The National Automobile Dealers Association (NADA) issued its 2020 analysis of U.S. auto sales and the economy.
“The coronavirus pandemic certainly impacted new light-vehicle sales in 2020, not to mention the U.S. economy as a whole,” said NADA Chief Economist Patrick Manzi. “Our forecast at the start of 2020 estimated new light-vehicle sales would fall by 1% to 2% compared to 2019 for a total of 16.8 million units sold, but once COVID hit, we knew this would be a different year than anticipated.”
2020 came to a close with new-light vehicle sales of 14.46 million units, down 14.7% compared to 2019.
Despite the lowest monthly SAAR on record of 8.7 million units in April, signs of the new-vehicle sales recovery began in the second half of the year as retail consumers returned to dealer lots. While the overall new-vehicle market fell by 14.7%, consumer retail sales only declined by an estimated 9%.
Given a stronger than anticipated sales recovery, manufacturing facility shutdowns and robust new-vehicle demand, most U.S. dealerships faced significant inventory constrains on popular models and segments during the second half of the year, including crossovers and pickups.
By mid-summer, tight inventory meant OEMs and dealers pulled back incentive spending. Coupled with consumer preferences for more expensive light-trucks, this pushed average transaction prices to record highs throughout the year.
In March, the Federal Reserve slashed interest rates to the 0% to 0.25% lower bound, helping vehicle buyers with their monthly payments and dealers with their floorplan costs.
In November 2020, the average interest rate on new-vehicle financing was 4.4%, down about 90 basis points compared to the same time last year.
At the macro level, real GDP rebounded at an annualized rate of 33.4% in Q3 of 2020, following an annualized 31.4% contraction in Q2 of 2020; NADA anticipates...