When you think “Mercedes Benz,” presumably it is in the context of something like the S-Class, a swanky motor vehicle.
And you wouldn’t be wrong, because a new S-Class was launched in 2021 and not only is it swanky, but it is chockfull of so much tech that it is probably like most PCs that people own: there are so many possible programs that one is unlikely to ever use all of them or even a few of them to their full capabilities.
And people clearly find it appealing because S-Class sales in 2021 were up 66.3% in 2021 over 2020, or 14,282 units.
Actually, in the car space, that was Mercedes top performer in 2021. Although it moved more C-Class cars, 30,815, on a percentage basis the C-Class was up only 17.2% from the previous year.
And while there were more E-Class vehicles sold than S-Classes—20,947—on a percentage basis that is down 22.7%.
In fact, there were a lot of minus signs in Mercedes’ 2021 results.
Fortunately for it, there are the “G” vehicles, crossovers, where, not surprisingly, the action was. For example, the GLE, with sales of 65,074 had a stellar performance, as it was up 35.1% compared with 2020. (The GLE has a variety of variants, so that undoubtedly was beneficial for those going into the showroom.)
But the bottom line for the Mercedes-Benz passenger vehicles shows an increase of just 0.4% compared to 2020. Yes, positive territory. But then, 0.4%.
However, Mercedes has something else, something that you probably don’t think about, something not stylish and swanky:
Things like the Sprinter and Metris Vans.
Van sales in 2021 were up 4.8% compared with 2020. A total of 53,472 units.
Cox Automotive reports that there are two things going on in the new vehicle market right now that certainly aren’t particularly beneficial if you’re looking for something new to put in your driveway.
On the one hand, average transaction prices (ATPs) are continuing to climb. In November the ATP was $46,329, a record, and while the December number has yet to be calculated, Cox notes, “A new record in December would not be surprising.”
Then on the other hand, there are incentive programs, which are continuing to disappear.
Cox points out that in 2019 new-vehicle incentive programs reached an all-time high. This year, incentive programs have decreased month after month such that in the fourth quarter it was at the lowest point in five years.
Of course, all of this matters only if vehicles can be found.
Charlie Chesbrough, senior economist at Cox, says, “While sales in the first half of 2021 were relatively strong, the industry ran out of vehicles, and sales stalled in the second half.
“Total sales in the second-half of 2021 were the slowest in a decade. Demand is healthy, but supply and production disruptions kept the industry in check. You can’t sell what you don’t have.”
Nor can you buy what you can’t get.
So if you can, you might want to wait until next year.
Chesbrough: “Heading into 2022, we believe the supply situation will improve but it will take time to restock the shelves at dealerships. We expect modest gains in new-vehicle sales in the first quarter, and by the second half of the year a much more robust market should emerge.”
This, of course, is dependent on things like the semiconductor issue to be solved, to say nothing of improvement in the logistics situation (i.e., shipping and trucking).
But the numbers for 2021 are improved over ’20, so. . . .
When looking at charts developed by French auto analyst firm Inovev of the sales of premium vehicles in the U.S., China and Europe for the first 11 months of 2021, there are a few surprises.
As in sales of 2 million in the U.S., 3 million in China and 2.5 million in Europe.
It’s not surprising that the number is higher in China than in the other two regions. After all, it has a population of 1.4 billion.
It is a little surprising that the numbers break as they do, given that the population in Europe is 748 million, which is about half of that in China and slightly more than twice the population in the U.S. The 500K increments seem strange given that.
Clearly wealth is not evenly distributed, with the U.S. having a higher proportion of its population capable of affording a premium vehicle.
But the surprising thing is the relative sales of the premium brands in the three markets.
The five three brands in the U.S. during this period are BMW, Lexus, Tesla, Mercedes and Audi. Then there is a slight falloff in numbers.
The top five brands in China are BMW, Mercedes, Audi, then a big decline (Audi is at over 600,000 units) to Tesla (at 240,000) and Cadillac.
In Europe it is BMW, Mercedes, Audi, then a big drop to Volvo (Audi: >500K; Volvo: 245K) and Tesla.
While there is consistency with BMW, Mercedes and Audi, and while Tesla is certainly on a roll, Lexus is something of an outlier. It doesn’t show up at all in the listing of sales in China and in Europe it is in ninth position, behind Lancia and just ahead of Jaguar, all of which are well below 100,000 units.
Lancia doesn’t show up at all in the sales tracking for the U.S. and China, and in the U.S. Jag is in last place and it is third from last in China.
Seems as though the German brands are consistently solid around the world while for everyone else it is somewhat random.
Whether it is a case of pent-up demand, regular demand or necessity, it may be that you’re going to be going out to get yourself a new set of wheels.
Based on information released by Kelley Blue Book about the state of affairs that existed in the U.S. market during the month of November, here are a couple of things you should have in mind:
Have lots of money or good credit. That’s because KBB found the average transaction price (ATP) of a non-luxury vehicle was $43,144. A record high. People were paying $900 over sticker (a.k.a., “MSRP”). People have been paying over MSRP for the past six months. And remember when there used to be all manner of cash incentives? Good luck. But let’s say you’re in the market for a luxury vehicle. The average price there is $61,455.
While it is still going to cost a lot, you might consider the type of vehicle that you’re buying from the point of view of price. For example, KBB calculated that the ATP for a car was $41,026, $45,201 for an SUV, $46,523 for a van, and $54,462 for trucks. The least expensive vehicle is a compact car at $25,650—which is 15.7% more than it cost in November 2020. And good luck trying to find one—or any car, for that matter, as OEMs are concentrating on building vehicles with higher content and prices because, obviously, they make more money on them.
Either way: Plan to spend more than you were planning to spend.
