Cox Automotive Commentary: March and Q1 2021 U.S. Auto Sales

Auto sales for the first quarter of 2021 are coming in slightly above the Cox Automotive forecast, driven in part by strong March results to close out the quarter. Our final tally will be counted in the coming days. Please find below commentary from our team of experts and analysts. As always, if you have any questions, feel free to reach out to the PR Team.

For a deeper dive into the quarter’s performance, our Industry Insights team shared a full review of Q1 2021 U.S. auto sales and forecasts for 2021 on Monday, March 29. Chief Economist Jonathan Smoke and his team have raised their 2021 full-year forecast to 16.1 million new-vehicle sales, up from 15.7 million, the full-year forecast posted in January. Our used-vehicle forecast for 2021, at 39.3 million, is unchanged.

Jonathan Smoke, Chief Economist, Cox Automotive
The quarter ended strong, setting the market up for an incredible spring from a demand perspective, with $1,400 stimulus payments starting to be issued, tax refund season beginning, rising consumer sentiment because of the vaccination progress, and, literally, it is spring which just normally causes people to think more about buying vehicles. All those things are coming together right now, and the industry would likely be setting all-time sales records if it were not for tight supplies and elevated prices.

Charlie Chesbrough, Senior Economist, Cox Automotive
A large gain over last year’s virus-impacted sales was expected this month, and based on reporting so far, there was no April Fools’ in this year’s numbers. Sales appear to be a bit stronger than forecast for March, thanks in large part to stimulus checks arriving around the country. The retail side of the business continues to shine, while fleet continues to struggle. Fleet sales were off 26% and 36% in January and February, respectively, and there is every indication the fleet business was off a similar amount in March. Fleet sales will improve this year, but, unlike retail, will remain well below pre-COVID levels.

Michelle Krebs, Executive Analyst, Cox Automotive
While the industry didn’t suffer anything similar to last year’s pandemic lockdowns, there were headwinds for auto sales throughout Q1 in the form of weather and supply chain disruptions, most notably the global computer chip shortage. The reports, however, indicate the industry has managed those headwinds fairly well. Computer chips have been re-allocated to high demand, high-profit models, and the automakers have slowed or stopped production on low demand, high inventory models. Going forward into Q2, that balancing act may become more challenging—Ford, for example, is scheduling downtime for plants that make its cash cow F-150. The story in Q1 was strong demand. The story for Q2 might well be inventory and production management.

Kayla Reynolds, Industry Intelligence Analyst, Cox Automotive
In January, we predicted growing EV competition would slow Tesla’s growth rate. And while Tesla continues to do well, in Q1, the story was industry wide: Electrified vehicles – EVs and hybrids of all sorts – are beginning to gain traction. Battery-powered vehicles are making big sales gains and accounting for ever-larger shares of some automakers’ overall sales. Nearly one quarter of Toyota’s sales are now battery-pack equipped, hybrids or plug-in. The Chevrolet Bolt and Nissan Leaf EVs had significant sales gains in Q1. At Hyundai, in March, the Ioniq model, offered as a hybrid or pure EV, outsold the Accent, a vehicle of similar size with a traditional gas-burning engine. And Ford sold more than 7,000 hybrid F-150s in the quarter. If there’s one message from Q1 sales: The battery business is booming.