Car sales in 2020 are expected to hit their lowest point in nearly a decade

Analysts at various research firms expect US auto sales to total 14.4 million to 14.6 million by 2020, which would be about 15% lower than a year earlier and the lowest level since at least 2012. The decline could be an unprecedented level. period of five years in which annual sales exceeded 17 million vehicles.

Among auto companies outperforming the wider industry, two of the biggest players were General Motors Co.

GM 2.75%

and Toyota Motor Corp.

TM -0.04%

GM said Tuesday it registered a big fourth-quarter increase in deliveries of pickup trucks and large SUVs, the most profitable vehicles. Total sales fell by 11.8% in 2020, better than the expected result for the broader sector.

Toyota said US sales fell 11.3% as steady demand for the Rav4 SUV and Tacoma pickup was offset by a stronger decline in its car offerings, including the Corolla and Camry sedans.

Nissan Motor Co.

The company’s sales fell more in 2020 than any major car maker, by 33%, the Japanese car company said.

Manufacturer of electric vehicles Tesla Inc.

also gained momentum in 2020. Sales of the company in the US increased by about 15% in November to nearly 180,000 vehicles, according to an estimate by the market research firm Motor Intelligence.

Tesla, which does not disclose US results, said last week that global sales are up about 36% this year to nearly 500,000 vehicles.

The industry’s fall in sales in 2020 tells only part of the story of a mixed year in the auto industry, a year with factory-wide plant closures last spring, soaring prices for new and used vehicles, and shifts in the way Americans buy cars.

Now analysts say the conditions are ripe for boosting results further this year, bolstered by near-record-low interest rates and a new round of federal stimulus measures, including direct payments to some Americans starting this week. Dealers and executives are optimistic that the effects of the pandemic will boost demand for new cars, as some consumers choose to own a private car over public transportation or shared rides.

Still, potential pitfalls remain, including the unknown duration of the pandemic, an ongoing shortage of dealer supplies and potential supply chain problems, including spotty availability of semiconductor chips.

Jeff Guyton, President of Mazda Motor Corps

In North American operations, the industry’s recovery continues this year, but thinks it “will likely be more gradual than explosive.” Mazda posted sales growth of less than 1% in 2020, one of the best in the industry, thanks in large part to a revamped range of SUVs.

The auto industry’s comeback is a relief to motorists who feared the worst last spring, when their North American factories were closed for nearly two months due to Covid-19 and analysts wondered if people would buy cars during a pandemic. Some forecasters had predicted sales would fall below 13 million vehicles by 2020.

However, towards the end of spring, car buyers began to appear in unexpectedly strong numbers. Car companies, which quickly put in place security protocols to prevent the spread of the coronavirus among factory workers, have since been making efforts to meet the demand.

Now the industry is facing an inventory crisis expected to last well into 2021, dealers and executives say. Stocks of new vehicles at US dealers have been about 25% below normal for months, with greater shortages of large pickup trucks. That has slowed overall sales, but has also resulted in a seller’s market, pushing prices to record levels, along with profits for some auto companies, dealers and parts suppliers.

The average price paid for a vehicle in December was about $ 38,000, up from about $ 34,000 in early 2020, research firm JD Power estimates. Dealers whose lots are only half full are stingier with discounts, said Tyson Jominy, JD Power’s vice president for data and analytics. In addition, buyers are shifting to larger, more expensive vehicles such as pickup trucks, he said.

Another factor, dealers say, is that some quarantined-weary American consumers – forced to forgo traveling and eating out – have spent their money on high-priced items, such as boats, housing projects, and new cars.

Chicago dealer Mike Maheras said his three Illinois Chevrolet dealers are committed to meeting the demand for high-end pickups. The stores, which normally hold more than 100 days of truck stock on their lots, run at less than a month.

“We’re seeing a lot of pent-up demand for trucks,” he said. “Instead of going on vacation, customers are treating themselves to their vehicle purchases.”

Analysts predict that carmakers will be catching up for much of the year on replenishing stocks, likely resulting in better profit margins for manufacturers and dealers – and fewer deals for consumers.

Research firm IHS Markit recently said it expected tight stocks to persist well into 2021. It pegs 2021 US car sales of about 16 million, which would be an increase of about 10% from last year.

Write to Mike Colias at [email protected]