Global Light Vehicle Sales: Gulp

When it is worse than it was last year. . .

By Gary S. Vasilash

According to LMC Automotive, global light vehicle sales in September 2021 were 6,229,029 units—which is down 20.3% compared with September 2020.

Think about that.

2020, which will be forever known as the year COVID hammered the world, had higher September sales than in September 2021. (Read that again.)

In the U.S. sales were comparatively down 25.1%. Canada was off 19.9%. Western and Eastern Europe down 24.2% and 20.9%, respectively. Japan down 32.2% and Korea off 30.5%. China sales were down 16.5%. Brazil/Argentina off 26.1%. And wherever Other is, that is down 11.3%.

Essentially, this all goes to the lack of microprocessor supply the world over.

Historically, it would be something like energy prices or a lack of steel driving a diminishing of sales.

But no, silicon.

Yes, the world’s auto industry is advanced, given the evident dependence on chips.

Thinking About Buying a New Vehicle? Think Hard

. . .because (a) you’re going to be spending more than you might think and (b) you may be buying something that you aren’t necessarily considering

By Gary S. Vasilash

If you’re thinking about buying a new car, ute or truck—and “new” may mean “new to you,” as in “used”—then you ought to hear what Charlie Chesbrough, senor economist and senior director of industry insights for Cox Automotive has to say about the current market conditions.

As Cox Automotive encompasses a variety of businesses that know more than a little something about, as they say, the conditions on the ground—as in Kelley Blue Book and Manheim Actions—Chesbrough’s observations and understanding are grounded in what’s really happening, not some theoretically calculations.

The fundamental thing is this: Although it might seem that COVID is behind us, that everything, with a few hitches here and there, is getting back to normal, that is far from being the case with regard to the availability of some things. Things like motor vehicles.

This is because COVID helped cause a semiconductor chip shortage. In part this came from everyone working or playing from home, which led to a sudden demand for PCs and PlayStations, both of which use silicon.

Because the auto companies faced shutdowns of their factories last year, they canceled their orders with the semiconductor providers, who then readily found anxious customers who were making things like PCs and PlayStations.

So the vehicle manufacturers had to go to the end of the line.

It is also worth noting that some of the chips that go into vehicles don’t have the types of margins that chips that go into other products do, so the semiconductor manufacturers realized that they’d do well by just serving the non-automotive customers fulsomely while providing the auto manufacturers—who are famously thrifty when it comes to paying suppliers—with a reduced number of chips.

This has led to two things, Chesbrough notes:

  1. Overall reduced number of available vehicles
  2. Overall increases in the prices being charged for vehicles—new and used

While the first part of the year seemed to be improving when it came to the availability of vehicles (relatively speaking—2020 was a horrible year for sales and 2021 was an improvement on that), things have gone south since then.

Chesbrough suggests that things won’t get back to what may be considered “normal” until sometime next year (if at all).

At present, OEMs are concentrating on putting chips in vehicles that are high-ticket items, which is good for returns, but which put many consumers in a bind (unless they are high-end buyers).

There are some companies, like Ford, which are recommending that people order vehicles, something common in Europe but not a practice that is at the basis of the auto market as it has developed in the U.S., which is all about moving the metal.

Chesbrough talks to Keith Naughton of Bloomberg, Joe White of Reuters and me on the show.

In addition to which, Naughton, White and I talk about Ford’s massive investments in electric vehicle/battery manufacturing capacity in Kentucky and Tennessee—and how Michigan didn’t even make a proposal for the investments, as well as about GM’s Investor Day presentations, which were clearly designed to make Wall Street look at GM more as a “tech company” with a wide range of product in the pipeline and technology and capacity that will make money sooner rather than later.

And you can see it all


AlixPartners Describe Auto Reality

The consulting firm couldn’t be much more clear

By Gary S. Vasilash

“Of course, everyone had hoped that the chip crisis would have abated more by now, but unfortunate events such as the COVID-19 lockdowns in Malaysia and continued problems elsewhere have exacerbated things,” said Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners.

Certainly, that was the case. The chip crisis continues to make the forecourts of new vehicle dealership look like basketball courts: empty.

The comment about the COVID-19 lockdowns in Malaysia is a bit surprising.

Who knew that Malaysia had a role to play in the production of a crossover in Michigan?

Keep that in mind when people talk about (1) supply chains and (2) how there is truly a global network in goods. Those chains are long and those networks are complex.

