10 Takeaways from U.S. Auto Sales: Q3 2021

Inventory was the auto industry’s story in the third quarter of 2021. More specifically, a lack of new-vehicle inventory. It was the same story for grocery stores and big-box chains: supply disruptions, parts shortages and COVID-19 outbreaks. In September, new-vehicle inventory was down nearly 60% from 2020. Sales suffered accordingly.  

While certainly the central story, inventory was not the only story last quarter. As the Kelley Blue Book team assembled their Q3 report, posted below, they also pulled 10 takeaways worth noting.

1. New-vehicle sales were mostly not good in Q3: 3,395,397 vehicles sold, the slowest third quarter in a decade. September was notably off. There’s only been three months since 2011 when total monthly sales fell below 1 million units. September 2021 made it over that bar, but just barely.  
   
2. As new-vehicle inventory dropped through 2021, incentive spending followed. By the end of the third-quarter, industry-wide incentive levels had fallen to 5.2% of average transaction price (ATP), a level not seen in a decade. In September 2019, incentives clocked in a 10.3% of ATP.
   
3. In a struggling new-vehicle market, Toyota Motor North America (TMNA) is on a roll. The company’s sales efficiency is notable, incentives are well below industry average, and, year to date, 24% percent of Toyota and Lexus combined U.S. sales are hybrids. Also this: TMNA has outsold General Motors in the U.S. through the end of September. It’s been roughly 90 years since GM was not No. 1 in sales. But it’s 2021. Why would anything be normal?
   
4. In the U.S. market, there are three segments that matter. The Big 3: Midsize SUVs (617,000 sales in Q3), Full-Size Pickups (494,000), and Compact SUVs (487,000). Combined, they accounted for nearly 50% of total U.S. sales in Q3.
   
5. Fiat watch: In Q3, the Italian brand sold 401 vehicles in the U.S. In September, sales amounted to just 103 units. The portfolio is down to the 500x only. A one-product showroom is a tough act.
   
6. The Ford F-Series pickup is an institution, and it will be the No. 1 best-selling vehicle in America again in 2021. You can count on that. However, at the end of Q3, the F-Series’ year-to-date lead over No. 2 Ram was only 100,000. Chevy Silverado was a distant third. That may seem like a big lead, but in 2020, F-Series was leading the full-size race by more than 180,000 at this point; in the more-normal days of 2019, the lead was more than 200,000. Microchip issues have hit F-Series hard. Sales of the Ford profit machine are down more than 30% from 2019.
   
7. Luxury brands performed relatively well in the third quarter. In fact, luxury brands have done reasonably well since COVID-19 threw the industry and the consumer into a spin. Luxury brand share in Q3 was 16.2% of the total market. By comparison, luxury commanded 14.1% of sales in Q3 2019.
   
8. With elevated luxury vehicle sales, it’s no surprise average transaction prices continue to rise. But it isn’t just luxury. Even the most affordable vehicle in the U.S., the Chevrolet Spark, chalked up an ATP above $17,000 in September, an increase of nearly 9% from one year ago.
   
9. And more on 2021, aka The Upside Down. For the first time on record, Honda outsold Chevrolet in a quarter. And not just by a few vehicles. In Q3, Honda sold more than 307,000 vehicles in the U.S. Chevrolet sold approximately 284,000.
   
10. Electric vehicles continue to be a good news story in 2021. Nearly 100,000 pure EVs were sold in Q3, a year-over-year increase of more than 44%. EV share is nearing 3% of the total market. Telsa continues to lead the push, but others are adding to the total. And we expect more growth in Q4, as newcomer Rivian begins to produce and sell EVs. The first Rivian sales will likely be counted in October. Welcome to the party, Rivian.