The U.S. auto sales volume is below 15 million for the second year. Cox Automotive forecasts that December 2021 will have a sluggish showing of 1.10 million new automobile units sold. This number likely contributed to the seasonally adjusted annual rate (SAAR) of 11.4 million, a 30% drop from last year’s 16.3-million-unit pacing.

Demand Isn’t the Problem… It’s Supply

INVENTORYWhile new vehicle sales did see a 2.5% bump from last year for a projected final number of 14.9 million, it’s still well under the successful 2015-2019 average of 17.3 million new units sold, according to Cox Automotive. The problem isn’t consumer demand, but that “supply and production disruptions kept the industry in check,” said Charlie Chesbrough, Cox Automotive Senior Economist.

According to their press release, Cox Automotive’s vAuto Available Inventory data revealed that national new-vehicle inventory would typically be around 3.5 million units. However, since August, inventory sold has held around one million units.

The lack of new inventory is a no-win situation for both industry players and consumers. The increase in pricing and lack of affordable options can eventually lead to demand cooling.

According to J.D. Power, 89% of new vehicles purchased by car buyers sold near or more than the manufacturer’s suggested retail price. Also, the lingering issue of the semiconductor chip shortage has stalled vehicle production and led to low vehicle inventories across the country.

Nevertheless, there could be a light at the end of the tunnel for 2022. Chesbrough believes that the supply situation will improve, but only after dealers replenish the supply. “We expect modest gains in new-vehicle sales in the first quarter, and by the second half of the year, a much more robust market should emerge,” he remarked in Cox Automotive’s December sales forecast press release.

Ultimately, new-vehicle sales could drop by more than 500,000 units from December 2020, according to Cox Automotive, but the news isn’t all bad as they may see an 80,000-unit rise compared to November 2021’s auto sales.

Larger Vehicles are Still the Cars of Choice

Even amid rising fuel prices, Cox Automotive forecasts that full-size pickup trucks and mid-size SUVs/crossovers are responsible for the highest units of sales, 170,000 and 200,000 units, respectively.

Pickup trucks and mid-size SUVs/crossovers saw a 35.1% and 27.9% year-over-year drop, but a 4.9% and 2.3% rise compared to November’s numbers.

However, while larger vehicles saw an uptick compared to the previous month, compact SUV/crossover vehicles saw the largest boost, with 6.5% month-over-month numbers.

ToyotaToyota Takes the Top Spot

Compared to Q4 2020, all automakers saw a drop in year-to-date sales, but one did rise to the front to become the top seller in 2021.

Toyota Motor Company became the largest seller of automobiles in the United States, bypassing General Motors, which historically held the top-selling spot even before Cox Automotive began collecting data. Toyota reported a 30.5% drop compared to the same time last year, while GM experienced a 46% decline.

Related: Toyota tops General Motors for 2021 total sales in U.S.

However, GM doesn’t expect to be behind for long. In a recent CNN article, the company suggested that the 2021 semiconductor chip shortage contributed to their diminished sales performance. But, the company feels that a “gradually improving supply chain” should help lead to continued growth as it plans to launch several new vehicles.

It’s not only GM’s efforts to retake their dominance that are at stake. The ability for automakers to produce more vehicles and for dealerships to restock their lots will likely make or break 2022’s auto sale performance. Still, with the pandemic’s continued disruption of supply chains, time will tell if supply can rebound and meet high demand.

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