To understand where 2021 auto sales could potentially be headed, dealers have to look back at what happened in the fourth quarter of 2020. On today’s show, we speak with Tyson Jominy, Vice President of data and analytics for J.D. Power who provides expert insight into the current state of the automotive industry.
Q4 for the auto retail industry had some very strong results, according to Jominy. Although total sales were down 5% quarter over quarter, retail sales gained about a tenth of a percent due to robust consumer demand. Additionally, consumers spent, on average, 5-6% more on their purchases than in Q3.
Outside of the COVID-19 pandemic, inventory is still a top concern for auto dealers. Since May of 2020, inventories have been tight, and manufacturers are struggling to meet demand. However, dealers are seeing higher profits on vehicles for the past five consecutive months. In fact, compared to the latter half of 2019, dealers are seeing profits increase by around $800.
The electric vehicle market made several big moves in 2020 in terms of innovation as well. However, from Jominy’s perspective, EV sales were flat for the majority of the year, excluding Tesla’s large Q4 push, which was mostly driven by incentives. It’s worth noting, that the large increase in EV sales was on a global scale. For the U.S. market, EVs remain somewhat stagnant. The key difference here is that government legislation in Europe and Asia has overwhelmingly driven the adoption of EVs. With the inauguration of President-elect Joe Biden right around the corner, EV infrastructure and tax incentives might change.
Many might consider digital retailing adoption and innovation to be the MVP of 2020. At the height of COVID-19 shutdowns, digital retailing allowed auto retailers to keep selling in an otherwise impossible circumstance. In 2021, Jominy predicts that a full year of robust digital retailing will be not only preferable for consumers, but it will confirm the importance of these services. Other 2021 trends on Jominy’s radar include the potential decline of used car sales and the impact of market uncertainty.
Jominy has worked as part of the J.D. Power information network for over 10 years. Prior to joining J.D. Power, he held various corporate sales, marketing, and finance positions with Ford and Nissan. Additionally, he previously managed financial forecasting in the consumer goods industry, and advised M&A activity for the energy sector.
For more great insight and data findings from Tyson Jominy, be sure to watch our entire interview above.
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