The midway point for 2021 is in the rearview mirror and many dealership owners and managers are knee-deep in planning for 2022. Now is the perfect time for a quick review of the mid-year economic indicators. While new model retail sales are trending up and used vehicle prices are hitting record highs, there are some broader market trends which should be considered.
Supply chain issues impact sales forecast
According to NADA, new light-vehicle sales are expected to reach 15.5 million units for 2021, representing a 7.2 percent year-over-year increase. Fitch Ratings expects vehicle sales to return to 2019 levels in 2022/2023. However, IHS Markit and Wards Intelligence do not expect the U.S. to see 17 million light-vehicle registrations annually until 2025. This market skepticism is fueled by supply chain issues and a persistent semiconductor shortage. General Motors, Fiat Chrysler and Ford have all felt the impact on production, and analysts believe the semiconductor chip shortage will reduce new vehicle production by 1.28 million.
While dealers have experienced the vehicle shortages first hand, one bright spot is the strong trend toward online sales which were bolstered during the 2020 shutdown. Consumers increasingly became more comfortable completing more of the vehicle purchase process online. This has allowed dealers to stay in the game even with the persistent production issues as the online sales model is perfect for a vehicle order rather than immediate delivery.