Tag Archives: LMC Automotive

A Bright Aspect of the U.K.’s Dour March Sales

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Although passenger vehicle sales in the U.K. were down 14.3% in March compared to March 2021 at a total 243,479 units.

The U.S. sales were, according to LMC Automotive, on the order of 1.25 million units in March, the automotive consulting firm notes that compared to March 2021 that is a decrease of 22%, so the Brits are better on that score.

What is most notable about the U.K. vehicle registration numbers, as reported by SMMT: Battery electric vehicle sales were 39,315 units, or 16.1% of all vehicles sold. That is a 78.7% increase over the number of EVs sold there in March ’21.

Other categories:

Diesel:                    13,736 units           -55.2% (from March ’21)

Petrol:                     102,349                  -25.6%

MHEV diesel:          11,569                    -50.3%

MHEV petrol:          32,716                    4.0%

PHEV:                     16,037                    -7.5%

HEV:                       27,737                    28.4%

In other words, only EVs, mild gasoline hybrids and hybrids saw an increase. Those three categories of vehicles represent 40.9% of the total market in March ’22.

Things are certainly changing in the U.K.

The best-selling vehicle in the U.K. in March? The Tesla Model Y. And that’s of all powertrains. Number 2? The Tesla Model 3.

Enough said.

LMC’s Schuster on the State of the Industry

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By Gary S. Vasilash

There is pent-up demand. People are driving more. But. . .there are not enough vehicles out there to fulfill demand. There is that chip shortage accounting for the vast majority of vehicles not being on lots (an impact on the order of 85-90% of missing vehicles). According to Jeff Schuster, president of Global Forecasting, LMC Automotive, inventories will improve. Which will help that situation. Somewhat.

Because there is that other big issue that those who are in the market for a new vehicle: cost. (Latest average transaction price according to KBB: $46,404).

Schuster suggests that if prices stay elevated—and for the foreseeable future there doesn’t seem to be any driver for why prices would decrease—there are going to be plenty of people who are sitting on the sidelines, not going out and buying new vehicles.

So on the one hand, while OEMs and dealers are making profits by producing and selling high-ticket vehicles rather than more conventional family haulers (i.e., if there is a limited number of chips, then they get installed in the more-profitable vehicles); on the other hand there are people who can’t afford to buy something that has a price tag more analogous to luxury vehicles, so they are likely to figure out the ways and means to get transportation at a more affordable rate.

But here’s something to consider: What if an OEM decides that there could be an opportunity to sell entry-level vehicles, vehicles that have slim margins, but vehicles that could sell in large numbers? Schuster says this is not entirely outside the realm of possibility.

And what if said OEM happens to be one that isn’t particularly familiar to U.S. buyers: as in a Chinese company coming in with low-end vehicles? Schuster says that this is a possibility—yes, even despite the currently existing 27.5% tariff that is tagged onto vehicles imported to the U.S. from China. Apparently there is a lot of capacity to build vehicles in China, and so there could be an interest in keeping those plants running.

EVs? There will be more of them. (Which, Schuster notes, is something that isn’t going to reduce the price paid by consumers as they tend to be more expensive than comparable ICE-powered vehicles.)

Tesla? Yes, it will continue to grow. Schuster says that while it is ahead of other global automakers in terms of tech—a cycle or two ahead of others—LMC analysts anticipate that it will begin to lose some of its dominance in the EV space because of the other OEMs entering it.

Jeff Schuster has a whole lot more of interest to say about the state of the auto market today and in the near future on this edition of “Autoline After Hours.” He talks with “Autoline’s” John McElroy, Reuters’ Global Automotive Correspondent and me.

And you can see it here.

EV Upstarts

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By Gary S. Vasilash

The number of electric vehicles being offered–or announced that they’re on their way–by traditional OEMs is increasing with a beat that it reminiscent of that person in the apartment above yours tapping his or her giant foot: BAM! BAM! BAM!

And in addition, there is the influx of new manufacturers, which are seeing the opportunity to get into automotive manufacturing, something that, say, 10 years ago, was about as appealing as a session at an endodontist who had just run out of Novocain.