AlixPartners’ Wakefiled continued:

“Also, chips are just one of a multitude of extraordinary disruptions the industry is facing—including everything from resin and steel shortages to labor shortages. There’s no room for error for automakers and suppliers right now; they need to calculate every alternative and make sure they’re undertaking only the best options.”

That’s resin as in the stuff used to make all of those plastic components that are part and parcel of vehicles. Steel shortages that are driving up the price of this ferrous material (shortages are contributing to rising sticker prices; no surprise there). And labor shortages just aren’t affecting that local restaurant down the street. Seems like workers everywhere have disappeared like that scene in the Marvel movie when the bad guy snapped his fingers.

As for the best options: Seems like OEMs are producing the high-ticket vehicles so as to maximize their venue potential.

A question, however, is whether this isn’t going to have some problems down the proverbial road assuming that the supply chain and network problems are resolved and there are people sitting there with exceedingly expensive vehicles in their driveways and exceedingly long payment schedules for said vehicles.

Another Straw on the OEM’s Back

As if COVID and chip shortages aren’t enough.

By Gary S. Vasilash

According to analysis firm IHS Markit, the automotive OEMs aren’t maintaining the level of loyalty with their customers that they once did.

In fact, the firm’s data show that brand loyalty dropped to a six-year low in June.

Looked at from a year-over-year perspective, the aggregate of April, May and June 2021 has a loyalty rate of 51.6% compared to 54% during the same period in 2020.

However, the type of vehicle that a person picks is something to which loyalty remains strong, reaching 55.5%.

In other words, if you have a Ford pickup truck and were out there in April/May/June for a new vehicle, there is a likelihood that you bought a pickup truck—not necessarily a Ford.

Or as IHS’s Tom Libby, associate director of loyalty and industry analysis, put it, “Households with a pickup in the garage like the concept of a pickup, and therefore will acquire another one.

“But their likelihood of their staying loyal to the brand of their pickup has diminished.”

One of the explanations that IHS has is that because of the chip shortage there are few vehicles on dealer lots. So if the theoretical shopper went out to a local Ford store for a new pickup and failed to discover anything that met their wants/needs, it very well may be that they’d go to a Ram or Chevy store, something that used to be uncharacteristic.

While the chip shortage undoubtedly plays a non-trivial role in this, there is another consideration: some buyers are simply more willing to try things that they may not have a few years ago.

Consider this the Amazon Effect: You put “wiper blades” into its search bar and it brings back some 8,000 results, brands you may have never heard of. So you try something new. It works. Then you search for something else. Again, lots of results. Maybe you’ve always only used Crest, but Colgate is something you’ve heard of, so you try it.

While this is not to say that a pickup truck and a tube of toothpaste are analogous, it is to say that if you can’t get the features you want on that Ford pickup that you can on the Chevy or Ram, there may be more willingness to take the option, especially as those are brands with which you’re familiar.

This doesn’t mean that brand loyalty is something that will disappear.

It is to suggest, however, that this is going to be an even-greater challenge for incumbent companies and challenger brands.

NSX Ending

A really wonderful supercar will come to an end. The reason? Probably because not many people are buying the car.

By Gary S. Vasilash

Yesterday the auto companies that announce sales figures on a monthly basis made their announcements.

American Honda was modestly happy, noting that for the month of July it delivered more than 135,000 vehicles, which includes 51,815 cars and 83,727 trucks for both the Acura and Honda brands.

One vehicle among the 135,542 units had sales of seven units. Seven.

Acura NSX; 22 is the final ride for production. (Image: Acura)

From January to July there have been 67 sold in the U.S.

Yesterday American Honda also announced that the NSX—the vehicle that isn’t selling well by almost any metric—will end with model year 2022.

The second generation NSX, which was launched in 2016, will have a limited run during its final year of production at the Performance Manufacturing Center in Ohio.

There will be 350 NSX Type S vehicles built. Period. Three hundred will be available in the U.S.

Given the sales of the NSX so far, the folks at Acura are evidently optimistic that there will be more than a few collectors looking to get their hands on the final edition.

Jon Ikeda, vice president and Acura Brand Officer, stoically said, “Acura is a performance brand, a company of enthusiasts, and we will continue moving forward, actively investigating what the next generation of sports cars should be in an electrified era.”

Seems like the answer to that might be: an SUV.

Surprising Trends in Auto Retail

You spend a lot. And you may be willing to forego the dealer “experience”

By Gary S. Vasilash

According to the most-recent Cox Automotive/Moody’s Analytics Vehicle Affordability Index, the number of median weeks of income to buy a new vehicle is 37.

