Declining Inventories Slowing June Auto Sales - Paul Eisenstein

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The annual rate of new-vehicle sales is expected to reach 16.4 million units in June, down from May’s more robust 17 million-unit pace as declining inventory made it more difficult for dealers to complete sales, analysts report.

New vehicle sales for June are expected to drop compared to May sales as chip shortages reduce inventories.

But sales this month were substantially stronger than June 2020 when the impact of COVID-19 reduced the pace of sales to just 13 million units as demand for new vehicle outpaced supply.

Overall, June sales volume is expected to increase nearly 24% from a year ago and finish near 1.35 million units, while first-half U.S. auto sales are forecast to grow 30% year over year, finishing nearly equal to 2019 level, according to estimates by Cox Automotive.

Cox analysts said June is expected to be the second consecutive month of slowing sales after the market hit a post-pandemic peak in April. The April sales pace of 18.8 million was among the strongest sales months in history.

Falling from the peak

Sales volume is expected to drop nearly 200,000 units from May, driven in part by one less selling day and no big holiday weekends to push more sales.

“While new-vehicle sales volume in the first half of 2021 is healthy — and on par with the first half of 2019 — the market could be stronger if not for the lack of available supply,” said Charlie Chesbrough, senior economist, Cox Automotive. “Concern about the supply situation really cannot be overstated as we are in untested territory for the market.”

Chevy dealership — Dealers are especially running low on pickups and SUVs.

New vehicle inventory was historically low at the beginning of June, running 43% behind levels for the same period in 2020 and 54% below the same timeframe in 2019, Cox analysts noted.

Second quarter strong despite steady decline

Edmunds estimates that more than 4.68 million new cars and trucks will be sold in the U.S. in the second quarter of 2021, reflecting a 51.6% increase from the second quarter of 2020 and a 14.8% increase compared to the first quarter of this year.

“New vehicle sales in the second quarter started off with a bang in April thanks to a combination of a speedier-than-anticipated vaccine rollout and many Americans itching to jump into a new vehicle and on the road toward some semblance of normal life,” said Jessica Caldwell, Edmunds’ executive director of insights.

“Unfortunately, the chipset and inventory shortages really came to a head and outstripped supply in June. This isn’t a problem that’s going away anytime soon, but the silver lining for automakers and dealers in the meantime is that consumer demand continues to run high, and shoppers are clearly willing to pay inflated prices for the vehicles that they wanted.”

The average price for a new vehicle in the U.S. is up $2,000 this year and now exceeds $41,000.

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