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.

Sales Numbers Could Make One Swoon In June

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

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

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

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.

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?