{"id":158041,"date":"2021-01-11T10:06:38","date_gmt":"2021-01-11T15:06:38","guid":{"rendered":"https:\/\/www.thedetroitbureau.com\/?p=158041"},"modified":"2021-01-11T11:25:18","modified_gmt":"2021-01-11T16:25:18","slug":"auto-industry-in-much-better-place-but-price-surge-likely-to-continue","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2021\/01\/auto-industry-in-much-better-place-but-price-surge-likely-to-continue\/","title":{"rendered":"Auto Industry \u201cIn Much Better Place,\u201d But Price Surge Likely to Continue"},"content":{"rendered":"
\"\"<\/a>
Tesla was one of only three automakers to post an increase in U.S. sales in 2020.<\/figcaption><\/figure>\n

The auto industry appears ready to get off to a good start for the New Year \u2014 and could gain even more momentum if the Biden administration moves forward with new stimulus and infrastructure programs, a panel of industry analysts forecast.<\/p>\n

The slow growth of the electric vehicle market could be a major beneficiary, demand in 2021 boosted not only by government incentives but also by the flood of new models coming this year, such as the GMC Hummer and Volkswagen ID.4. Ironically, that may not be good for the segment\u2019s leading brand, Tesla, the experts warned during a seminar sponsored by Cox Automotive.<\/p>\n

\u201cWe\u2019re in a much better place than in spring (2020),\u201d said Jonathan Smoke, the chief economist for the Cox which services a broad range of automotive operations, from online retailing to used vehicle wholesale auctions. But Smoke and his colleagues cautioned there are still plenty of uncertainties, especially when it comes to the health of the economy in the months to come.<\/p>\n

\"\"<\/a>
But even though EV sales are forecast to grow in 2021, Tesla could face its first serious challenge from a wave of new entries like this Ford Mustang Mach-E.<\/figcaption><\/figure>\n

Among the uncertainties facing the industry: whether new- and used-vehicle prices will continue to surge, and if that upward trend continues, whether it could start to choke off consumer demand.<\/p>\n

(Automakers slash production due to chip shortages; situation could grow worse.)<\/em><\/span><\/strong><\/a><\/p>\n

Noting December was \u201ca very strong month,\u201d Cox Senior Economist Charlie Chesbrough said the pace of sales was the strongest the U.S. market has seen since August 2019, and signals \u201cthe market will continue this upward trajectory in 2021. I would say there is more upside potential this year than downside.\u201d<\/p>\n

In line with several other forecasts, Cox\u2019s official forecast calls for sales to reach 15.7 million for all of 2021, a 9% year-over-year increase. That\u2019s still well below the 17.1 million number from 2019, but the primary reason for the gap is the sharp slump in fleet sales. Those \u2013 especially when it comes to daily rentals \u2013 likely won\u2019t recover until 2023, Chesbrough cautioned, requiring time for business, as well as tourist, travel to recover from the COVID-19 pandemic.<\/p>\n

The pandemic caused chaos across the industry last year, and while 2021 begins with the promise of new vaccines, it is yet uncertain how \u2013 and how quickly \u2013 things will return to anything close to \u201cnormal\u201d again. One of the big challenges for automakers and dealers has been the shortage of inventory, especially when it comes to pickups and utility vehicles<\/p>\n

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One of the biggest challenges facing the industry this year will be the ongoing shortage of inventory.<\/figcaption><\/figure>\n

\u201cThe inventory situation is better but still remains relatively tight (and) may hold back the market for the rest of the year,\u201d warned Chesbrough.<\/p>\n

The general consensus is that automakers have at least 1 million fewer vehicles in inventory right now compared to normal. That\u2019s beginning to improve as factories ramp up overtime, but COVID challenges have hindered recovery efforts. Toyota and its Lexus sibling each have less than 25 days of supplies on the ground, the automaker noted last week, compared to an industry norm of around 60 days.<\/p>\n

