By on July 7, 2021

Mikbiz/Shutterstock.comThe pandemic isn’t over. But a good chunk of the United States is returning to normal, and at some point, the pandemic will peter out in the rest of the world.

How long that takes is anyone’s guess. And beyond the pay grade of anyone who contributes words to this hallowed site. But we can hazard a guess as to how post-pandemic car sales, perhaps with some assistance from an analyst.

We’ve already covered the insanity of new- and used-car prices, but we want to look a bit further ahead. Which, given how the pandemic has messed with the economy, will be difficult.

I was once an analyst myself, and forecasting sales was difficult enough in “normal” times. It’s obviously going to be harder now.

Let’s take a look at what’s happening in the wider world. There’s a labor shortage, especially in lower-paying service jobs. Whether that’s because folks would rather sit home and collect stimulus and employment checks or because service jobs are difficult and pay too little and put workers at risk of exposure to COVID and workers just said “screw it, I’m not doing that job again, unless the pay is much better” depends on one’s perspective (and in some cases, politics). Reports seem to suggest the latter is closer to the truth.

If people aren’t working, can they still afford cars, new or used? Does government stimulus money pay enough for an automobile and all the associated costs (gas, insurance, etc)? Does a low-paying retail/service job, for that matter?

Not to mention that a shortage of labor could cause some businesses to close, which would have a negative financial impact on owners and landlords.

What about migration patterns? I’ve heard anecdotes and read reports about people fleeing the cities, at least temporarily, to avoid the virus/be closer to family/live in a cheaper place now that they no longer need to commute to work.

Related to that — it seems likely there will be a shift to remote work, though how big a shift remains to be seen. There seems to be a push/pull between old-school managers who want their employees in the office where they can see them and workers who feel more productive at home, happier without commutes, and glad to have more flexibility.

Obviously, a large shift to remote work would impact the auto industry. Some folks, especially those in large cities with easily accessible public transit, would go car-free. Other people would simply put fewer miles on their car and perhaps buy a new car less often (they’d end up servicing their vehicles less often, to0). Maybe the well-heeled remote worker would trade in the sedan that’s comfortable for commuting for something more fun for weekend drives.

On the other hand, there may be pent-up demand. Those who didn’t urgently need a new car may have stayed away from the dealership during the height of the pandemic, preferring to avoid going to too many public places. Now, those same folks may be vaccinated and ready to shop, especially if they got stimulus money and didn’t need to spend it on necessities.

The post-pandemic car world won’t just be shaped by how society emerges from COVID. Things don’t happen in a vacuum. The auto industry hasn’t just been hampered by COVID-related production shutdowns but also by a semiconductor-chip shortage. Yours truly was driving around a dealership-heavy part of his hometown in Chicago’s suburbs recently and saw, for perhaps the first time ever, empty parking spaces where new cars would normally sit. Supply is tight right now.

Then again, COVID and the chip shortage/tight supply could be short-term challenges that will disappear in the next year or two.

Ed Kim, vice president of industry analysis at AutoPacific, thinks so.

“For 2021, we are forecasting about 16.5 million sales, a marked improvement over 2020’s 14.6 million sales that represented a severe drop due to the pandemic from 2019’s 17.1 million sales,” Kim said. “If not for materials-related shortages, most notably the semiconductor chip shortage, 2021 sales would be significantly higher as a combination of tax refunds, stimulus money, and the weakening of the pandemic mean that many people have money to spend and places to go.”

“AutoPacific expects that it won’t be into early into next year that volumes really recover from the chip shortage, and there are other raw materials shortages that have the potential to cause trouble such as a potential looming rubber shortage that could affect tire production,” Kim added. “In 2022, we are expecting sales to recover to about the 16.8-16.9 million unit range, possibly even hitting an even 17 million units, which would effectively match the pre-pandemic year of 2019. We expect sales to remain fairly stable in the 17 million unit range for the next few years thereafter.”

