Economic indicators that could impact auto sales for the rest of 2021 – Patrick Manzi, NADA Chief Economist

Most major automakers and dealer groups have released their second-quarter earnings and some of the results have been surprising. Joining us today, to discuss his economic analysis for Q2, and what indicators could impact auto sales for the rest of the year is Patrick Manzi, Chief Economist at the National Automobile Dealers Association (NADA). 

Manzi begins the conversation by discussing what happened in the retail auto industry in the second quarter of the year. He says, they saw booming retail demand. April SAAR came in around 18.8 million, the fourth-highest on record since the year 2000. March was 18 million and was still in the top 10. Manzi believes those numbers could have been even higher if the inventory was available to meet the fleet demand.

Manzi says he’s expecting strong demand to continue from the end of the year to the start of 2022. He believes at the end of July, inventory will fall further to below 1.3 million units on the ground, possibly a 40 year low. He also expects by September is when we’ll see the chip shortage get resolved.

Used prices last year, leveled off at the end of the year, then when the chip shortage happened, wholesale prices took off and set record month after month. Manzi expects to see prices fall to a new normal until the chip shortage gets resolved. The demand for a 17 million unit year is certainly out there, says Manzi. If productions surprises to the upside, that will become more likely.

Manzi wraps up the conversation by discussing economic indicators that could impact auto sales for the rest of the year. Low-interest rates are helping consumers afford new vehicles, including the equity they have. He believes the biggest negative is COVID, including different strains and shutdowns in the supply chains.

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