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Auto Makers Start 2021 Strongly Despite Supply Constraints

Could supply-chain woes kill momentum?
(Mikbiz)
(Mikbiz)
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“Automakers are reporting a jump in U.S. vehicle sales in the opening months of 2021,” WSJ writes.

Why It Matters: The rise was bolstered by consumer demand and favorable comparisons to the year-ago period where the country was first coming to grips with Covid-19 lockdowns. But it’s still a bit of a surprise considering the global semiconductor shortage and disruptive winter storms earlier this year causing supply-chain woes. But still, consumers are buying cars.

Numbers To Consider:

  1. U.S. auto sales increased by 1.3% in the three-month period, according to Wards Intelligence.
  2. The annualized industry selling pace could reach 16.8 million vehicles, which would put demand on par with pre-pandemic levels.
  3. January and February sales “were still off 3.3% and 13%, respectively,” with March sales expected to post double-digit gains.

Looking Ahead: Vehicle demand is poised to increase in the coming months, especially with consumer savings rising with stimulus. While limited inventory hasn’t factored in much yet, it could become an issue in the coming months.

  • “While demand continues to outstrip supply, car companies have pulled back on deep discounts offered early in the pandemic and consumers are spending more to drive off the lot in a new ride.”
  • “Some dealers worry the extended inventory shortages could disrupt some important new-model launches this year.”

Justin Oh:

This syncs up with my prediction that post-pandemic mobility and driving will roar back over the next 12 months. This would bode well for the oil & gas industry (disregarding the supply dynamics) and also industries that benefit from mobility such as quick service restaurants and automotive-related products and services.

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