But if you act quickly, you might get one of 50 special editions
By Gary S. Vasilash
In the first three quarters of this year Audi has sold 825 TT models. Which in the context of, say, the Audi R8 is good (496 through the first three quarters) but as all other Audi models (with the exception of the e-tron GT, which had sales of 462, but know that it didn’t go on sale in the U.S. until July, so that number is completely understandable) are in at least the four figures, the 825 isn’t all that robust.
Model year 22 is the last for the Audi TT RS in the U.S. market, so Audi of America is offering a limited edition—the Audi TT RS Heritage Edition—of which 50 will be on offer.
They are emphasizing the five-cylinder engine in the vehicle, although in a way that might not be apparent to anyone other than someone buying one, as they have a selection of five color combinations–Alpine White with Ocean Blue leather and Diamond Silver stitch; Helios Blue metallic Diamond Silver leather and Ocean Blue stitch; Stone Gray metallic with Crimson Red leather and Jet Gray stitch; Tizian Red metallic with Havanna Brown leather and Jet Gray stitch; Malachite Green metallic with Cognac Brown leather and Black stitch—and they are producing 10 each.
Two numbers of interest related to the TT RS Heritage Edition:
It has a 174 mph top speed limiter
The MSRP is $81,450
This doesn’t mean the end of the TT in the U.S. The TT and TTS models will continue to be available.
Challenges and opportunities in the dealer model and other contentious issues
By Gary S. Vasilash
Research from Cox Automotive, which is a source that dealers find exceedingly useful in their efforts to conduct their business, found that there is an increasing interest among customers to do more of their transactions digitally.
As in 80% of consumers would like to do part of the buying transaction on line. (Who doesn’t do research on the vehicles they’re interested in on line; who doesn’t want to get some of the “paperwork” related to the transaction done in the comfort of their own home rather than under the fluorescent lights of a dealership?)
And 25% of customers would like to have the whole thing done and dusted on line.
What’s more, KPMG conducted a global survey among executives in the auto industry—OEMs, suppliers, dealers, financial services providers, etc.—and they found (again, realize this is a global survey and the Cox Automotive survey in U.S. only):
78% think the majority of purchases will be on line by 2030
34% think that from 60 to 79% of the vehicles delivered will be direct to the consumer by 2030
84% think vehicle subscriptions will be competitive to buying and leasing by 2030 and only 22% dealers are the best channel for subscriptions (OEMs are the biggest choice, 45%)
There is some concern that due to the reduced inventories that are a result of supply chain issues dealers—not all, but some, some that get attention—are increasing prices well above the sticker price.
If consumers were thinking there might be an alternative before this occurred, then those who were subjected to or simply heard about this behavior might be thinking harder about new approaches to getting vehicles (e.g., the Tesla approach).
This is one of the topics that is discussed on this edition of “Autoline After Hours” with “Autoline’s” John McElroy, Cars.com editor-in-chief Jennifer Newman, the Wall Street Journal’svehicle expert Dan Neil, and me.
Other topics include whether Apple is going to get into the vehicle business (Neil and Newman both think that it is a when not an if), and whether electric vehicles are going to be the end of muscle cars as we know them.
And there’s much more in one of the more animated shows in some time.
This is what happens when there’s little supply and plenty of demand
By Gary S. Vasilash
Back in November 2020, the Centers for Disease Control determined, “The overall weekly hospitalization rate is at its highest point since the beginning of the pandemic, with steep increases in adults aged 65 years and older. Based on death certificate data, the percentage of deaths attributed to PIC for week 48 was 12.8% and, while declining compared with week 47 (18.6%), remains above the epidemic threshold.”
In other words, horrible times.
As we come forward to now, here is something that seems nearly inexplicable: J.D. Power and LMC Automotive estimate that new-vehicle retail sales in November 2021 will be 12.6% lower than they were in November 2020.
Thomas King, president of the data and analytics division of J.D. Power, explains, “For November—as has been the case since August—new-vehicle sales are being constrained by available inventory.”
Less to buy.
King continues, “Retailers continue to sell a large proportion of vehicles almost as soon as they arrive in inventory. This November, a record of nearly 55% of vehicles will be sold within 10 days of arriving at a dealership, while the average number of days a new vehicle sits on a dealer lot before being sold is on pace to fall to 19 days, a record low and down from 48 days a year ago.”
Think about that. A year ago vehicles were on lots for nearly 30 days longer than they are now.
And the people on the short end of the proverbial stick are customers. The research firms estimate that average transaction prices—the prices actually paid by people—will be $44,043, which is 18.1% higher than they were in November 2020.
As a result, the total retail profit per vehicle will hit a record $5,164, which is up $3,060 last year.
$5,164 now. $2,104 then.
And then there’s this:
Two years ago, November 2019, COVID wasn’t even on the radar of most people.
Yet the J.D.P.A. and LMC estimate that the total aggregate profit from new-vehicle sales in November 2021 will be 226% higher than in November 2019.
Keep that in mind when you visit the nearly empty lot of your local dealer. You might think they’re hurting. But that may not be the case.
In the first three quarters of 2021, these are the U.S. sales numbers of the leading luxury brands:
That’s right: Tesla outsold Mercedes.
And then there is this, the market capitalization (on 11/11/21) of the three companies that were once known as the “Big Three”:
GM: $89.14 billion
Ford: $77.5 billion
Stellantis: $64.21 billion
(It is worth noting that in addition to Chrysler, Dodge, Jeep, Mopar and Ram, Stellantis includes Abarth, Maserati, Open, Alfa Romeo, Citroen, DS Automobiles, Fiat, Fiat Professional, Lancia, Peugeot, and Vauxhall. Meaning it is a much larger company back when it was part of the Big Three.)
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.