By on December 27, 2021

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/Shutterstock.com]

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44 Comments on “December Auto Sales Still Looking Weak...”


  • avatar
    Kendahl

    Given the prices dealers are demanding in this sellers’ market, I’m surprised anyone is buying unless they are desperate for transportation. I’d like to replace my 14-year-old Infiniti with something newer (and faster) but not at these prices. I’m “helping out” the auto industry by keeping what I have instead of further aggravating the shortage of vehicles.

    • 0 avatar
      Astigmatism

      Same here. The good news is that, with work-from-home the new white-collar normal, we don’t have to drive our cars nearly as much as we did a couple of years ago. Even with the current bubble in used-car prices, the delta between new and (well-) used is a lot wider than it should be, and there’s no way we’re spending that kind of money for what’s now relatively light use.

      • 0 avatar
        28-Cars-Later

        Age will eventually catch up to us… now the “2030” EV target they keep parroting starts to make more sense doesn’t it?

        • 0 avatar
          thornmark

          start hoarding Accords and Camrys – they will become incredibly valuable in a Gov pushed ev world – if it ever comes to that

          see how Cuba kept their cars going

          remember, the same people pushing ev’s also pushed Solyndra, “high speed” rail and ethanol – BIG losers all

  • avatar
    SCE to AUX

    “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.”

    Thanks for posting that 15-day number; it’s worse than I thought.

    It’s strange that paying MSRP is considered a win these days. But I’ve noticed that a lot of dealers are listing ‘inventory’ on vehicles that are actually in transit to their lot. After that, I know that some dealers have a waiting list for the in-transit vehicles, and subject the prospective buyers to a lottery or a bidding war to get the car after it arrives.

    So the ATP may be higher than the price shown on the web site, with the buyer basically paying the dealer extra for the privilege of taking the car home. Technically not dealer markup, but definitely a gift to the dealer. I wonder how the extra amount is described on the sales invoice.

    • 0 avatar
      JMII

      But I’ve noticed that a lot of dealers are listing ‘inventory’ on vehicles that are actually in transit to their lot.

      I have noticed this too. They want you to call and discuss a model then they try to sell you something else. Its like the old bait-n-switch but there is nothing to switch out. Instead your placed into a long snaking line like your trying to ride Space Mountain at Disney. My local dealer wouldn’t even take down my contact information because his incoming inventory is still a month out. They are only dealing with buyers that want to bid on a vehicle right now.

      And yes MSRP is considered a good deal these crazy days. ADM, market value (like lobster?), price adjustment, inventory shortage, delivery package… I’ve seen all kinds of BS terms during my search. Basically they want over MSRP and thus will tack on all sorts of made up fees.

  • avatar
    Heino

    Isaac Newton was secretly a car lover.

  • avatar
    FreedMike

    It’s a December To Remember!

  • avatar
    kcflyer

    I don’t see much light at the end of this tunnel yet. Sleepy jo is still reading off last years script. Dim governors like NY’s pushing for more 2020 hindsight policies. Locking out, firing non vaxers, shutting down free markets every where they can. Instead of pushing to deregulate covid test like the europeans or pushing out anti viral’s to doctors and hospitals nationwide they are just stuck on pause. Yes, tragicly, many have died. I sympathize with those who have lost loved ones to the CCP engineered virus. People die every day of accidents, disease, crime, etc. We must not abandon our civil rights and destroy the economy over covid or any other single health threat. We must move forward. 2 million unvaccinated illegal entrants and counting. Thousands left behind in Afghanistan. Record inflation turning the working middle class into working poor. This is the rise of democratic socialism if voters don’t stop it.

    • 0 avatar
      Margarets Dad

      Sales are low because supply has been severely constricted due to the chip shortage.

      What does that have to do with any of the bananas stuff you just puked out?

      • 0 avatar
        28-Cars-Later

        “chip shortage”

        • 0 avatar
          Margarets Dad

          Did Santa bring you the 50-gallon drum of Ivermectin you asked him for?

          • 0 avatar
            28-Cars-Later

            Don’t need it, but please make sure to check into your local hospital at the first sign of “pandemic” trouble. Ask for the remdesivir, its going on sale next month.

        • 0 avatar
          Astigmatism

          “A Year of Poor Planning Led to Carmakers’ Massive Chip Shortage
          Debby Wu, Gabrielle Coppola and Keith Naughton, Bloomberg News
          Jan 19, 2021
          (Bloomberg) — Near-sighted planning, supply-chain complexities and a tradition of keeping inventories low caused the semiconductor shortage that is now forcing carmakers to idle production lines and straining their relationship with chip manufacturers.

          Seeds of the imbroglio were sown almost a year ago as the virus outbreak led to plunging car demand, prompting auto-chip companies to slash orders. But when they wanted to increase supply toward the end of 2020, they struggled to secure capacity at Taiwan Semiconductor Manufacturing Co. and other contract chipmakers that were busy servicing a boom in demand for gadgets that help housebound consumers stay connected, according to people familiar with the situation…
          A further squeeze to the global supply was caused by the Trump administration blacklisting China’s Semiconductor Manufacturing International Corp. in December.”