Those with long-enough memories will note that 16 million units a year was about where the industry was at before the Great Recession. Sunny days may yet lie ahead.

[Image: Mikbiz/]

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15 Comments on “The Post-Pandemic Sales Outlook Looks Good Despite Current Struggles...”

  • avatar
    SCE to AUX

    2019 was supposed to be peak sales, with 2020+ being somewhat lower – all before the pandemic and stuff. I don’t see how 17 million is sustainable when the same limiting factors apply as they did in 2019 – namely car prices outpacing income, enormous student loan debt, and now house debt thanks to the current buying frenzy. Vehicle ATPs have jumped a lot.

    There is certainly pent-up demand, but soon enough inflation will arrive to limit people’s spending potential. And when people wake up from their new house hangover, they’ll realize they’re upside down on an overpriced mortgage and can’t afford to sell the house, much less buy a car.

    • 0 avatar

      I’m seeing a lot of “frenzy buying” in many markets – particularly in higher-priced, “hot” markets (California, Seattle, Colorado, etc). Seems people are buying now before it gets too expensive to buy down the road.

      In a sense, this reminds me a lot of the late-aughts mortgage situation, but we don’t have the widespread use of fraudulent, sure-to-default financing – I mean, stated income loans – that we did back then.

    • 0 avatar

      Our current housing prices are structural, not bubblicious, in many markets.

      We’ve had fairly consistent population growth but have been building housing at only half (or even less) of our usual pace nationwide since the 2008 crisis. Part of that is construction capacity, but a big part of it is regulatory—extremely tight, restrictive zoning in job centers. There are lots of empty derelict houses in places without jobs, but the supply crunch in the places with jobs is acute and is not changing in the near future.

      I’m a Seattle homeowner and the crunch has been insanely profitable for me—there have been a couple years where I’ve made more from housing appreciation than from my job—but it’s not healthy when only the top 5% in the income distribution have any hope of buying in a major market. We need to build more stat.

      • 0 avatar

        “We need to build more stat.”

        Exactly. But in a place like Seattle, which has high population density already, where are you going to build? You can build up, of course, but that’s going to be expensive, and may end up defeating the purpose of building more. You can build out, but that increases sprawl, which isn’t going to work well at all in your neck of the woods – it’s politically unpopular, but the real issue may be that there isn’t a handy place for Seattle to grow into without a LOT of extra transport infrastructure, which is going to be expensive as hell to build there.

        Same in places like California. I think it’s a true supply/demand issue.

        Meanwhile, in other “hot” markets like Austin or Nashville, the prices aren’t going as crazy as they are in Seattle because sprawl is easier and cheaper.

        If places like St. Louis could get their act together when it comes to deal-killing issues like crime or poor schools, they could really cash in – plenty of people and employers would move there because the cost of living is so reasonable. And unlike a place like Denver, which was built for 750,000 people and now has 3 million, there’s plenty of transportation and other infrastructure already in place. Growth there would be far less painful.

        • 0 avatar

          We should build lots of small apartment buildings. They are pretty cheap to build if you stay under about 7 stories. And, once there are a lot of them, they allow sufficient density of retail and other amenities that people can walk to most things and bike to most of the rest.

          About two-thirds of residential land in the city of Seattle is restricted to single-family houses, which is utter insanity. A lot of people recognize this and there is a pretty solid electoral majority in the city to change the zoning. But the political *donor* class largely favors existing zoning so the local electeds haven’t done anything.

          • 0 avatar

            “But the political *donor* class largely favors existing zoning so the local electeds haven’t done anything.”

            They are probably realizing that the current zoning is doing a bang up job of driving prices up on the property they own. Same thing is happening in Boulder – the locals there are dead set against multifamily housing because it will destroy the views of the Flatirons. What, a four story apartment building ruins everyone’s views? Bulls**t. They just want to keep the supply of housing low so their house prices keep going up. And it’s working like a charm – average house price there is well over a million and keeps going up.

