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Monday, 18 January 2021 22:56

Auto Industry ‘In Much Better Place,’ But Price Surge Likely to Continue

Written by Paul A. Eisenstein, The Detroit Bureau
Tesla was one of only three automakers to post an increase in U.S. sales in 2020. Tesla was one of only three automakers to post an increase in U.S. sales in 2020.

Index

...return to anything close to “normal” again. One of the big challenges for automakers and dealers has been the shortage of inventory, especially when it comes to pickups and utility vehicles.

 

“The inventory situation is better but still remains relatively tight [and] may hold back the market for the rest of the year,” warned Chesbrough.

 

The general consensus is that automakers have at least 1 million fewer vehicles in inventory right now compared to normal. That’s beginning to improve as factories ramp up overtime, but COVID challenges have hindered recovery efforts.

 

Toyota and its Lexus sibling each have less than 25 days of supplies on the ground, the automaker noted last week, compared to an industry norm of around 60 days.

 

Ironically, there is an upside to the shortages, Cox analysts noted. It has allowed the industry to back off on incentives and discounting. Dealers, in particular, they noted, recovered profits during the third quarter of 2020 as a result.

 

“It’s amazing what a supply-constrained market and a shift to digital sales can do,” said Smoke, noting all or part of the vast majority of retail automotive sales now take place online. It’s a trend he expects to continue to accelerate.

 

During the session, the experts foresaw the continuation of several other key trends in 2021, starting with the shift from sedans and coupes to SUVs, CUVs and pickups. The Cox forecast calls for passenger cars to drop to just 21% of overall new vehicle sales this year.

 

That shift played well for automakers who had the right product mix last year. But, on the whole, there were relatively few “winners” who came through the year of pandemic increasing sales. Those included Alfa Romeo, Mazda and Tesla---the EV maker setting a global sales record just short of 500,000 deliveries in 2020.

 

“If we had to declare a winner for the year it would be Tesla because sales were up substantially for the year, but that’s a bit misleading,” said Chesbrough, “as Model 3 sales were down a lot,” and only...


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