Commentary & Voices
Low Inventory and High Prices Can’t Slow U.S. Auto Sales
Monday May 3, 2021
Article Highlights
- Light vehicle sales continue on a hot streak in April, coming in ahead of the Cox Automotive forecast.
- Large year-over-year gains were expected, but an impressive number of brands are posting results above April 2019 levels.
- Our Senior Economist Charlie Chesbrough is indicating a recent analysis of inventory levels suggests days' supply for the entire industry could drop into the mid-30s, an unheard-of low number but possible under current conditions.
Light vehicle sales continue on a hot streak, with April sales coming in ahead of the Cox Automotive forecast. Initial estimates are putting the seasonally adjusted average rate (SAAR) of sales well above 18 million. When the counting is finished, April 2021 might well be among the strongest months ever for U.S. auto sales. Indications are product shortages and low incentives are not sidelining vehicle buyers; many OEMs are reporting “Best April” numbers.
Large year-over-year gains were expected, as April 2020 was the low point for monthly sales last year. More telling, however, is the number of brands posting results above April 2019 levels. Toyota, for example, beat April 2019 by more than 25%; Subaru sales last month were ahead of 2019 by more than 7%. The story is similar at Honda, Hyundai, Kia and others, including, we estimate, Ford and General Motors. New-vehicle sales haven’t just recovered; they’ve been turbocharged. Americans are in buy mode.
Auto dealers, however, are likely to run out of gas soon, as they struggle to replace these recent sales with new inventory. Supply was well below year-earlier levels as April began and many OEMs are cutting back production due to supply chain problems, so restocking the shelves is certainly becoming more challenging. Our Senior Economist Charlie Chesbrough is indicating a recent analysis of inventory levels suggests days’ supply for the entire industry could drop into the mid-30s, an unheard-of low number but possible under current conditions. We are estimating retail demand will remain high through the summer, but inventory levels will be the metric to watch. As auto dealers know too well, “You can’t sell what you don’t have.”
Cox Automotive will post updates to April sales results in the coming weeks, including fleet sales, CPO sales, average transaction prices and inventory levels. Check back to the Cox Automotive Newsroom as the full story unfolds.
Recent Data Points include:
Cox Automotive April Sales Forecast: Hot New-Vehicle Sales Pace Expected to Continue
Auto Sales Remain Healthy Even With Incentive Spending at 5-Year Low
If you would like to speak with one of the expert analysts from Autotrader, Kelley Blue Book or any member of the Cox Automotive Industry Insights team, please contact us.