December Auto Sales Still Looking Weak

Matt Posky
by Matt Posky
december auto sales still looking weak

While the official figures haven’t dropped, just about every outlet tracking new vehicle sales is projecting a significant decline in volume for December 2021. Showrooms have been trending toward the minimalist aesthetic since 2019 with the pandemic kicking things into overdrive as supply bottlenecks nullified practically every manufacturer’s ability to produce anywhere near its normal pace.

Last December was bleak, with sales falling by around 5 percent for the month as the typical transaction price for automobiles set new records. The U.S. market only saw 1.54 million sales, the lowest volume witnessed since December of 2014. But 2021 volumes are shaping up to be decidedly worse. This month is on track to fall by anywhere from 23 to 30 percent with retail sales barely cresting 1 million units as transaction prices for both new and used vehicles surpass all previous metrics.

The exact number depends on who you’re asking and ultimately hinges on what reality brings after the figures are tallied in January. However J.D. Power, LMC Automotive, and TrueCar are all forecasting light vehicle sales to be down by anywhere from a quarter to a third year-over-year right now.

“Historically, December is a big month for the industry as OEMs and dealerships work to close out the calendar year with strong sales. The last week of the month is also typically the biggest week of the year in terms of sales volumes but it’s unlikely to happen this year due to continued inventory shortages and declining incentives,” said Nick Woolard, Lead Industry Analyst at TrueCar.

TueCar estimated retail sales to be down by 27 this December (YOY), planting its assessment smack-dab in the middle of other outlets. Though they’re all expecting volumes to be low this year with dwindling incentive spending usually receiving an honorable mention. Automakers were already abandoning incentives by the start of 2020. But spending for 2021 is down another 55 percent vs last year. Meanwhile, fleet volumes for December 2021 are expected to be down 29 percent from a year ago and down 3 percent from November 2021 (adjusted for the same number of selling days).

The truth of the matter is simply that automakers now have a captive audience. With fewer cars being constructed, there are far fewer on the lot. Average new car inventories were a staggeringly low 15 days in November. For the sake of comparison, normal inventories would have been somewhere in the 50-70 day range just a couple of years ago. Though we’ve already discussed the absolutely grotesque ways this has influenced pricing, so we’ll not risk depressing you again. Suffice it to say, new vehicle prices have continued to climb another 2.5 percent within the last month and we understand if you need to take a break from reading to angrily curse for a few minutes.

We suppose that the good news is that dealerships have remained quite profitable, provided they were large enough. According to the National Automobile Dealers Association, retailers actually recorded an average pretax profit of $3 million through the first nine months of 2021 — more than twice what they accomplished in 2020 within the same timeframe. Manufacturers may not be breaking records like dealerships are, however, most are performing decently despite there being a general lack of sales over the last two years. Some brands are even doing quite well (e.g. Jeep, Porsche) while others are just trying to hang in there (e.g. Cadillac, Infiniti, Aston Martin).

The industry is still estimated to have $200 billion lopped off the top due to complications stemming from parts shortages (specifically absent semiconductors) though. Just about everyone wants to know when this is going to end. We assumed pricing had gotten so out of whack by the summer of 2021 that they couldn’t possibly continue climbing without the whole economy being thrown out of whack. We even got promising news from a few suppliers that the issue was becoming more manageable, with parts shipments allegedly becoming more routine over the fall. But prices climbed anyway as vehicle inventories continued to fall, leaving us more than a little befuddled on the long-term ramifications.

Apparently, we aren’t alone in that feeling.

“In October we were seeing initial signs that the worst may be behind us in terms of inventory shortages. We continue to see signals of stability and in some cases, slight improvement. One such indicator, our scarcity measure, shows improvement in recent months for both new and used vehicles,” stated Valeri Tompkins, Senior Vice President of OEM Solutions at TrueCar. “However, questions still remain as to the trajectory of improvement we can expect to see in 2022.”

