Home Credit union Cox Automotive cuts 2021 new car sales forecast by 4%

Cox Automotive cuts 2021 new car sales forecast by 4%

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Cox Automotive on Monday lowered its forecast for new car sales to 15.3 million this year from 16 million forecast two months ago, as the market remains significantly constrained by a lack of supply.

A press release from Cox Automotive also said the forecast had been lowered by 4% due to “recent news from Ukraine and ongoing inflation concerns”.

“To reach this level by year end, the supply situation must start to show meaningful gains in the next quarter and steadily improving throughout the year, if not, another forecast adjustment. may be required,” the press release read.

Cox Automotive estimates 3.3 million new cars and trucks will be sold in the first quarter, down 16% from the first quarter of 2021. It will also mark “the second worst quarter for new vehicle sales in a decade , behind only the second quarter of 2020, the peak of the global COVID-19 pandemic.”

In credit unions, the relatively slow auto market compared to the robust mortgage market helped drive cars down from 39% of portfolios at the end of 2018 to 32% at the end of 2021.

In January, CUNA found that credit unions held $143.4 billion in new auto loans, down -0.7% from a year earlier and up 0.7% from the month. previous. Used car loans were $268.7 billion as of January 31, up 11% from a year earlier and 1.2% from December 31.

The spring selling season traditionally ramps up in March, but Cox expects new cars to sell at a seasonally adjusted annual rate (SAAR) of 13.1 million this month, up from 14.1 million in February. and 17.6 million in March 2021.

Cox Automotive senior economist Charlie Chesbrough said conditions were right for increased sales with low unemployment and relatively low interest rates. But unadjusted sales volume has averaged just over 1.06 million vehicles each month since last August.

“Make no mistake, this market is stuck in low gear,” Chesbrough said. “Sales remain weak and will essentially be stuck at the current level until more supply arrives.”

In Cox Automotive’s webcast of U.S. auto sales forecasts and industry outlook on Monday, he also reported:

  • Besides the chip shortage, the biggest threats to a sales recovery this year are new variants of COVID-19 that could disrupt the economy, higher interest rates that will make cars less affordable, and the war of Ukraine, which raises gasoline prices and makes the supply chain more vulnerable.
  • Total used car sales will be 39.3 million this year, down 3% from 2021. Retail sales will drop 2% to 20.7 million.
  • The average list price for a used car was $27,398 in March, up 27% from $21,493 a year earlier. The pace of price increases is expected to slow this year.
  • In February, the average transaction price of a new car rose 11% from a year ago, but he expects the rate of growth to decline after May, the anniversary of the chip shortage. computers.
  • New car incentives rose from about 10% of the manufacturer’s suggested retail price (MSRP) from early 2019 through the summer of 2020, before dropping to about 4% in February.
  • New car transaction prices have fallen from around 96% of MSRP in January 2021 to around 103% in February.
  • The average income for a new car buyer was nearly $124,000 last year. People with incomes below $75,000 accounted for 35% of new car sales last year, up from nearly 37% in 2020.