December Auto Sales Disappoint, Wrapping Up An Underperforming Year

December Auto Sales Disappoint, Wrapping Up An Underperforming Year

Forecasters expect U.S. auto sales in December to be down more than 20% vs. December 2020, due to the ongoing shortage of new vehicles, in turn due to a computer chip shortage and other supply-chain problems.

Consumer demand remains high, however. The combination of high demand and low supply predictably will keep prices high and incentives low, probably for most if not all of 2022, analysts said.

Most automakers in the U.S. market report fourth-quarter and full-year sales for 2021 on Tuesday, Jan. 4. Most major automakers report sales quarterly, although some report sales every month. Forecasters estimate monthly sales totals, based on industry reports, historical data, and online shopping during the month.

In a joint auto sales forecast, J.D. Power and LMC Automotive say they expect U.S. auto sales of about 1.2 million in December, down 20.5% vs. December 2020. TrueCar Inc. has a lower December auto sales forecast, of about 1.1 million. That would be down 27% vs. a year ago.

For the full year, J.D. Power and LMC expect 2021 auto sales of just under 15 million, up 4.2% vs. 2021. December makes it six months in a row U.S. auto sales fell below the year-ago month, according to Thomas King, president of the data and analytics division at J.D. Power.

Earlier this month, Cox Automotive said separately it expects full-year 2021 sales to be in a range from 14.8 to 15 million.

To put that in context, U.S. auto sales for all of 2020 were about 14.6 million, down 15.1% from slightly above 17 million in 2019, pre-COVID; 2019 was a record fifth year in a row that U.S. auto sales were higher than 17 million. The all-time record was about 17.6 million in 2016.

U.S. auto sales in 2021 started out more promisingly, especially in contrast to the lows of 2020.

Because of the COVID-19 pandemic, dealership showrooms were closed in many states in the spring of 2020, and North American auto assembly plants were shut down for weeks, followed by a slow climb to get back to pre-COVID monthly production numbers.

The computer chip shortage started to bite into new-vehicle production late last year, and has continued in 2021, with some ups and downs, mostly downs. Analysts said the supply of chips at least appears to have bottomed out, and at least the shortage isn’t expected to get any worse.