Though demand for many vehicles remains at a high level, auto website TrueCar is forecasting new vehicle sales to be on a continued downward trend. In its recent prediction, the company said August will mark the fourth consecutive month of declining sales for dealers. Compared to August of last year, overall new vehicle sales are down 4%. If you take fleet vehicles out of the equation, that number rises to 7%. Ongoing supply chain issues are the primary culprit for lagging sales of new cars.
Semiconductor chip shortage means there are less vehicles on dealer lots
For months now, a worldwide shortage of semiconductor chips has plagued automakers, who can’t finish vehicles without them. In some cases, automakers like Ford have been parking dozens of trucks that are still awaiting the necessary electronics to arrive. This translates into long wait times for consumers who have ordered a vehicle, and potentially stressful situations at the dealership otherwise.
“The chip shortage continues to be the driving force behind vehicle availability, creating the lowest average incentive spending since 2013,” said Nick Woolard, Lead Industry Analyst at TrueCar. “Continued strong demand is creating an environment where vehicles are selling extremely quickly. About a third of vehicles are selling within a week of arriving on the dealer lot, compared to just 18% last year.”
Toyota looks strong despite tall odds, says TrueCar
Despite also being hurt by the chip shortage, Toyota is managing to rise above the odds to this point, according to TrueCar. The Japanese automaker has managed to keep its supply chain rolling so far, but said recently that production will be temporarily paused at its Mississippi plant. The company says its 2400 employees there will keep their jobs, despite the halt in production.
“Though new vehicle sales continue to decline in August, some brands saw a year-over-year increase in sales. Toyota is operating extremely well considering their inventory days’ supply is roughly half the industry average. We will continue to see how they perform once their announced plant closures put additional pressure on production and inventory,” said Valeri Tompkins, Senior Vice President of OEM Solutions at TrueCar.
Incentives slashed and used car sales are up
The strong demand also means consumers are paying higher prices, with incentives down 39% compared to 2020. The average transaction price for August is expected to be inflated 6% over August 2020. Compared to July 2021, it is projected to rise .5%, according to TrueCar. While new car sales falter, used vehicle numbers are up 6% to 3.7 million for the month of August.
With no end to the chip shortage in sight, it’s unlikely new car sales will be on a growth trajectory in the near term.