Key Industry Stat(s) of the Week

IHS Markit released their analysis of 2020 H1 US New Vehicle Registration Data with great data from the first half of the year:

• US light-vehicle registrations fell 22.8% year-on-year for the first 6-months of 2020
• Registrations for pick-up trucks continue to be the most resilient type of vehicle with 1.31 million registrations
• CUVs saw the most registrations of any category at 1.43 million, and also saw them increase their market share to 21.9%, leading all other vehicle types

J.D. Power has released updated retail sales results and forecasts. (Source: Auto Inc., J.D. Power: Average vehicle prices reach all-time high)

August 2020 saw a record high for average new vehicle retail transaction price, rising to a record $35,420, which was slightly higher than July 2020.

• This is not surprising given the challenges surrounding low inventory levels of new vehicles.

Trucks and SUVs accounted for more than 3 out of every 4 new vehicles sold in August, further cementing them as America’s favorite body style for new vehicles

• August marked the fifth consecutive month that Trucks/SUVs accounted for 75% or more of retail sales

Low inventory levels of new vehicles has also led to quicker sales, with 45% of all vehicles sold in August spending fewer than 20 days on dealer’s lots.

Despite US light vehicle sales on a decline for the year, the SAAR of US light-vehicle sales estimated between 14.1-14.5 million units in July, which is a big improvement over the 13 million vehicles sold in June. (Source: IHS Markit, US light-vehicle sales decline 12 percent year-over-year in July)

SUV’s continue to lead the way as the most considered vehicle by US consumers, with 63% considering purchasing an SUV.  Pick-up trucks followed with 35%, which is up from 30% pre-COVID, and cars declined to 35%. (Source: Cox Automotive, Q2 2020 Kelley Blue Book Brand Watch Non-Luxury: Pickup Truck Shopping Sets Record)

• 11 of the 12 fastest-selling new vehicles from March-June were SUVs, led by the Chevy Trailblazer, with just an average of 19 days to sell. (Source: CBT News, Chevy and Tesla Top the List of Fastest-Selling Cars)
• The Tesla Model 3 led all used vehicles

Used-Car Prices appear to be leveling out

In July, Edmunds reported that the average listing price for used vehicles increased $708 to $21,558, showing that demand for used vehicles continues. (Source: PR Newswire, Used Vehicle Prices Are on the Rise During the Coronavirus Pandemic)

• They report consumers being more financially responsible, extremely favorable interest rates and CPO offers, and severely limited new vehicle inventories have all led to the increase in demand.

However, for the first time since late April, used car wholesale auction prices saw a 0.7% decline for the week ending Aug. 23. (Source: Automotive News, Hot wholesale used-car prices could slide as demand cools).

• Is consumer demand cooling off?

Luxury vehicle sales declined 35% in Q2, hitting their lowest level in two years. (Source: AutoBodyNews.com and CBT News, Luxury Vehicle Sales Expected to Rebound from Depression).

• There is some reason for optimism despite the decline though as New York City and Los Angeles, the top two markets in the U.S. for luxury vehicles, are starting to reopen and pent up demand from consumers in those markets is being unleashed.

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Many U.S. Dealerships Still Struggling to Keep Pace with Online Retailing

IHS Markit recently found that 34% of US vehicle shoppers were able complete their transaction completely online from start to finish, with 27% able to complete the transaction partially online and partially at the dealership, with 38% of US vehicle shoppers conducting the entire transaction in-person at the dealership. (Source: IHS Markit, Fuel for Thought: Automotive Retail – The Path Forward)

Dealerships are not keeping up with consumer behaviors of them increasingly doing their shopping and purchasing online:

• Even 62% of Baby Boomers, often slow adopters of newer technologies, have indicated they are now making purchases online, which is up significantly from just 8% of Baby Boomers who said they’ve shifted their buying to online in February/March (Source: eMarketer, The Pandemic Has Driven Boomers to Increase Their Digital Shopping)

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Inventory Levels Are Still Problematic for Dealerships

Industry inventory actually decreased from June to July, down ~55,300 units, with the days’ worth of supply at 54 days in July, down from 58 days at the end of June. (Source: IHS Markit, US light-vehicle sales decline 12 percent year-over-year in July)

OEM production plants are also still understaffed despite reopening, which has slowed progress on getting production numbers back to normal.  GM actually saw their vehicle shipments decline 62% in the 2ndquarter this year. (Source: CBT News, Staff Shortages Continue Delaying Inventories)

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5 Electric Vehicle Makers Currently Own Majority of Market, But Will Face Increased Competition in Next Few Years

Tesla, VW, Renault-Nissan, BMW, and Hyundai-Kia currently account for 55% of the total electric vehicle market (in that order) -- Tesla leading the pace with 19% market share, followed by VW Group with 13%.  (Source: CBT News, Tesla and Other EV Makers Ramping Up Production Despite Flat First Half).

Car and Driver has listed all of the EV’s that are expected (but not guaranteed) in the next two years, showing how quickly competition is ramping up.  (Source: Car and Driver, Every Electric Vehicle That’s Expected in the Next Two Years).  The Ford Mustang Mach-E is expected at some point this fall or early Q4.  Some of the most anticipated EV’s for 2021 are:

• Bollinger B1 and B2
• Ford F-150 Electric
• Rivian R1T and R1S

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Source: Oracle