Cox Automotive Commentary: December 2020 U.S. Auto Sales

Good riddance, 2020! We’re closing the books on auto sales this week, and we’re glad to have our pandemic year in the rearview mirror.  Our team is forecasting sales to end near 14.4 million, down roughly 15% compared to 2019 and putting 2020 on par with 2012, when the market was recovering from the Great Recession and tallied 14,442,599 new-vehicle sales. In all, 2020 was a tough year for the industry but one that could have been tougher. Our industry, riding on the shoulders of a never-say-uncle body of auto dealers, pulled through. In fact, some automakers, Hyundai for example, deserve extra credit for delivering noteworthy performances. 

2020 will be remembered for a number of reasons, including the year we passed through the $40,000 barrier for new-vehicle list prices. According to an analysis of vAuto Available Inventory data, the average list prices of new cars in December was $40,423, a 6.2% gain from last year and a continuation of the trend we’ve watched over the past month as pricey, well-equipped, new 2021 model SUVs and trucks flooded dealers’ lots.

The good news, we finished the month with positive momentum. This upward shift is perhaps being driven by an incentive volume peak in December, which likely turned some late-year shoppers into late-year buyers. Our team is also seeing sales and shopping activity increase on our consumer-facing websites: KBB.com, Autotrader.com and Dealer.com-run dealer sites. Increases in shopping activity is often correlated with the upward shift in consumer sentiment, and these trends started when a $900-billion stimulus package was signed into law late last month. We believe this positive momentum can continue in the coming months as more vaccines are administered and we move past the holiday surge of COVID-19 cases. 

Our Industry Insights team shared a full review of 2020 auto sales and new forecasts for 2021 on Friday, January 8.

Please find below commentary from our team of experts and analysts. As always, if you have any questions, feel free to reach out to our PR Team. We’d be happy to hear from you.

Jonathan Smoke, chief economist, Cox Automotive
Another silver lining to the dark cloud of 2020 is that Dealertrack data shows sales for both new and used vehicles improved in the last week of December to close the year with positive momentum. In December, we are also seeing the first uptick since April in the share of new finance deals with 0% APR.  At 7.2%, it’s still lower than the 21.3% in April but is still historically well above normal and was likely part of the reason for a better-than-expected December performance.

Charlie Chesbrough, senior economist, Cox Automotive
The final days of December appear to have been stronger than forecast, and a number of OEMs have cited unexpected robust retail activity over the holidays. December had 28 selling days, so there was plenty of time for shoppers to buy. There was also no shortage of positive news in the last week of December, and that may have encouraged consumers and lifted sales – passage of the stimulus package, more certainty around the election outcome, coupled with a lot of vaccine news. That may have been enough to drive a surge at the end of the month, a surge that surprised even us.

Michelle Krebs, executive analyst, Cox Automotive
The vehicle market in 2020 perfectly illustrates the K-shaped recovery we’re watching. The top leg of the K represents the upwardly mobile people who kept jobs, were invested in the surging stock market, saved money because they had no place to spend it. This group stayed in the market, and they bought expensive vehicles, SUVs and pickup trucks. The bottom leg of the K is an entirely different story. It represents the financially vulnerable who lost income or jobs altogether, struggled with credit issues and were frozen out of the new-vehicle market, which is why lower-priced vehicles, including cars, suffered. This fractured marketplace was emerging even before the pandemic, but it was accelerated in 2020.

Brian Finkelmeyer, senior director, new car services, Cox Automotive
In the beginning of 2020, no car dealer in the U.S. could have imaged that the year would bring the lowest retail sales in years, but also the highest profits. The pandemic created significant headwinds for almost every business, but once again our U.S. automobile dealers found a way to quickly adapt and adjust their operations to succeed.

Eric Ibara, executive analyst, Kelley Blue Book
While the sales numbers at both Nissan and Infiniti are worse than most – both brands down more than 30% in calendar year 2020 – there’s reason to believe the top line number hides an underlying truth. In 2019, some of the volume Nissan achieved was the result of aggressive marketing tactics.  In other words, incremental volume was achieved through aggressive rental fleet sales and heavy discounting, and that negatively impacted the Nissan and Infiniti brands. By shifting the focus to strengthening their brands, Nissan in 2020 cut back on some of this volume, and there’s reason to believe they have been successful in achieving that goal. The new Sentra has been well received as has been the new Rogue, but it will require a continuation of new products and strong marketing to entirely turn that ship around. In the end, the numbers for Nissan in 2020 are bad, but the direction is good.