37 weeks to buy a new vehicle.

That’s the greatest number of weeks since they started measuring it back in 2012.

The firms found a trifecta of things contributing to this situation:

  • Vehicle prices increased
  • OEMs and dealers are putting less cash on the hood
  • Median incomes fell

It would have been worse, apparently. Financing rates decreased, so if that didn’t happen, there would have been higher monthly payments.


In May, the most recent month with figures, the average transaction price that people were paying for a new vehicle was $41,263 according to Kelley Blue Book.

Now admittedly that doesn’t mean that everyone pays that much. It wraps in figures for OEMs from Mitsubishi to Mercedes, from Chevy to Porsche. Cars, trucks, SUVs.

But still, a lot of money.

A lot of weeks to earn that money.

All that said, J.D. Power has announced that predicated on its analysis of the usage of OEM websites, 49% of vehicle shoppers are willing to purchase a new vehicle online.

This is an increase of 11% from 18 months ago—about the time that the effects of the pandemic kicked in in the U.S. market.

So what’s behind this:

  • Is it that people are more comfortable shopping for things online, as many of them have done during the past 18 months for everything from groceries to appliances?
  • Are more people simply questioning the visit to a dealer as being a necessity?
  • Is this a case where people go to a dealership, take the test drive, and then go home and search for a better deal?

Whatever the case, it is clear that there is a shift in how vehicles are going to be bought. And it is also clear that there is a shift in what people are willing to pay for vehicles.

Consider this: If you bought a new vehicle the first week of January this year, you wouldn’t pay it off until the week of September 10.

That Old Vehicle Is Now. . .Older

Yes, another consequence of COVID

By Gary S. Vasilash

During 2020 probably one of the last things on anyone’s mind was buying a new car or truck unless, of course, they had a feeling of being locked in and locked down so they wanted to get out there and do something with the money that they were not spending on cruises or long weekends in Las Vegas.

Light vehicle sales went down.

And according to research from IHS Markit, a consequence of that is that the age of vehicles in people’s driveways went up.

Up by almost two months.

According to the research firm the average age of a light vehicle is 12.1 years old.

(Image: IHS Markit)

Another thing happened, IHS found. The number of vehicles that were taken out of active service went up. Known as “scrappage,” some 15+ million vehicles—or 5.6% of all vehicles in operation—were, well, scrapped.

One would think that this would have made the average age go down, but the reduced overall sales and a drop in vehicle miles traveled caused, in the words of Todd Campau, associate director of Aftermarket Solutions at IHS Markit, “a radical departure from the norm.”

On the subject of vehicle miles traveled, they were down over 13% in 2020.

One result of that is that people may have allowed their registrations to expire because they weren’t going anywhere.

And if they kept it, they may be in for a happier 2021.

Campau: “The microchip shortage and subsequent inventory levels for new vehicles have created a situation in which used vehicle values have gotten extremely high, so a vehicle owner who may have kept a vehicle in the garage that they were not using in 2020, now instead may take advantage of the opportunity to either reduce the number of vehicles in their garage, or trade up to something newer while the demand and value is extremely high on their used vehicle.”

Of course, this means being able to find a vehicle that they may actually want if said vehicle isn’t a high-end SUV or loaded pickup, which is what OEMs are focusing on building as they meter out their silicon to vehicles that provide them with the highest margins.

IHS anticipates that the aging fleet will, however, get younger, as more people get in the market in 2021.

Not a fountain of youth. But a move in the right direction.

Not As Big 3 for SUVs

Toyota leads in SUV sales in the U.S.–by a non-trivial amount

By Gary S. Vasilash

Although it might seem that when it comes to trucks and SUVs, “trucky” things, that Ford, General Motors and the company formerly known as FCA which was formerly known as Chrysler, would be dominant.

When it comes to pickups, yes. The numbers of F-150s, Silverados and Rams is truly extraordinary. Who knew that so many people were in need of boxes on the back of their vehicles? (Yes, people who actually do work with their trucks, do, but somehow that guy down the street who uses the bed to carry mulch once a year. . . .)

According to analysis firm Inovev, SUVs represented 53.5% of the U.S. market during the first quarter.

Toyota RAV4: best selling SUV in the U.S. (Image: Toyota)

And of them, most carried the Toyota “T.”

Inovev notes that Toyota has outsold both Chevy and Ford by about 50,000 units, with Toyota sales being just shy of 250,000 units and the other two slightly below 200,000 for Q1.

