Auto Sales in 2020 Expected to Hit Lowest Point in Nearly a Decade – The Wall Street Journal


The U.S. auto industry is expected to report its lowest yearly sales tally in nearly a decade Tuesday, as the fallout from the Covid-19 crisis in 2020 upended a record run for the American auto sector.

But a sharp bounceback in demand in the year’s second half led shoppers to pay record sums for new wheels, bolstering car-company profits and giving executives optimism for a sustained recovery in 2021.

Analysts from several research firms expect U.S. vehicle sales to total 14.4 million to 14.6 million in 2020, which would be down roughly 15% from a year earlier and the lowest level since at least 2012. The decline would snap an unprecedented five-year stretch in which sales topped 17 million vehicles annually.

Among car companies outperforming the broader industry were two of its largest players,

General Motors Co.


GM 3.06%

and

Toyota Motor Corp.


TM 0.02%

GM said Tuesday it logged a big fourth-quarter increase in deliveries of pickup trucks and large SUVs, its most profitable vehicles. Its overall sales declined 11.8% in 2020, better than the expected result for the broader industry.

Toyota said its U.S. sales fell 11.3%, as steady demand for the Rav4 SUV and Tacoma pickup truck was offset by steeper declines in its car lineup, including the Corolla and Camry sedans.

Nissan Motor Co.

’s sales dropped more than any major auto maker in 2020, falling 33%, the Japanese car company said.

Electric-vehicle maker

Tesla Inc.

also gained momentum in 2020. The company’s U.S. sales rose about 15% through November, to nearly 180,000 vehicles, according to an estimate from market-research firm Motor Intelligence.

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Car Sales

Covid-19-related factory closures last spring led to months of tight inventories, pushing up vehicle prices.

Vehicle sales and inventory, U.S.

Market share change,

U.S. 2019-20††

Avg. transaction price, U.S.

Vehicle production, N. America

Vehicle sales and inventory, U.S.

Market share change,

U.S. 2019-20††

Avg. transaction price, U.S.

Vehicle sales and inventory, U.S.

Market share change,

U.S. 2019-20††

Production,

North America

Avg. transaction price, U.S.

New Vehicle Sales and Inventory, U.S.

Avg. transaction price, U.S.

Vehicle production, North America

Market share change, U.S. 2019-20††

Tesla, which doesn’t break out U.S. results, said last week that its global sales for the year surged about 36%, to nearly 500,000 vehicles.

The industry’s 2020 sales decline tells only part of the story of a topsy-turvy year in the car business, though, one that included industrywide factory shutdowns last spring, soaring prices for new and used vehicles and shifts in the way Americans shop for cars.

Now, analysts say the conditions are ripe to further lift results this year, buoyed by near-record-low interest rates and another round of federal stimulus, including direct payments to some Americans beginning this week. Dealers and executives are optimistic the fallout from the pandemic will spur new-car demand as some consumers opt for personal-vehicle ownership over public transit or shared rides.

Still, potential pitfalls remain, including the unknown duration of the pandemic, a continued shortage of dealer stocks and possible supply-chain snags, including spotty availability of semiconductor chips.

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Jeff Guyton,

president of

Mazda Motor Corp.’s

North American operations, sees the industry’s rebound continuing this year, but thinks it will “probably be more gradual than explosive.” Mazda posted a less-than-1% sales increase in 2020, among the industry’s best results, thanks largely to a revamped lineup of SUVs.

The auto industry’s comeback is a relief for auto executives who feared the worst last spring, when their North American factories were closed because of Covid-19 for nearly two months and analysts wondered whether people would buy cars amid a pandemic. Some forecasters had predicted 2020 sales would fall below the 13-million-vehicle mark.

By late spring, though, car buyers began turning out in unexpectedly strong numbers. Car companies, which quickly put in place safety protocols to prevent the spread of the coronavirus among factory workers, have been straining to meet demand ever since.

Now, the industry faces an inventory crunch expected to last well into 2021, dealers and executives say. New-vehicle stocks at U.S. dealerships have been running roughly 25% below normal for months, with more-severe shortages in large pickup trucks. That has curbed overall sales, but also resulted in a seller’s market, sending prices soaring to record levels, along with profits for some car companies, dealers and parts suppliers.

The average price paid for a vehicle in December was around $38,000, up from about $34,000 in early 2020, research firm J.D. Power estimates. Dealers whose lots are only half full have been stingier with discounts, said Tyson Jominy, J.D. Power’s vice president of data and analytics. On top of that, buyers are shifting toward bigger, pricier vehicles like pickup trucks, he said.

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Another factor, dealers say, is that some quarantine-weary American consumers—forced to forego travel and dining out—have spent their money on big-ticket items like boats, home projects and new cars.

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Chicago-area dealer Mike Maheras said his three Illinois Chevrolet dealerships have strained to meet demand for high-end pickup trucks. The stores, which normally keep more than 100 days of truck supply on their lots, have been operating with less than one month’s worth.

“We see a lot of pent-up demand for trucks,” he said. “In lieu of taking vacations, customers are treating themselves on their vehicle purchases.”

Analysts predict auto makers will remain in catch-up mode on restocking inventory for much of the year, likely resulting in better profit margins for manufacturers and dealers—and fewer deals for consumers.

Research firm

IHS Markit

recently said it expected tight inventories to last well into 2021. It pegs 2021 U.S. vehicle sales of around 16 million, which would be a roughly 10% increase from last year.

Write to Mike Colias at Mike.Colias@wsj.com

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