According to LMC Automotive, the startup EV brands in the U.S. are going to have nearly 40 models on offer in the U.S.

(Image: LMC)

However, LMC reckons that few of the new brands are likely to have sales of more than 50,000 units per year.

That said, a sufficient number of 50K-selling OEMs means that the sales are likely to be taken from the traditional OEMs.

However, LMC thinks that it is going to be costly for the upstarts that build factories. The firm calculates that the capacity utilization of a given plant is going to be on the order of 30%, which is about 60% less than it really ought to be. (I.e., 30% capacity utilization means that 70% of the personnel and equipment are not making vehicles, which is the whole point of their being there.)

Startling Projected Sales Numbers

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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.

Global Light Vehicle Sales: Gulp

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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.

Sales Numbers Could Make One Swoon In June

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J.D. Power and LMC Automotive see solid figures for June ’21 sales

By Gary S. Vasilash

J.D. Power and LMC Automotive have come out with their prediction for how June 2021 sales will come in, and the prediction is that it will be a 12.4% increase over June 2020—which isn’t all that surprising, given that in June 2020 we were still in the midst of the pandemic—and even a smidge, as in 0.3%, better than June 2019 (taking into account available selling days).

However, looking at the second quarter of 2021 in its entirety, things are rather robust, as in a 44.2% increase over Q2 2020 and a 10.7% increase over Q2 2019.

But there are some other figures that need to be taken into account.

One of those numbers is $38,088. That’s the average price of a new vehicle, which is a first half record according to the two organizations. It is a 10.1% (or $3,497) rise compared to the same period in 2019 and a 14.1% (or $4,699) increase over the number in 2019.

The average transaction price—as in what people actually pay for a vehicle from a dealer—is expected to be $40,206, a record high.

The organizations see retailer profits rise from $1,310 in the first half of 2020 and $1,457 in the first half of 2019 to $2,844.

Explains Thomas King, president of the data and analytics division at J.D. Power, “Consumers are buying more expensive vehicles despite smaller discounts, which is dramatically increasing the profitability of those sales for both manufacturers and retailers.”

Although there is evident agitation on behalf of some of an economic bent regarding the rise in inflation, recognize that here are consumers who are buying big, which means that OEMs are going to make more expensive vehicles because they’re selling, which means that there will be a continued rise. . .

Until there isn’t.

Some Sales Numbers to Consider

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All things considered, the auto market in the U.S. is doing remarkably well

By Gary S. Vasilash

According to LMC Automotive, a forecasting and market intelligence firm, in the month of May there were some 1.59-million light vehicles sold in the U.S.

Which in and of itself is somewhat meaningless unless you keep track of things like that.

What may be helpful to know is that that number is a 43% increase compared to May 2020.

Of course, May 2020 was a period when we were in the thick of COVID, with not a whole lot of people going to kick tires unless those tires were on one’s vehicle in one’s garage.

Another thing that those who look at the numbers do is calculate the annualized rate of sales.

In April the annualized rate was 18.8 million vehicles, which essentially means that if things continued for the rest of the year like April there would be a total of 18.8 million vehicles sold.

In May the annualized rate fell to 17.2 million.

Given that part of LMC’s business is forecasting, that is a good thing, as it has, and continues to predict, that the 2021 light vehicle sales will be 17 million vehicles.

And the good thing for the industry about that is that if it does finish at 17 million, that is an 18% increase over 2020.

Arguably the would be more vehicles sold were it not for the semiconductor shortage.

Last year COVID.

This year the semiconductor problem (and some COVID).

Next year?

Locusts?

Something Surprising About SUVs

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Yes, they are selling in the U.S. and Canada in great numbers, but the Mexican market still likes cars, LMC finds

By Gary S. Vasilash

Although SUVs (yes, including crossovers under that omnibus name) continue to proliferate in the U.S. and Canadian markets, turns out that things aren’t quite the same in the other USMCA country, Mexico.

