Commentary & Voices
Auto Sales Should Catch Up as Texas Thaws
Thursday February 18, 2021
Winter storms that have swept across a large swathe of the U.S., particularly hitting hard the big vehicle-buying state of Texas, should not badly damage vehicle sales this quarter.
In Texas, winter storms caused massive power outages that closed dealerships as well as disrupted computer chip production in Austin and vehicle assembly for GM and Toyota. The state historically accounts for 9% of all new-vehicle sales in the U.S. in February. It is No. 1 for pickup trucks.
“Storms are short-term events, and these occurred in mid-month, not the all-important last week of the month,” said Cox Automotive Chief Economist Jonathan Smoke. “There’s plenty of time to make up sales lost this week in the remainder of the month.”
Already, the power is beginning to return in Texas, and the forecast is for temperatures to rise. In other storm-struck areas, there’s still time this month, or sales that didn’t happen likely will be rolled into March.
February in recent years has been the second-lowest month for new-vehicle sales, behind only January. It would have been worse for dealers if it had happened a month from now as March and May are typically the biggest volume months.
Sales of both new and used vehicles could be particularly brisk this year as Americans receive their tax refunds and stimulus checks if approved by Congress. The vaccination roll-out, signaling the emergence from the pandemic, may further boost consumer optimism.
Will consumers be able to find what they want to buy is the question. Already lean inventories, caused by automakers being unable to refill the pipeline fast enough to meet consumer demand that snapped back dramatically, have been further plagued by vehicle production disruptions, from storms to computer chip shortages.
“Inventories for new and used vehicles could become even tighter just as we kick off the spring selling season,” said Cox Automotive Senior Economist Charlie Chesbrough.
This week’s storms forced a number of automakers, including GM, Ford, Toyota, Nissan and Subaru to cut production. GM plants included those that make its highest demand and lowest supply models like the full and midsize pickup trucks, large and midsize SUVs and the Chevrolet Corvette.
Ford’s just launched redesigned F-150 pickup and new Mustang Mach-E were hit by shutdowns.
An earthquake in Japan last weekend forced Nissan and Toyota to pause or slow assembly lines. Toyota took downtime at nine plants, affecting 14 of its product lines, including the Toyota RAV4 and Lexus models. Toyota and Lexus have had the lowest U.S. inventories of all brands for months.
The Cox Automotive forecast for new-vehicle sales is 15.7 million. The February U.S. auto sales forecast will be published on Tuesday, February 23.