By Nora Naughton
Auto makers are reporting a jump in U.S. vehicle sales in the
opening months of 2021, boosted by continued consumer demand and
some easier year-ago comparisons, but chip shortages and other
supply-chain snags threaten to derail that momentum.
Overall, U.S. auto sales rose 11.3% for the three-month period,
according to industry data firm Wards Intelligence. The industry's
annualized selling pace in March could hit 16.8 million vehicles,
according to Wards, a sign that the level of demand is about on par
with what it was before the Covid-19 pandemic.
The increase is in part being driven by the collapse in business
at the end of March 2020, when the economy began to shut down to
limit the spread of the coronavirus.
Auto-industry sales in January and February were still off 3.3%
and 13%, respectively, according to automotive-data firm Motor
Intelligence. March sales, however, are expected to leap, with car
companies posting double-digit gains for the month compared with a
year earlier, industry forecasts show.
For the U.S. car business, it has been a choppy start to the
year. A global shortage of semiconductors has disrupted production
at many U.S. factories, hitting car-company earnings and leaving
dealerships with lower inventory, particularly on popular trucks
and sport-utility vehicles. Then, in February, winter storms in
Texas further disrupted the production of plastics used in seat
foam and other materials, adding to the industry's supply-chain
Still, customers kept buying.
"Honestly, the numbers probably would have been even higher,"
said Judy Wheeler, Nissan Motor Co.'s U.S. sales chief. "Between
the chip shortage and the weather -- it definitely did have an
Nissan reported a nearly 11% increase in U.S. sales for the
Among the U.S. car companies, General Motors Co. on Thursday
posted a nearly 4% increase in its U.S. sales for the January
through March period and said it expects auto demand to remain
strong throughout the year.
Stellantis NV, formerly Fiat Chrysler Automobiles, reported a 5%
increase in U.S. sales during the first quarter, and Ford Motor
Co.'s U.S. sales were near flat for the period, according to
Toyota Motor Corp. and Honda Motor Co., which weren't hit by the
chip shortage until later in the quarter, said U.S. sales in the
first quarter increased 22% and 16%, respectively.
Meanwhile, South Korean auto maker Hyundai Motor Co. said it was
able to keep U.S. dealer inventory steady during the first quarter,
and reported a 28% increase in sales.
New-vehicle demand is expected to grow in the coming months as
the car business hits the busy spring-selling season and the
distribution of new stimulus checks puts more money in shoppers'
Tight inventory levels didn't have much of an impact on buyers
in the first quarter, but that is likely to change in the coming
months, Cox economist Charlie Chesbrough said.
Already, at the end of February, vehicle stock levels at
dealerships and in transit were down 26% compared with a year
earlier, according to research firm Wards Intelligence. That is
near the lows reached last summer when auto makers were starting to
recover from the pandemic-related factory closures in the
Ford said Wednesday that it would halt production in April at
several U.S. factories, including its two major truck plants.
Stellantis, the maker of Jeep, Ram and Chrysler, said it would
halt production at five North American plants through mid-April,
following other major car companies that have paused work at
factories in the region because of parts shortages and backups at
West Coast ports.
While demand continues to outstrip supply, car companies have
pulled back on deep discounts offered early in the pandemic and
consumers are spending more to drive off the lot in a new ride.
The average price paid for a new vehicle in the first quarter
was $37,314, the highest ever recorded for the quarterly period,
according to J.D. Power.
Some dealers worry the extended inventory shortages could
disrupt some important new-model launches this year.
Joe Shaker, owner of Shaker Automotive Group, which has stores
in Connecticut and Massachusetts, said he is most concerned about
any delays of long-awaited vehicles such as the Ford Bronco and
"We'll keep battling through and hopefully be better for it when
we're on the other side," Mr. Shaker said of the inventory
Jeff Dyke, president of Sonic Automotive Inc., a publicly traded
dealership chain based in North Carolina, is more optimistic. Mr.
Dyke said that while sales during the summer months could be lean
as dealers restock, he is encouraged by the strength in demand
throughout the pandemic.
"As we roll into the third and fourth quarter, this too shall
pass," he said.
Write to Nora Naughton at Nora.Naughton@wsj.com
(END) Dow Jones Newswires
April 01, 2021 19:51 ET (23:51 GMT)
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