Automakers sold more cars in the first quarter of 2021 than most analysts had expected, even though an ongoing global microchip shortage and supply problems caused by severe winter weather hampered production. Sales easily beat numbers from a similar period one year ago – a time when coronavirus-related lockdowns began and global auto sales slumped.
A sampling of first-quarter sales results:
- Ford + 1%
- General Motors: + 3.9%
- Stellantis: +5.1%.
- Honda: +16%
- Toyota: +21%
- Subaru: +23%
- Mazda: + 23%
- VW: + 21%
- Nissan: +11%
- Hyundai: +28%
Individual Sales Up; Fleet Sales Down
Automakers that depend less on fleet sales did the best.
“Fleet sales were off 26% and 36% in January and February, respectively, and there is every indication the fleet business was off a similar amount in March. Fleet sales will improve this year, but, unlike retail, will remain well below pre-COVID levels,” said Charlie Chesbrough, senior economist with Kelley Blue Book parent company Cox Automotive.
General Motors, for instance, saw a 3.9 percent overall sales increase. The – but reported that sales to individuals were up 19 percent, while fleet sales declined by 35 percent.
Here Come the Stimulus Checks
Analysts expect the sector’s recovery to continue, and even accelerate, particularly now that some shoppers have government assistance in hand. Cox Chief Economist Jonathan Smoke explains, “The quarter ended strong, setting the market up for an incredible spring from a demand perspective, with $1,400 stimulus payments starting to be issued, tax refund season beginning, rising consumer sentiment because of the vaccination progress, and, literally, it is spring which just normally causes people to think more about buying vehicles. All those things are coming together right now, and the industry would likely be setting all-time sales records if it were not for tight supplies and elevated prices.”
Chip Shortage Will Remain a Challenge
However, Cox Automotive Executive Analyst Michelle Krebs cautions that the semiconductor shortage means the recovery will face some challenges. “While the industry didn’t suffer anything similar to last year’s pandemic lockdowns, there were headwinds for auto sales throughout Q1 in the form of weather and supply chain disruptions, most notably the global computer chip shortage. The reports, however, indicate the industry has managed those headwinds fairly well. Computer chips are going to high demand, high-profit models, and the automakers are slowing or stopping production on low demand, high inventory models. Going forward into Q2, that balancing act may become more challenging– Ford, for example, is scheduling downtime for plants that make its cash cow F-150. The story in Q1 was strong demand. The story for Q2 might well be inventory and production management.”
EV Sales Picking Up
The industry is betting heavily on electric vehicles (EVs) to power future sales. EVs remain a small percentage of the cars currently on American roads, but in the first quarter of 2021, EV sales began to heat up. “Battery-powered vehicles are making big sales gains and accounting for ever-larger shares of some automakers’ overall sales,” noted Cox Automotive Industry Intelligence Analyst Kayla Reynolds. “Nearly one-quarter of Toyota’s sales are now battery-pack equipped, hybrids or plug-in. The Chevrolet Bolt and Nissan Leaf EVs had significant sales gains in Q1. At Hyundai, in March, the Ioniq model offered as a hybrid or pure EV outsold the Accent, a vehicle of similar size with a traditional gas-burning engine. And Ford sold more than 7,000 hybrid F-150s in the quarter. If there’s one message from Q1 sales: The battery business is booming.”