[Image: Mikbiz/]

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  • TomLU86 TomLU86 on Dec 27, 2021

    @BSttac You are a good indicator. In 1973, 15 million new cars/trucks sold in the US, population was about 210 million. In 2017-18, 17 million units sold, US population about 320 million. In 1973, one new vehicle for every 14 Americans. In 2018, one new vehicle for every 19 Americans. Yes, I know some one will tell me the "inflation-adjusted" price of a car is less, blah-blah. The inflation-adjusted AFTER TAX, after medical/insurance/education of middle America is a lot less. The essential function of a vehicle, being secure from weather and self-propelled, remains the same, regardless of how many speakers, air bags, power assists, etc. However, cars do last longer, and require less maintenance. Pricier cars, less money (pursuing MORE products and services than ever) mean less new car sales per capita. I enjoy visiting here, but I like and appreciate your name.

  • Jkross22 Jkross22 on Dec 28, 2021

    A dead center mid level Toyota RAV4 is the most average car I can imagine. That cost $36,343 before tax but includes destination fee. Figure you're out the door right at $40k. For the most average vehicle I can imagine. There are better cars for less (GLI, Civic Si, Accord) but those sedans are less desirable than the SUV.

  • Alan The Prado shouldn't have the Landcruiser name attached. It isn't a Landcruiser as much as a Tacoma or 4 Runner or a FJ Cruiser. Toyota have used the Landcruiser name as a marketing exercise for years. In Australia the RAV4 even had Landcruiser attached years ago! The Toyota Landcruiser is the Landcruiser, not a tarted up Tacoma wagon.Here a GX Prado cost about $61k before on roads, this is about $41k USD. This is a 2.8 diesel 4x4 with all the off road tricky stuff, plus AC, power windows, etc. I'm wondering if Toyota will perform the Nissan Armada treatment on it and debase the Prado. The Patrol here is actually as capable and possibly more capable than the Landcruiser off road (according to some reviews). The Armada was 'muricanised and the off road ability was reduced a lot. Who ever heard of a 2 wheel drive Patrol.Does the US need the Prado? Why not. Another option to choose from built by Toyota that is overpriced and uses old tech.My sister had a Prado Grande, I didn't think much of it. It was narrow inside and not that comfortable. Her Grand Cherokee was more comfortable and now her Toureg is even more comfortable, but you can still feel the road in the seat of your pants and ears.
  • Jeffrey No tis vehicle doen't need to come to America. The market if flooded in this segment what we need are fun affordable vehicles.
  • Nrd515 I don't really see the point of annual inspections, especially when the car is under 3 years (warranty) old. Inspections should be safety related, ONLY, none of the nonsensical CA ARB rules that end up being something like, "Your air intake doesn't have an ARB sticker on it, so you have to remove it and buy one just like it that does have the ARB sticker on it!". If the car or whatever isn't puking smoke out of it, and it doesn't make your eyes water, like an old Chevy Bel-Air I was behind on Wed did, it's fine. I was stuck in traffic behind that old car, and wow, the gasoline smell was super potent. It was in nice shape, but man, it was choking me. I was amused by the 80 something old guy driving it, he even had a hat with a feather in it, THE sign of someone you don't want to be driving anywhere near you.
  • Lou_BC "15mpg EPA" The 2023 ZR2 Colorado is supposed to be 16 mpg
  • ToolGuy "The more aerodynamic, organic shape of the Mark VIII meant ride height was slightly lower than before at 53.6 inches, over 54.2” for the Mark VII."• I am not sure that ride height means what you think it means.Elaboration: There is some possible disagreement about what "ride height" refers to. Some say ground clearance, some say H point (without calling it that), some say something else. But none of those people would use a number of over 4 feet for a stock Mark anything.Then you go on to use it correctly ("A notable advancement in the Mark VIII’s suspension was programming to lower the ride height slightly at high speeds, which assisted fuel economy via improved aerodynamics.") so what do I know. Plus, I ended a sentence with a preposition. 🙂