US auto dealers expect uptick in new car sales in 2021

HOUSTON (ICIS)–US sales of new automobiles in
2021 are expected to rise by 7.2% over 2020,
the National Automobile Dealers Association
(NADA) said on Tuesday, after 2020 ended with
the industry experiencing its lowest full-year
sales total since 2012.

“The coronavirus pandemic certainly impacted
new light-vehicle sales in 2020, not to mention
the US economy as a whole,” said NADA chief
economist Patrick Manzi.

US Light vehicle sales

NADA’s forecast for 2021 anticipates that lower
interest rates and lower unemployment amid the
current economic recovery will outweigh
headwinds from rising coronavirus cases, a
global shortage of semiconductor microchips
used in many facets of auto production and
tight supply at dealerships.

Other tailwinds likely to support increased
sales are a potential economic boom in the
second half of the year once coronavirus
vaccinations are widely available and, as
Americans start returning to work, continued
consumer preferences for personal vehicle
ownership over rideshare services and public
transportation and a gradual return of fleet
demand for new vehicles.

NADA said fleet demand is the main factor
preventing total light-vehicle sales volume
from returning to pre-pandemic levels.

Through most of 2020, retail sales outperformed
fleet sales, as several major rental car
agencies cancelled a large portion of their
fleet orders early in the pandemic.

“We expect that fleet demand will continue to
increase throughout 2021 as more Americans get
vaccinated and can return to their daily
lives,” Manzi said.

Despite the overall reduction in sales,
inventories are tight because of a
stronger-than-anticipated sales recovery,
manufacturing facility shutdowns and robust
new-vehicle demand.

The recently passed stimulus package may also
provide a small boost to new-vehicle sales, and
a wave of pent-up demand could come in the
summer and fall once most Americans have been
vaccinated.

“While the coronavirus was something that no
one in the auto industry expected, the industry
rallied and adapted to the new state of play,”
Manzi said. “Looking forward, we are optimistic
about the continued recovery of the new
light-vehicle market.”

The automotive industry is a major global
consumer of petrochemical-based materials,
which account for more than a third of the raw
material costs of an average vehicle.

Several chemicals have a significant percentage
of their demand tied to the global auto
industry. They include nylon resins, styrene
butadiene rubber (SBR), polypropylene (PP),
acrylonitrile-butadiene-styrene (ABS),
polymethyl methacrylate (PMMA), and
polycarbonate (PC).

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