SAAR Hit Highest Levels Since the Pandemic Began, but Several Factors Could Hinder February’s Growth Prospects
January 2021 SAAR (a measure of Light-Weight Vehicle Sales: Auto and Light Trucks) increased to 16.6 million from 16.2 million in December. Though this is a decline of 1.4% from the same period last year, this is the highest that SAAR has been since the pandemic began. Light truck sales were behind this growth, as they captured 77.8% of all new vehicles sold in the past month. Despite January’s peak, two significant events could hinder February’s outcome.
2021 Predictions for Auto Dealers
Heading into 2021, we’re going to make some SAAR predictions. Although they may or may not prove true in 2021, we believe this exercise is beneficial for auto dealers who should be looking forward to what the year might bring and prepare themselves should these trends materialize.
SAAR Declined to 15.6 million, Primarily Driven by a Decline in the Number of Selling Days for the Month
After steady increases, SAAR (a measure of Light-Weight Vehicle Sales: Auto and Light Trucks) experienced its first notable decline since April, dropping to 15.6 million from 16.3 million in October. November 2020 is off of the same period in 2019 by 8.4%, and through 11 months of the year, new light-vehicle sales are down 16.7% compared to the same period last year. The calendar differences are important to note for this month with November 2020 only having 23 selling days relative to 26 days in November 2019.
October lightweight vehicle sales had their second month in a row above 16 million, coming in at an annualized rate of 16.2 million for the month. Though this is down 0.6% from September SAAR of 16.3 units, it is still a positive sign for the industry that sales have shown notable improvement since the start of the pandemic.
SAAR Is Reaching a Post-Pandemic High, and Pent-Up Demand Is Leading to an Expected Bounce Back of M&A Activity
In September, lightweight vehicles marked a notable accomplishment during a tumultuous year, increasing to a seasonally adjusted 16.3 million. This is a 10% pickup from August, and the fifth consecutive monthly increase as the industry is recovering from lows at the beginning of the year. M&A activity for dealerships in the first half of the year has been delayed or cancelled as uncertainty has widened the bid-ask spread. However, there is evidence of pent-up demand which could lead the second half of the year to reach record levels.
Consumers Seek Budget Friendly Options as Economic Struggles Continue
With a shaky economy on many people’s minds, a winner in the auto dealer industry is emerging: the used car market. With new car advertisements flooding airwaves, used cars have often been overlooked in favor of “what’s new.” We are also at fault for this, with several of our recent blog posts being centered around electric vehicles and new vehicle inventory constraints. However, used cars are stealing the spotlight.
SAAR Increased to 14.5 Million in July, and Declines in Public Transportation and Ride-Sharing Usage Could be Creating Opportunities for Dealerships
SAAR continues to trail pre-COVID numbers with July 2020 14% below last year. Still, the continuing increase is encouraging. With demand picking up as customers can return to brick-and-mortar locations, dealerships aren’t feeling the need to offer as strong of incentives as they did at the start of the pandemic.
A Lackluster Month, But a Move in the Right Direction
After SAAR rebounded in May, June’s results seem to pale in comparison. However, with SAAR coming in at just over 13 million, this is still an increase from May’s SAAR of 12.3 million. Sales have continued to remain below the previous year’s numbers, with June 2020 declining 20% from the same period 2019.
May Vehicle Sales Supported Optimistic Predictions, But a Slow Manufacturing Rebound is Threatening to Hinder This Growth
After a devastating April SAAR, predictions for a rebound in May proved to be correct. Vehicle sales in the month jumped with SAAR increasing 38.6% to 12.2 million. However, while dealerships have been able to remain open in some capacity through online sales, manufacturing plants have not had such options. Looking forward, inventory shortages and supply chain disruptions may pose some challenges for dealerships.
April Showers Bring May Flowers? High Optimism Following a Historically Low April SAAR
Proliferation of stay-at-home orders and adjusting to digital sales amid the COVID-19 pandemic contributed to April SAAR declining to the lowest seasonally adjusted national sales volumes in decades. Despite the decline, there are reasons to be optimistic about dealership sales going forward.
When Might Things Return to Normal?
The term “24-hour news cycle” doesn’t do justice to the rate at which new information becomes available and is consumed by people trying to understand the significant impact COVID-19 is having on all of us. Stay-at-home orders have created a huge demand shock, which is particularly harmful to a largely service-based economy. In this post, we contextualize some of the fallout that has been experienced and try to answer the question “when will things return to normal?”.
This week we discuss the February SAAR