          • 0 avatar
            ajla

            I’ve read similar stories, and I’m not an expert on automotive supply chains, but I do think there is more to it than that.

            0. Every automaker “slashed orders” in early 2020 at roughly the same level?
            1. Those cut orders caused a disruption that lasts for over two years?
            2. The auto industry wasn’t the only sector that saw inventory problems throughput the pandemic.

          • 0 avatar
            28-Cars-Later

            9/11: Nobody could see it coming, and we (gov’t/industry) screwed up.

            2008: Nobody could see it coming, and we (gov’t/industry) screwed up.

            2020: Nobody could see it coming, and we (gov’t/industry) screwed up.

            “Chip shortage”: Nobody could see it coming, and we (gov’t/industry) screwed up.
            ——————-

            Noticing a pattern.

          • 0 avatar
            FreedMike

            …and I’ll add:

            2020: No one saw climate change coming, and we screwed up. Too bad about Miami…it was a nice town.

            Common thread: no one wants to do what it takes to get out front of a potential problem…probably because it’s a pain in the a** and costs money.

          • 0 avatar
            ajla

            Everyone saw 2008 coming.

          • 0 avatar
            28-Cars-Later

            @ajla

            “Everyone saw 2008 coming.”

            People did? Michael Burry and his investors did, and if it was purposely triggered starting in July of 2008 maybe those people did, but by and large the public, gov’t and Wall Street seemed to be caught off guard.

            On the “chip shortage” its +15 months and it seems to be getting worse, not better. This doesn’t add up and it aligns with the stated political goals of the DC junta as well as the statements made in 2020 regarding the so called “great reset”. Now they’ve come along to ram Obama’s incredibly poor MPG policy *while* this is going on, which will forced mfgs to further subdivide whatever electronics supply they have toward things to meet this goal – instead of doing the opposite while this crisis is happening. Much of this “shortage” is artificial and intentional, but “elections” have consequences.

            @Freed.

            If heaven forbid Miami gets taken down by some sort of natural disaster it will be by hurricane or earthquake, not by “climate change”. Cleverly “climate change” is now the catch all boogeyman for when anything unexpected occurs in the Earth’s natural cycles. Kinda like how the “pandemic” is now a catch all boogeyman for anything they want.

            Again in ’73/74/75, how often was “OPEC” or “the embargo” the excuse for something unrelated or indirectly related occurring? Check out this 90s oil history documentary called “The Prize” on Amazon Prime. In the second to last episode they offer some interesting insight on the period leading up to Gadaffi and OPEC, the Saudi oil minister explains the situation between the Arabs and the seven sisters very well. The Arab nations were in the middle of negotiations with the oil majors when the Yom Kippur War started, they used it as leverage to gain a 50/50 or more share in profits and were initially rebuked. Conveniently not long after this Kissinger started negotiating the Petrodollar system in place today with OPEC. Orbo ad Chao is the name of the game. I do think this period something similar is occurring behind the scenes which won’t be unveiled for at least another year or longer. Rumor mill speculates they will introduce digital currencies (I was predicting a new currency in 2014/15 and some sort of 3:1 split for green FRN for say “blue” ones, but I said at the time I can’t see how that won’t cause an international war).

          • 0 avatar
            ajla

            “the stated political goals of the DC junta as well as the statements made in 2020 regarding the so called “great reset.”
            “Much of this “shortage” is artificial and intentional”

            But why would Japan and South Korea (or China and Russia) care to go along with any of that?

          • 0 avatar
            28-Cars-Later

            @ajla

            Why does a major oil and nuclear weapons power (Russian Federation) put up with Western mercenaries on its border (Ukraine)? Why does a major industrial and nuclear weapons power (China) continue to adhere to the Petrodollar system for trade? Not so easy to just thumb you nose at the US, just ask Saddam and Gadaffi how that went for them.

            Even if the situation were different, Japan would not move against US interests and I doubt SK would as well especially since both nations rely on the US for national defense. Without a doubt those nations will continue tow the line.

          • 0 avatar
            Dimwit

            Response to AJLA’s question. The biggest issue is the automaker’s themselves. These chips are antiques. The manufacturers have had a great run with these. They’re robust, reliable and cheap. And the fabs hate them. They’ve been trying for years to get the auto industry to modernise. AFAIK there were only 2 fabs left that kept those old line running. Once the auto guys dropped orders one of them ripped out the line and put in something modern to get more capacity on current processes. What that means is that all those lovely designs now have to be redesigned for something like 14nm. And taped out, tested, fixing errors and then finally getting production space. And once you have all that? The auto guys now need new boards, new enclosures, new integration to the wiring harnesses. Fun wow! And that’s why we’re 2 years on with the chip shortage.

