September US auto sales are forecast to be significantly hampered by an ongoing lack of new vehicle inventory.
According to a forecast today by Cox Automotive, the pace of auto sales, or seasonally adjusted annual rate (SAAR), is expected to finish near 12.1m, the slowest pace since May 2020, when much of the country was closed during the first wave of the COVID-19 pandemic. The September 2021 sales pace will be down from August’s 13.1m and down from September 2020’s 16.3m.
Sales volume is forecast to come in near a notably low 1m units. The low volume expectations for September 2021 put the month on course to be among the worst in the past decade. Sales volume is expected to be down nearly 26% from last September and down 8.5% from last month.
The sales pace in the US market has fallen every month since reaching a peak of 18.3m in April.
Cox Automotive senior economist Charlie Chesbrough said: “After a strong spring selling season, the supply situation has worsened precipitously and is dragging sales down with it. The monthly declines have been large – the sales pace has declined by more than a million units in each of the past five months. Available supply on dealer lots is now 58% lower than last September, down nearly 1.4m units.”
The new vehicle supply shortage is impacting the market in many ways. Manufacturers have cut back significantly on incentives and transaction prices have risen as a result. In addition, the lack of new vehicle stock is steering many dealers and consumers into the used vehicle market resulting in higher prices for both wholesale and retail used vehicles.
With lower sales forecast for September, the third quarter of 2021 is forecast to finish with auto sales down 14% versus Q3 2020 and down 22% compared to the same period in 2019.
Underlying economic conditions in the US are currently healthy enough to support higher new vehicle sales. The demand is there. Inventory levels, however, are the unique problem facing the automotive market right now with disruptions to the global supply chain challenging all automakers, severely impacting available inventory, and pushing many would be buyers out of the market.
Recent research by Kelley Blue Book showed nearly half of would be buyers indicated in August they would likely step back from the market, many for three months or more.
Inventory conditions, however, are anticipated to improve in the coming months.
“The expectation is that OEM supply issues will improve such that Q4 should have better selling SAARs than the September rate but that doesn’t mean good selling rates,” said Chesbrough.
“Vehicles are getting produced, and some OEMs have improved their supply situation. In recent months, OEMs seem to be managing the situation better now that they’ve had time to adjust. For example, automakers are improving their ability to redirect existing chips to the most important vehicles in their portfolios. This strategy should support better sales in the fourth quarter compared to the third quarter.”