The industry’s seasonally adjusted annualized rate of light-vehicle sales likely will be down in the first quarter from the same period in 2019, analysts say, before increasing later in the year.
“Especially as the vaccine spreads through the population, people get more and more confident with how safe they are going out and how confident they are in their jobs,” said Sam Fiorani, vice president of AutoForecast Solutions. The forecasting firm projects 16.2 million light-vehicle sales in 2021.
Still, there is uncertainty as the vaccines are distributed and cases of the virus continue to climb in many states.
“There is some risk in 2021 mainly centered in the first quarter. That’s because we don’t know what things will look like as the vaccine rolls out,” said Jeff Schuster, president of global forecasting at LMC Automotive. “As that happens, things will improve, but not until you get to large numbers. It’s not going to affect any of the restrictions and lockdowns that we’re seeing.”
The general consensus is that mass vaccinations could happen by the second half of the year, but if distribution goes faster than expected, Schuster said the industry could rebound sooner.
Analysts expect sales to improve in the second quarter, and by then, the industry may have a more accurate outlook on what’s to come, said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners.
“The real test will be the second quarter,” Wakefield said. “You’re going to have a clear view of, ‘Are we starting to see the tailwind expected from the vaccine impacts? Are we starting to see some supply chains … be less of a constraint?’ ”
Tyson Jominy, vice president of data and analytics at J.D. Power, said the vehicle market is strong, despite having so much working against it.
J.D. Power data shows the average transaction price surpassing $37,000 for the first time in November, and Jominy said it probably reached $38,000 in December.
“There’s a lot of money being spent, and dealers are making a lot of money as well, so the industry is, all things considered, in a very healthy place right now because inventories are so low,” Jominy said. “So long as we can maintain that discipline, we’ll continue to see these record margins that we’re seeing. But the history of the industry is that we need a lot of volume, and there’s always the risk that we’ll fall back into producing too many.”
Some forecasters expect inventory levels to normalize by the third quarter this year, but even with higher inventory levels, it could take a while for automakers to get dealerships enough of the vehicles that sell fastest, Fiorani said.
“To get the breadth of the products they’re looking for, especially when you see products that traditionally have a large amount of inventory, like F-150, coming off the assembly line, it will take a while to load up all the different choices a buyer might want,” he said.
Chesbrough said automakers should be able to recoup some of last year’s lost sales to rental companies as the travel sector rebounds in 2021.