According to LMC Automotive, while SUV sales surpassed those of cars in Canada in 2015 and in the U.S. in 2016, in 2020 cars outsold SUVs in Mexico. And not just by a little.

Nissan still sells cars in Mexico. (Image: Nissan)

The LMC data show that cars outsold SUVs by more than 2:1.

That said, there is growth in SUV sales in Mexico notes LMC Americas Vehicle Sales Forecasts analyst David Oakley, but there is an issue: “The overarching obstacle is cost, with SUVs still carrying a larger price tag than many high volume cars.”

Complicating matters for Mexican consumers is the fact that Ford and Chevrolet have pretty much given up on cars, about which Oakley says, “these brands seem to have jumped the gun with regard to Mexico’s readiness for such a shift.”

Although it is estimated that cars and SUVs will reach parity in sales by 2030 in Mexico, there are still several years of sales between now and then, sales that will probably go to brands like Hyundai and Nissan.

China Sales Compared to U.S.—and They’re Not Done Yet

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According to Automotive News, for 2020 there were 14,645,049 light vehicles sold. This is down 14.4% compared with the total number for 2019, 17,104,792. Which is to say that while COVID-19 had an impact on overall sales, it wasn’t as substantial as it had been feared to be.

China, too, was affected by the pandemic. And its sales were affected, as well.

That said, numbers for the first 11 months of 2020 have it, according to LMC Automotive, that there were 21.64 million light vehicles sold in China. About a third more than U.S. sales.

And there is still an additional month to go in the Chinese market.

In November there were 2,710,957 vehicles delivered in China. So if that number was repeated in December, that would be a total of 24.35 million units, or nearly 10 million more than were sold in the U.S.

One thing that is interesting about the China market is that the top-selling brands are probably not what you’d expect.

Volkswagen Lavida–number-one in China. (Image: Volkswagen)

The number-one brand in terms of sales and production is Volkswagen. What’s more, the top-selling vehicle is the Volkswagen Lavida, a Passat-like sedan that is available only in China. The car was the best-selling model in China in 2019, and even the folks at Volkswagen acknowledge, “but hardly anyone in Germany has ever heard of it.”–gsv

2020 Sales Expectations: Not Bad. But Not Good.

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12,386,000. That’s the number of new vehicles that J.D. Power and LMC Automotive estimate will be sold in the U.S. in 2020.

All in, this is a decline of 9.5% compared with 2019 sales.

Given COVID-19, surprisingly good.

What’s more, the average transaction price—that is, the price that people actually pay, taking cash back, incentives and other means to persuade people to buy—is expected to be $38,077, up 9% from 2019.

According to the researchers, because of the higher transaction prices, the vehicle manufacturers are not going to take quite as big a hit as the 9.5% decline in sales might lead one to expect: It is estimated that the total value of new vehicles purchased will be off just 4%.

December sales provide a bit of a boost because this is when luxury sales tend to make an upswing.

And for this particular December, J.D. Power and LMC calculate that trucks and SUVs—which generally have a higher sticker price than sedans—will account for 79% of all retail sales, up 4% from December 2019.

But here’s a question: is this a sustainable situation given the number of people in the U.S. who are currently unemployed?

According to the most recent figures from the Bureau of Labor Statistics:

“Among the unemployed, the number of persons on temporary layoff decreased by 441,000 in November to 2.8 million. This measure is down considerably from the high of 18.1 million in April”—good—“but is 2.0 million higher than its February level.” Not good.

“The number of permanent job losers, at 3.7 million, was about unchanged in November but is 2.5 million higher than in February.” Think of this: those people aren’t getting their jobs back.

“In November, the number of persons who usually work full time rose by 752,000 to 124.3 million”—good—“while the number of persons who usually work part time decreased by 779,000 to 25.4 million.” Not good.

Given the number of unemployed people, is it not likely that there were some people who, after the lockdowns were lifted, went out and bought a new pickup because they figured that they might as well?

While sales in 2021 will undoubtedly be better than 2020 (yes, a not particularly high bar), one wonders: How many people are going to find that their vehicle payments and their income just aren’t getting along very well?