Here to give us an overview of the first half of 2021 and what we can expect from the balance of the year is Charlie Chesbrough, Senior Economist and Senior Director of Industry Insights at Cox Automotive.
Chesbrough begins the conversation by discussing his assessments of how the U.S. auto market performed in the first half of the year. Chesbrough says, as we look back, it was a great six-month span. However, the industry did end the month of June on a sour note, in terms of the sales pace.
As far as manufacturers’ performance, Chesbrough says the early recovery winners have been Toyota and Hyundai. They both have gained more market share in 2021, than in the first half of 2020 and 2019. Toyota has had very tight inventory throughout the year, yet sales are still strong. The Detroit Three: General Motors, Ford, and Chrysler have been low performance and suffering, with a big decline in market share.
Chesbrough says, so far in May and June, car shares have risen to about 24% of the market. Chesbrough thinks, that the cars left on dealers’ lots remain because everything else is picked, consumers don’t have much of a choice. Chesbrough also believes this is the opportunity for car dealers and manufacturers to grab market share.
For the remainder of the year, Chesbrough says, analysts expect the supply shortage to continue, especially over the third quarter. Hopefully, by September and October, the chip shortage will get better. Production will be able to catch up, and possibly outpace sales. There’s going to be a slower second half than we had in the first half, says Chesbrough.
Chesbrough says, it’s still a pretty good year and the margins on new and used vehicles are probably the best they have ever been. For car buyers, it will be a challenge because they are looking at very high prices and maybe not exactly the product they want. Customers will have to figure out what they are willing to give up. Chesbrough says he can’t imagine paying $40,000 for a new vehicle and not getting exactly what he wants. It will be a different kind of market.
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