What’s with declining auto sales?

Mitchell Hartman Sep 1, 2021
Heard on:
HTML EMBED:
COPY
In this aerial photo from a drone, brand new Subaru cars sit in an Auto Warehouse Co. storage lot on April 30, 2020 in Richmond, California. Justin Sullivan/Getty Images

What’s with declining auto sales?

Mitchell Hartman Sep 1, 2021
Heard on:
In this aerial photo from a drone, brand new Subaru cars sit in an Auto Warehouse Co. storage lot on April 30, 2020 in Richmond, California. Justin Sullivan/Getty Images
HTML EMBED:
COPY

Here’s one part of the economy that’s gotten steadily worse over recent months, even as much of the rest of the economy’s been improving: motor vehicle sales. Monthly sales totals (on an annualized basis), peaked back in April, and have been falling ever since. Another dip is expected when figures for August are released this week.

What gives?

Many consumers have cash in the bank, and they’re ready to spend it on a new vehicle. Especially, said Garrett Nelson at CFRA, if it’s big enough to take the family on the road.

“COVID has boosted demand for trucks and SUVs. You know, a lot of it really depends on the delta variant. If we see a pullback in airline travel, I think you’re going to see even stronger demand for trucks and SUVs,” he said.

But the pandemic has disrupted the global supply of computer chips that go into modern vehicles, said David Whiston at Morningstar. And that’s slowed production. 

“That’s what’s been so tragic in 2021 for the auto industry is that demand is excellent. There’s just not enough inventory to meet that demand, it’s not even close right now,” he said.

The shortage of models on dealer lots has driven up prices and wait times.

He said, if you don’t want to wait for new wheels to come off the assembly line, shopping “pre-owned” is an option.

But there’s no guarantee you’ll find what you’re looking for and used-vehicle prices have shot up, too. 

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.