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.
This month’s SAAR came in below expectations as the industry experienced only slight inventory improvement from the historic lows of September and October. For our last SAAR blog of 2021 we provide some commentary on what seemed to work well for auto dealers in 2021 and what changes might be around for a while.
October 2021 SAAR was just shy of 13.0 million, as new light vehicle sales saw their first month-to-month gain since April. The October SAAR is up 6.3% from last month but remains 20.8% lower than last October. Auto dealers began the month with record low inventory levels of 972,000 units, and low inventories continue to keep car buying activity constrained.
September 2021 SAAR was 12.2 million, dropping for the fifth consecutive month amidst an ongoing inventory shortage. The September SAAR was the lowest since May 2020’s 12.1 million units but has not fallen near the COVID-19 pandemic low of 8.6 million units in April of 2020. Tight inventories limited both fleet and retail sales in September, which has been the same case over the last four months. Fleet sales continue to fall as a percent of total sales, making up just 12% over the last month as higher profit retail sales continue to be prioritized.
August 2021 SAAR was 13.1 million units, significantly lower than August of 2020 at 15.2 million units and lower than last month’s figure of 14.6 million units. This level of sales is the lowest recorded since June 2020’s 13.0 million during the earlier stages of the COVID-19 pandemic. August’s sales rates reduced the year-to-date SAAR to 16.1 million units from last month’s end total of 16.5 million units.
The July 2021 SAAR was 14.8 million units, roughly flat compared to July 2020, but down 12% from July 2019. SAAR was expected to fall for the third straight month, but this figure is lower than many experts predicted in June. In this week’s post, we dig into the numbers.
The June 2021 SAAR totaled 15.4 million units, which is up 12.4% compared to June 2020 (the lowest June figure in recent memory due to the COVID-19 pandemic) but down 9.9% from May 2021. In this post, we discuss the June SAAR number, the ongoing microchip shortage, the hot market for used cars, and what all this means to dealers.
After three straight months of impressive gains, the SAAR fell 9.6% in May from 18.8 million units to 17.0 million units. The summer is typically a strong season for auto sales, but several supply-side factors have limited the availability of vehicles over the last month.
SAAR has continued its impressive run in 2021, increasing for the second straight month to 18.5 million. This is a 3.1% increase from March 2021. As previously mentioned, comparing spring 2021 SAAR to 2020 does not hold much merit, especially in April which experienced the weakest sales of the pandemic in 2020. Compared to April 2019, a better comparison in our view, April 2021 is up 12.1%. But the industry faces headwinds: the shortage of computer chips. In this post, we break down what all this might mean.
After a tumultuous February due to weather conditions, March SAAR has bounced back with a vengeance. March SAAR of 17.75 million units is the second-highest of all time for the month, just shy of March 2000. There are two main factors driving this increase. While the winter storms had a negative impact on February SAAR, it likely caused pent-up demand that helped drive sales in March. Beyond simple delays, flooding forced some to replace damaged vehicles. Secondly, the Biden administration passed a Covid-19 stimulus bill at the beginning of March, and $1,400 paychecks hit many Americans’ wallets. This influx of cash may have also spurred a massive increase in vehicle sales.
Several Factors Put Pressure on February SAAR, Contributing to a 5.4% Decline from January
As we previewed in our January SAAR blog, February SAAR (a measure of Light-Weight Vehicle Sales: Auto and Light Trucks) declined as expected to 15.7 million from 16.6 million the previous month. This is a decline of 6.6% from the same period last year. In this post, we discuss the factors that contributed to this decline and expectations for March.
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