SANTA MONICA, Calif. (AP) – U.S. consumers continued to spend heavily on new cars in the second quarter, pushing sales up 50.2% from a year ago despite tight dealer inventories and record prices.
Automakers sold around 4.43 million vehicles from April to June, a figure 0.4% lower than in 2019, the last normal year before the coronavirus pandemic struck.
Despite the big jump from a year ago, there were signs that sales were slowing towards the end of the quarter, mainly because dealers had few vehicles to sell. A global shortage of computer chips has forced most automakers to cut production. But demand remains high as the pandemic subsides and people look to purchase vehicles for family trips.
“Unfortunately, the chips and inventory shortages really peaked and outstripped supply in June,” said Edmunds.com Director of Ideas Jessica Caldwell. “It’s not a problem that will go away anytime soon. “
Consumers desperate for new vehicles often paid more than the sticker price, pushing the average sale price in June above $ 40,000 for the first time, according to JD Power.
Automakers cut discounts, but still sold vehicles. On average, they had enough inventory to provide just 39 days of sales, down from 93 days a year ago, JD Power said.
This means that automobiles will almost certainly again be a big part of domestic price inflation. When new vehicle prices rise, many buyers are driven into the used market, pushing up used vehicle prices, which accounted for a third of the sharp rise in consumer prices in May. Prices hit a record 10% in April and 7.3% in May, as inflation climbed 5%, the biggest 12-month increase since 2008.
Some analysts expect sales to decline in the second half of the year as supplies dwindle. Some dealerships are running out of vehicles to sell.
“Too few vehicles in inventory are preventing the industry from sustaining the phenomenal sales pace seen in recent months,” said Thomas King, president of analysis at JD Power.
Analysts say the chip shortage will start to ease in the third quarter, but won’t go away completely until next year.
Still, the high prices mean big profits for automakers, as they don’t need vehicle discounts, and they’ve all but stopped selling to car rental companies, who tend to pay less because of the wholesale discounts.
“Automakers are in the unusual position of having less inventory than demand, which supports high prices which may help offset the drop in revenues typically associated with falling sales,” said Stephanie Brinley, Automotive Analyst principal at IHS Markit.
In the second quarter, General Motors sales increased 39.7% from a year earlier, while sales of Stellantis, formerly Fiat Chrysler, increased 32.2%. Toyota climbed 73.1% and Nissan 68.1%.
