The squeeze on inventories continued to haunt dealers in August, as sales of new vehicles dropped below the levels reported during the summer of 2020.

The comparison is important because it was this time last year when the industry began to recover from the shutdowns following the outbreak of the pandemic in the U.S. and well below numbers registered in 2019, analysts predict.
J.D. Power and LMC Automotive said retail sales of new vehicles in August are expected to drop 14.3% decrease compared with August 2020, and a 21.6% decrease compared with August 2019 when adjusted for selling days.
Comparing the same sales volume without adjusting for the number of selling days translates to a decrease of 17.6% from 2020 and a decrease of 30% from 2019, according to the report.
August is prime sales time
“The month of August is historically a peak selling month as manufacturers launch promotional events to clear inventories of outgoing model-year vehicles and begin sales of the new model year,” said Thomas King, president of J.D. Power analytics division.

“This year, however, the industry has insufficient inventory at dealerships to meet strong consumer demand. The consequence is that the retail sales pace is depressed, but transaction prices are elevated.”
The seasonally adjusted annualized rate, or SAAR, for total new-vehicle sales is expected to be 13.1 million units, down 2.1 million units from 2020 and down 4 million units from 2019, King said.
Production cuts put squeeze on sales
General Motors, Ford, Toyota, Nissan and Honda have all reported they have been forced to curtail production due to shortages of semiconductors. Cox Automotive said U.S. auto sales are forecast to be squeezed even tighter in August by a worsening supply situation.

Cox expected SAAR to reach 14.3 million, the slowest sales pace this year. The August pace will be down from July’s 14.8 million pace and down from a level 15.2 million units last August, after averaging nearly 17 million a month through May.
This expected pace is the slowest since June 2020 when it was 13 million, Cox said. Despite the issues, some brands just remain near the top of the list of potential buyers.
“As the entire automotive industry continues to grapple with the ongoing microchip shortage and related supply chain disruptions as a fallout of the global pandemic, it’s interesting to see how consumer perceptions and shopping behaviors change in some areas and how they hold steadfast in others,” said Vanessa Ton, senior industry intelligence manager for Kelley Blue Book.
“Top brands like Toyota and BMW have stayed at the top of shoppers’ consideration lists, but interest in popular models has shifted and other brands are starting to close in. We also see that segment considerations fluctuated quite a bit among shoppers in response to inventory shortages.”