Inovev points out that Toyota also leads the Big Three in the sedan category (Camry, Corolla).

So if there are three big categories–trucks, SUVs and cars–the Big Three is now only dominant in one.

About the 2022 Lexus ES

Yes, sedans matter. Done right.

By Gary S. Vasilash

Lexus has revealed the major midcycle update of the seventh generation ES, which appeared in 2018. The ES is a sedan. The ES is one of the fundamental products of the brand that we now know as Lexus. In 1989 at the North American International Auto Show in Detroit Lexus was introduced to the world with two models: the LS 400 sedan and the ES 250. While many associate Lexus with the wildly popular RX crossover, it wasn’t introduced until 1989.

Without the ES, arguably, we wouldn’t have the Lexus that we now know: Let’s face it, while the top-of-the-line LS is notable, its sales potential is limited. (That is: the starting MSRP for an LS is $76,000, while the starting price for an ES is $40,000. The difference is not trivial.)

The 2022 Lexus ES. Yes, people still like to drive cars. (Image: Lexus)

Lexus has seven cars in its lineup: IS, RC, ES, GS LS, LC and LFA. In 2020 there were 68,205 Lexus cars delivered. Of that number, 43,292 were ES models. Second to it is the IS, at 13,600.

Of course, the brand that made luxury crossovers a thing has five models in the SUV category. In 2020 it sold 206,836. Of that number, 101,059 were RX models. Second to it is the NX, at 55,784.

While it is clear that the crossover is certainly bringing in more buyers, note how important the ES is to the overall car sales: 63% of the total. The RX represents about 49% of the crossover total.

So for 2022 the brand has made some modifications, such as making its Lexus Safety System+ 2.5 as standard equipment (among its elements: Pre-Collision System (PCS) that uses enhanced sensors; it includes Frontal Collision Warning (FCW), Automatic Emergency Braking (AEB), Pedestrian Detection and Bicyclist Detection, and Intersection Turning Assist (under certain conditions it will recognize an oncoming vehicle when performing a left-hand turn, or a pedestrian when performing left and right-hand turns; it activates PCS if needed)).

They’ve modified the instrument panel design, doing such things as moving the center screens (standard 8-inch and optional 12.3-inch) forward 4.3 inches for easier accessibility.

On the outside there are new grille patterns. There are new wheels.

They’ve modified the ride and handling characteristics thanks to things like the use of a new rear suspension member brace. They’ve updated the braking system. . .and even enlarged the size of the brake pedal.

They’re even offering an FSPORT accessory and handling package for the hybrid version of the ES.

Lexus is putting a lot into the ES.

Look at those numbers for last year.

And consider this: in 2020 there wasn’t a single Cadillac model—not a car, not a crossover, that had sales of 43,292. The closest is the XT5 crossover, at 35,223.

Yes, the right sedan can matter.

Remember When Nissan Was Noticeable?

Not all that long ago the Japanese Big Three were Toyota, Honda and Nissan. Nowadays the last-named seems to have lost its momentum in the market while the other two keep driving forward. Why?

By Gary S. Vasilash

“Remember when driving was fun?” actress Brie Larson opens a new Nissan commercial rhetorically asking before she blitzes her way through the array of new vehicles that Nissan has launched, or is about to.

At one point she’s being the wheel of the Z Proto and acknowledges that there are three pedals down there. Enthusiasts will get it. Others may be confused.

Will Brie boost Nissan? (Image: Nissan)

Nissan is rolling out 10 new or improved products over 20 months, so its showrooms will be fresh with sheet metal.

For those who are interested in one-pedal driving, Larson drives in a Nissan Ariya, the new EV that is anticipated to launch this year. (EV drivers will get it. Others may be confused.)

Although Nissan showed improvement in the first quarter, with its sales up 14.8% from Q1 2020, it really isn’t a good reflection of what it has on offer right now.

Consider: the Nissan Division had sales of 266,482 units. That’s Versa, Sentra, Altima, Maxima, LEAF, 370Z, GT-R, Kicks, Frontier, Titan, Pathfinder, Armada, Rogue, Murano, NV, and NV200.

Ford sold 277,233 trucks. F-Series, Ranger, E-Series, Transit, Transit Connect, and Heavy Trucks. 203,797 of those were F-Series.

What accounts for Nissan’s lack of traction in the market is certainly mystifying.

The question is whether Captain Marvel will save the day.