US auto dealers expect uptick in new car sales in 2021

HOUSTON (ICIS)–US sales of new automobiles in 2021 are expected to rise by 7.2% over 2020, the National Automobile Dealers Association (NADA) said on Tuesday, after 2020 ended with the industry experiencing its lowest full-year sales total since 2012.

“The coronavirus pandemic certainly impacted new light-vehicle sales in 2020, not to mention the US economy as a whole,” said NADA chief economist Patrick Manzi.

US Light vehicle sales

	Dec-20	YoY%	Jan-Dec 2020	YTD%
Total car	3.72	-16.8	3.39	-28
Total light truck	12.55	1.7	10.98	-10.4
Domestic light vehicle	12.66	-3.4	11.13	-15.6
Import light vehicle	3.61	-2.4	3.25	-14.2
Total light vehicle SAAR	16.27	-3.2	14.37	-15.3

NADA’s forecast for 2021 anticipates that lower interest rates and lower unemployment amid the current economic recovery will outweigh headwinds from rising coronavirus cases, a global shortage of semiconductor microchips used in many facets of auto production and tight supply at dealerships.

Other tailwinds likely to support increased sales are a potential economic boom in the second half of the year once coronavirus vaccinations are widely available and, as Americans start returning to work, continued consumer preferences for personal vehicle ownership over rideshare services and public transportation and a gradual return of fleet demand for new vehicles.

NADA said fleet demand is the main factor preventing total light-vehicle sales volume from returning to pre-pandemic levels.

Through most of 2020, retail sales outperformed fleet sales, as several major rental car agencies cancelled a large portion of their fleet orders early in the pandemic.

“We expect that fleet demand will continue to increase throughout 2021 as more Americans get vaccinated and can return to their daily lives,” Manzi said.

Despite the overall reduction in sales, inventories are tight because of a stronger-than-anticipated sales recovery, manufacturing facility shutdowns and robust new-vehicle demand.

The recently passed stimulus package may also provide a small boost to new-vehicle sales, and a wave of pent-up demand could come in the summer and fall once most Americans have been vaccinated.

“While the coronavirus was something that no one in the auto industry expected, the industry rallied and adapted to the new state of play,” Manzi said. “Looking forward, we are optimistic about the continued recovery of the new light-vehicle market.”

The automotive industry is a major global consumer of petrochemical-based materials, which account for more than a third of the raw material costs of an average vehicle.

Several chemicals have a significant percentage of their demand tied to the global auto industry. They include nylon resins, styrene butadiene rubber (SBR), polypropylene (PP), acrylonitrile-butadiene-styrene (ABS), polymethyl methacrylate (PMMA), and polycarbonate (PC).

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