The lack of dealer inventory continues to throttle new vehicles sales, which are expected to drop to the lowest level in September since Spring 2020 when the pandemic-related lockdowns prevailed, according to analysts.
Bank of America estimates U.S. light vehicle sales in September will decrease 25% compared with the year-ago period on a sales day-adjusted basis for a seasonal adjusted annual rate of 12.2 million units.
September could mark the fifth month in a row the SAAR has dropped in reaction to the significant constraintson supply due to the semiconductor shortages, the report noted, adding the SAAR, which measures the sales tempo, fell from 18.5 million units in April to the current 12.2 million.
More than a short-term trend?
Analysts from B of A said beyond absolute unit trends, price and mix also appear to be flattening or fading, which may turn into headwinds for industry longer term.
Meanwhile, Wards Intelligence also noted the dearth of popular models relative to less popular vehicles is exacerbating the overall downturn, pushing some consumers out of the market for indefinite and lengthy periods.
According to a forecast released by Cox Automotive, the pace of auto sales, or SAAR, is expected to finish near 12.1 million, the slowest pace since May 2020, when much of the country was closed during the first wave of the COVID-19 pandemic.
September sales volume is expected to fall nearly 26% from a year ago and finish near 1 million units, among the lowest volume in the past decade, according to Cox Automotive. Third-quarter vehicle sales are forecast to be down 14% from the third quarter of 2020 when the industry was struggling to recover from the lockdowns and down 22% compared to the same period in 2019, Cox said.
The September 2021 sales pace will be down from August’s 13.1 million pace and down from the September 2020 pace of 16.3 million.
Industry SAAR falls to new low
Like the others, Cox laid the blame for the drop in September U.S sales on the ongoing lack of new-vehicle inventory created by the semiconductors shortages, which have closed assembly lines across the industry as manufacturers juggled the limited supply of chips. Analysts now believe the shortages could last well into 2022.
“September results show that there are simply not enough vehicles available to meet consumer demand,” said Thomas King, president of the data and analytics division at J.D. Power. “In September 2019, 1,020,000 retail sales occurred as buyers chose from 2.9 million vehicles in inventory. This month, retail customers will buy 888,900 vehicles, with just 920,000 in inventory.
“The mismatch between strong consumer demand and constrained inventory is leading to higher vehicle prices. In September 2021, average transaction prices are expected reach an all-time high of $42,802, the fourth consecutive month over $40,000.
“For context, average transaction prices are trending to be 18.6% higher in September 2021 than they were in September 2020 when prices broke the $36,000 level for the first time ever. This is partially due to continued compression of manufacturer incentives,” King added.
The average manufacturer incentive per vehicle is on pace to be $1,755, a decrease of $2,037 from a year ago and the lowest amount on record. Expressed as a percentage of the average vehicle MSRP, incentives for September 2021 are trending toward a record low of 4%, down nearly 5.2 percentage points from a year ago.
“Retailers continue to sell a large proportion of vehicles almost as soon as they arrive in inventory. This month, nearly 50% of vehicles will be sold within 10 days of arriving at a dealership,” King added.