            But wait, there’s more…the anti-growth mafia in Boulder isn’t just making Boulder unaffordable – it’s driving up prices everywhere AROUND Boulder too. Basically, anything within 10 miles of the place is ridiculously overpriced. Well done, guys.

  • avatar
    Jeff S

    Manufacturers and dealers are making more money by selling fewer vehicles. Just make and sell vehicle 50k and above with the highest profit margin at MSRP or above and don’t bother selling less expensive vehicle unless they are used. Keep the shortages of trucks and suvs since most are protected by the Chicken Tax. Who needs competition when you can control the market. Keep the shortages and there will be enough people to buy a new vehicle at any price. This would also help EV sales be good for EV sales since people would be so glad to buy a new vehicle they would buy an EV despite the lack of infrastructure.

  • avatar

    I’d like to buy a new vehicle before I retire. My truck’s 11 years old but still in decent shape so I can wait. My motorcycle is what’s taking the abuse with 35,000 hard kilometers in 3.5 years.

    • 0 avatar

      It is a really tough time for anyone who MUST buy a car right now. I am looking for a used car for my son who is about to turn 16 and looking in the lower price points so I dont have to carry collision insurance here in Michigan which would be about the price of a new car payment for a 16 years old boy (in Michigan). Everything seems to be priced about 10-20% out of whack if you ask me, but I am sure one element of that is me getting older to the point where everything seems too expensive. Think I have a pretty solid car nailed down though, hopefully pick it up in the next week.

      Thankfully I have two new cars in the driveway purchased about 8 months prior to the pandemic. Bought my wife’s Atlas, and when the lease is up on my Accord, I will just buy that out for the contractual rate if things are still crazy. As it stands right now, looking at off lease Accords, I could buy it out for about $5k below market and probably turn around and sell it privately for a few grand profit fairly easily.

      • 0 avatar

        Agreed, I’m looking or a car for my kid too and the prices are just silly.

      • 0 avatar

        I had a very odd buying experience with my new 2021 Chrysler Pacifica Limited Hybrid. Dealing with CJDR is always a nightmare, but finally found a dealer who wasn’t playing around and drove it off the lot in Los Angeles for a little under $42k. It seemed as though the hybrids weren’t moving as fast as other vehicles, although three months later that same dealer’s lot is sitting at maybe 1/3 full. I was flexible on color combos, so maybe that was part of it, but at no point did I feel as though it was a one-sided negotiation. I did, however, get WAY above blue book for my 2014 Sienna LE AWD from CarMax, which was a pleasant surprise. Tl;dr – got a good deal on a new Pacifica at the end of March, but also got $4k above blue book on my Sienna from CarMax. The market is odd right now!

        • 0 avatar

          If you’re not looking for a truck or CUV/SUV, deals are out there. Just bought a new car myself last month (a sedan), and it wasn’t a giveaway, but the deal was decent. Main attraction was that I was able to make out nicely on my old Audi, which had gained an unfortunate appetite for water pumps, and oil and coolant AFTER replacement of said water pumps.

      • 0 avatar

        We got a used Colorado for my oldest son a few years ago. It’s now being driven by my youngest. My oldest got lucky due to grandparents gifting him a “jellybean” F150 last year and he has a few other vehicles.
        Last year my oldest bought a Cherokee with a 3 inch lift. The seller now wants to buy it back.

  • avatar
    Jeff S

    The market is still crazy and who knows when and if things will get back to normal. The panic buying by those worried about price increases will most likely cause price increases leading to less supply.

  • avatar

    The used market is started to flatten out. The last 30 days shows only single digit increases. YOY is still up 20-30% which some vehicles like trucks up 40%. As someone who is trying to buy a new vehicle (Hyundai Santa Cruz) I am hopeful the production delays (chips, other suppliers) finally comes to an end in Q4 so there is enough stock on the lots to chose from. Hard to bargain with a dealer that is selling vehicles for MSRP (or more!) as soon as they roll off the transporter.

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