Ironically, there is an upside to the shortages, Cox analysts noted. It has allowed the industry to back off on incentives and discounting. Dealers, in particular, they noted, had recover profits during the third quarter of 2020 as a result.<\/p>\n

\u201cIt\u2019s amazing what a supply-constrained market and a shift to digital sales can do,\u201d said Smoke, noting that the all or part of the vast majority of retail automotive sales now take place online. It\u2019s a trend he expects to continue to accelerate.<\/p>\n

(EPA: auto fuel economy gains stalled in 2020.)<\/strong><\/em><\/span><\/a><\/p>\n

\"\"<\/a>
Motorists, whether looking for a new or used vehicle, could face another surge in pricing this year.<\/figcaption><\/figure>\n

During the session, the experts foresaw the continuation of several other key trends in 2021, starting with the shift from sedans and coupes to SUVs, CUVs and pickups. The Cox forecast calls for passenger cars to drop to just 21% of overall new vehicle sales this year.<\/p>\n

That shift played well for automakers who had the right product mix last year. But, on the whole, there were relatively few \u201cwinners\u201d who came through the year of pandemic increasing sales. Those included Alfa Romeo, Mazda and Tesla \u2013 the EV maker setting a global sales record just short of 500,000 deliveries in 2020.<\/p>\n

\u201cIf we had to declare a winner for the year it would be Tesla because sales were up substantially for the year, but that\u2019s a bit misleading,\u201d said Chesbrough, \u201cas Model 3 sales were down a lot,\u201d and only Model Y buoyed the automaker\u2019s overall volume.<\/p>\n

Tesla itself is looking for a rapid increase in sales, especially with new products like the Cybertruck coming, along with two new factories in Berlin and Texas. But the EV upstart might find things a bit tougher going forward, cautioned Cox analyst Michelle Krebs.<\/p>\n

\"\"<\/a>
Nissan posted the biggest dip in 2020 sales but is counting on new models like this Rogue to rebuild momentum in 2021.<\/figcaption><\/figure>\n

\u201cTesla may face its first competitive challenge\u201d from products like the Hummer, ID.4 and Ford Mustang Mach-E, said Krebs. She acknowledged there have been dire predictions about Tesla in the past but, she added, \u201cWe mean it this time.\u201d<\/p>\n

(Automakers and suppliers plan major presence at \u201cvirtual\u201d CES.)<\/a><\/strong><\/em><\/span><\/p>\n

At the other end of the spectrum, Nissan was the big loser from a sales standpoint, its U.S. share dropping a sharp 1 point. The real test will come this year with the launch of all-new versions of both the Sentra sedan and Rogue crossover, Cox analysts said.<\/p>\n

One other trend industry analysts will be watching in 2021 \u2013 as will consumers \u2013 is the steady climb in vehicle pricing which is now approaching a $40,000 average. Combined with tightened credit, the analysts noted, that has driven many buyers out of the new car market. In turn, that has both spurred demand \u2013 and driven up prices \u2013 in the used vehicle market.<\/p>\n

In fact, upward pricing pressure may hit the \u201cpreviously owned\u2019 segment hardest going forward because the 2020 sales slump means there will be fewer used vehicles available. \u201cThat will exacerbate pricing pressures for the next few years,\u201d warned Smoke.<\/p>\n","protected":false},"excerpt":{"rendered":"

The auto industry should post a major recovery in 2021 \u2013 but consumers likely will see prices continue to surge, according to an expert panel. Meanwhile, though EV sales will rise, Tesla will face serious new competition, reports TheDetroitBureau.com<\/p>\n","protected":false},"author":2,"featured_media":149075,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[7,8,5,12,9],"tags":[],"make":[33,56,59,83,90,110,113],"post-state":[],"category_old":[118,140,208,150,151,123,131,173,319,155,171,248,242,132,198,283,189,139,148,128,291,207,278,288,232],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/158041"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=158041"}],"version-history":[{"count":0,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/158041\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/149075"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=158041"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=158041"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=158041"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=158041"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=158041"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=158041"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}