How Inventory Shortages and Electric Vehicles May Shape the Future of Automotive Retail
Just as December is a good time to look back and reflect, January is a good time to look forward, to 2022 and beyond. When we value auto dealerships, we look back at performance in prior years because this helps to inform reasonable expectations for future performance. Prior to the pandemic, the directly preceding twelve months of performance may have been a reasonable proxy for ongoing expectations. However, throughout 2020 and 2021, discussions about when things will return to “normal” or whether we’re in the “new normal” have taken center stage.
In order to look forward, we must also consider the past, or as Shakespeare’s Antonio would say, “What is past is prologue.” In this post, we look at two key trends in 2021 (inventory shortages and electric vehicles/direct selling) and how they may inform how automotive retailing will look in the future.
The December SAAR totaled just 12.44 million units, down 3.5% from last month and 23.7% from December 2020. Inventory shortages, supply chain issues, and consistently high demand have been commonplace in the auto industry since the summer. That being the case, December’s low SAAR should not surprise many. In this week’s post, we discuss inventories, transaction prices, electric pickup trucks, and the outlook for January 2022.
What It Means for Ford, Other OEMs, and Auto Dealers
Rivian Automotive has been in the news a lot recently given its eye-popping IPO. Ford has invested in Rivian and until recently was planning to jointly develop an EV. In this week’s post, we feature a recently published piece from our Family Business Director blog about Ford’s decision to invest in Rivian from Ford’s perspective.