It’s predicted to be a big year in the auto retail industry. On today’s show, we’re pleased to welcome back Jonathan Smoke, chief economist for Cox Automotive to discuss the significance of 2020, industry trends and predictions for 2021, and what dealers can look for in Q1.
Smoke begins the conversation with a thoughtful reminder that even though the calendar may reflect a fresh start for 2021, the nation is still carrying the hardships of the COVID-19 pandemic. For the automotive industry, the pandemic will largely frame what it will be able to accomplish this year, especially in the winter months.
January is typically the lightest month of the year for vehicle sales, and Smoke has low expectations for any sizable shifts in trends. However, once January and February are in the rear-view window, Smoke predicts strong momentum for the economy and the vehicle market. There will likely be a convergence of stimulus money, with more potentially to come, a robust tax refund season, and increased consumer optimism. These factors will likely contribute to an industry boom in the Spring months.
Smoke believes that more certainty about the future will allow business owners and consumers to be more comfortable making purchases like vehicles.
Electric vehicle adoption is on the upswing in regards to OEM investment and new legislation. While consumer demand is still somewhere in the neighborhood of 3%, Smoke says that 2021 will mostly likely dawn the EV decade. From his perspective, previous government administrations have not prioritized EV infrastructure and some have actively worked against electrification. However, there will be a greater focus on emissions and alternative energy from the Biden administration. With this greater focus, EVs will continue to gain momentum.
Gas prices and interest rates are always two defining factors that determine what kind of car consumers purchase, as well. While gas prices and interest rates likely won’t go any lower than we saw in 2020, they also won’t rise dramatically. All of these mitigating factors prompted Smoke to boost the 2021 forecast which now sits at 15.7 million SAAR. Retail used-vehicles are also projected to rise by 10% year-over-year. It looks like a great year ahead for the auto retail industry, so be sure to stay tuned to CBT News for the latest updates and insights.
Jonathan Smoke and the economic industry insights office, leverage data across all of the Cox Automotive brands to decipher relevant trends and actionable insights in the automotive retail industry. Prior to his role at Cox Automotive, Smoke was the Chief Economist at realtor.com and Hanley Wood. For more great insight from Smoke, check out his Auto Market Weekly Summaries here.
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