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U.S. car sales inched higher and inventories grew in October, a sign that some of the worst of the shortages hampering auto production might be fading, but auto makers continued to struggle to replenish dealer lots and supply is likely to remain tight through next year.
That will test brand loyalties and keep average vehicle prices higher, as auto makers are choosing to use their chips in pricier, higher-margin vehicles amid shortages of chips and auto parts as used-car prices continue to rise.
October’s seasonally adjusted annual rate for light vehicles came in at 13.1 million, up from about 12.3 million in September and on par with August’s reading.
“Every auto maker has been struggling,” said Garrett Nelson, an analyst with CFRA. “There’s some incremental improvement happening over the last month or so … but we are talking very marginal improvement.”
Ford Motor Co.
F,
earlier Wednesday reported a 4% drop in U.S. sales for October, but the stock turned higher as investors focused on a 14% jump for retail sales of SUVs and news that electric-vehicle sales nearly tripled to a new monthly record.
General Motors Co.
GM,
and Tesla Inc.
TSLA,
report quarterly rather than monthly sales and are expected to update Wall Street in early January. Toyota North America reported October 2021 U.S. sales were down 29%.
See also: More electric pickup trucks are coming to market. The question now is who will buy them?
The average price of a new vehicle is hovering at $45,000, up more than 20% year-on-year. The average used-vehicle price is around $30,000, up about 30% year-on-year.
There are also fewer promotions for new-car shopping: Auto makers continued to unwind incentives due to low inventories, analysts at Deutsche Bank said in a note Wednesday.
“Looking ahead, we still forecast full-year 2021 US auto sales of (15.5 million) units as tight inventories continue to limit sales despite the robust consumer demand in the market,” they said.
Don’t call it a comeback, but new-car inventory finally increased, CarGurus Inc. CARG analyst Kevin Roberts said. That, however, didn’t slow down new-car average listing prices, and used-car listing prices accelerated again in October after several months of slower growth.
“Despite this cautious rise in new vehicle inventory numbers, the road back to a normal automotive market won’t be easy or straightforward,” he said.
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“With used inventory still down and production low, we’ll likely see reinvigorated demand for new vehicles once OEM production can rebound, which will continue to keep inventory low.” Late 2022 is likely the earliest “we could arrive at our new normal of inventory supply,” Roberts said.
RBC Capital analyst Joseph Spak said in a recent note that he expects that the first half of 2022 “will still be somewhat constrained from supply, thus limiting the SAAR, but as the year progresses, supply improves and the SAAR improves.”
Supply “is slowly but surely improving from the lows,” Spak said.
