sales in 2021, up from 0.5% of sales in 2020.

Battery electric vehicles (BEV) also continued to gain market share, accounting for 2.9% of all new-vehicle sales in 2021, up from 1.6% in 2020. As new BEV product continues to reach showrooms, franchised new-car dealers sales of BEVs continue to grow; in 2021 franchised dealers sold more than 31% of all new BEVs sold the U.S., according to NADA.

As has been well documented, scarce new-vehicle inventory meant consumers sought transportation in the used-vehicle market. Tight new vehicle inventory caused rising used vehicle prices throughout the year. Through October 2021, the average used vehicle transaction price at a franchised dealerships was $25,904, up +19.1% year-over-year.

NADA said that consumers are feeling the effects of rising prices and are concerned that their standard of living will decrease as wage gains are not sufficient to mitigate rising prices. Despite this sentiment coming as a result of increased inflation, real personal consumption expenditures surpassed pre-COVID levels starting in the second quarter of 2021 and increased throughout the remainder of the year.

“This contradiction is likely due to increased spending by higher income households with lower- and middle-income households feeling the impact of inflation more directly,” said NADA

The U.S. unemployment rate fell to 3.9% in December 2021 during the Biden recovery. In November, a record 4.5 million Americans quit their jobs with 6.7 million hired. There were 1.5 job openings per unemployed person at the end of the November 2021, the best job-seekers market on record. While the economy continues to add more jobs than have been resigned each month, the COVID Omnicron variant could impact employment numbers in the coming months if increasing numbers of infection continue. At franchised new-car dealerships, employment totaled 1.079 million at the end of October 2021, virtually unchanged from prior months; throughout 2021, employment at franchised dealerships has hovered at approximately 4% to 5% below pre-COVID levels.

“We expect employment at franchised new-car dealerships to return closer to pre-pandemic levels as new vehicle production picks up and the microchip shortage slowly dissipates,” said Manzi. “Furthermore, pent-up demand continues to build, which should help push sales rates closer to pre-pandemic levels once the chip shortage is behind us.”

This entry was posted in economy, news analysis, sales and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published.