          • 0 avatar
            28-Cars-Later

            @Dimwit

            Interesting points. I will ask though, are you implying every major automaker is dragging their feet on this? Because this “shortage” isn’t limited to one mfg or one group (i.e. Detroit 3)

    • 0 avatar
      Ol Shel

      You forgot to say a single thing about cars, but did a fine job of regurgitating Fox blather.

      Please stay off our socialist roads. Also, stop pretending to praise our Socialist police, firefighters, and military. That blue line flag on your Hyundai wouldn’t be possible without public money used to fund them.

      • 0 avatar
        ToolGuy

        @Dimwit (posting as close to your post as my feeble brain will allow),

        Your 10:59 post [antique chips] is *superb* – thank you.

      • 0 avatar
        Christophe

        Prior to implementation of the federal income tax in 1913 to help finance WWI we had roads, an army, a navy, railroads, schools and colleges.

        Government has only two legitimate purposes, providing for the common defense and maintaining the social order through equal enforcement of the rule of law.

    • 0 avatar
      66 West

      Eh, isn’t there one place on the internet that is free of your vomit? Give it a rest man, this is a car enthusiast site–Not FACEBOOK!

  • avatar
    dal20402

    If that projected drop in sales is entirely because of low supply, that’s a staggering amount, and it’s no wonder prices for new and used cars alike are on the far side of insane. Hoping for at least a return to normal supply in 2022, although it will take a while to address pent-up demand.

  • avatar
    IH_Fever

    I keep getting the “we want to buy your car” letters from my local dealers. The “offers” are outrageous, but then what would I replace it with? You can’t buy what’s not there.

  • avatar
    ToolGuy

    The Consumers Who Matter are doing just fine. The Proles have no business buying new vehicles and never did [ok perhaps in 1914, but times change – do keep up].

    The Legacy OEMs have figured out that selling to Proles is a huge waste of everyone’s time.

    TL;DR: Sales volumes will continue to drop, average transaction price will continue to climb, profits (manufacturer and dealer) will continue to grow, and we will all be Just Fine*.

    *You might argue, “Yes, until the torches and pitchforks come out,” but ask yourself these critical questions:
    a) How many people do you personally know who own a pitchfork in 2021?
    b) What percentage of the current population could realistically construct a functional torch with materials on hand? (Plus – messy, smelly and potentially dangerous – very high ‘ick’ factor for many Americans)
    c) How many people are even looking up from their latest binge-watching spree?

    • 0 avatar
      ajla

      I think this will last into 2023 but it is unlikely to become a “new normal”. Game theory behind price competition still exists and you have to think about the impact your scenario would have on the used car market.

    • 0 avatar
      ToolGuy

      @ToolGuy,

      Binge-watching? You are clearly confusing the Proletariat with the Petty Bourgeoisie. (Proles don’t binge-watch, they are too busy working a second job.) You have a lot to learn about class warfare [and limited time in which to learn it].

    • 0 avatar
      SPPPP

      You forgot:
      d) Torches are not carbon-neutral, so you have to buy offsets.

  • avatar
    Margarets Dad

    “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.”

    The ways this has influenced pricing is the way every college student learns on their first day of Econ 101. If supply is constricted and demand remains the same, the price will rise. This is how capitalism works. Stop hunting for boogeymen under every rock, Matt. What are you advocating, SOCIALISM?

    • 0 avatar
      ToolGuy

      This right here feels like socialism to me:
      https://www.healthcare.gov/choose-a-plan/plans-categories/

      As I understand it, my Silver plan starting five days from now will be heavily subsidized by most (some?) of you. [My strong hope, anyway.]

      • 0 avatar
        CKNSLS Sierra SLT

        ToolGuy-
        That would fit your definition of “socialism” only if you get a subsidy from “The Marketplace” (i.e government). Otherwise-it’s a list of providers who wish to market their services.

    • 0 avatar
      JMII

      Yep its just simple supply and demand. The question is who will get their chips first and how many vehicles can they crank out? Dealers would love if this current environment remained but some OEM will break ranks, unless this is the new OPEC.

  • avatar
    probert

    Tesla is projected to be up about 18% from last quarter, and some 50-60% YoY. An arrow straight to your heart I’m sure.

    • 0 avatar
      SCE to AUX

      Yes, and they are production constrained and have raised prices just like everyone else.

      It’s another blow to the dealer sales model, among other things.

      Tesla’s agility is remarkable. Supposedly they rewrote code that required certain chips, just to keep production going. At GM, they just killed off some features and said sorry.

  • avatar
    BSttac

    Given how prices keep increasing on new cars and my salary is not, I’ve put off buying a new car. I’ve put money into my existing car to keep it on the road longer. Honestly I’m probably going to buy used in the future as oppose to new know in the future anyways. Car prices are out of hand and I can’t afford them

  • avatar
    tomLU86

    @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.

  • avatar
    jkross22

    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.

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