Pub 6 2021 Issue 1

26 Covering Data thru March 2021 Los Angeles Auto Outlook Los Angeles Auto Outlook Comprehensive information on the LA County new vehicle market Market Summary Data Source: AutoCount data from Experian. Annual Trend in County Market Historical Data Source: AutoCount data from Experian. Domestics consist of vehicles sold by GM, Ford, FCA (excluding Alfa and FIAT), and Tesla. The graph above shows annual new retail light vehicle registrations from 2015 thru 2020 and Auto Outlook’s projection for 2021. 521363 537983 512417 490351 476260 379697 413000 200,000 300,000 400,000 500,000 600,000 2015 2016 2017 2018 2019 2020 2021 Forecast New light vehicle registrations YTD '20 YTD '21 % Chg. Mkt. Share thru Mar. thru Mar. '20 to '21 YTD '21 TOTAL 110,334 106,379 -3.6% Car 48,727 39,748 -18.4% 37.4% Light Truck 61,607 66,631 8.2% 62.6% Domestic 23,419 26,042 11.2% 24.5% European 22,488 21,754 -3.3% 20.4% Japanese 54,733 49,621 -9.3% 46.6% Korean 9,694 8,962 -7.6% 8.4% FORECAST Market Gets off to Good Start in 2021; 8.8% increase Predicted for Entire Year Below is a summary of five key trends in the Los Angeles County new vehicle market. County new retail light vehicle registrations declined 3.6% in the First Quarter of 2021 The market declined slightly during the first three months of this year versus a year earlier, and there would have been an increase were it not for the typical lag in measuring registra- tions. The recording of registrations can occur 15 days, or more, after the date of sale. So the March 2020 total likely reflects vehicles that were sold from around the middle of February to the middle of March, when COVID was bare- ly a factor. The full of impact of the pandemic will be evident in the Second Quarter, when the market could improve by more than 60%. Los Angeles county new vehicle market pre- dicted to increase by 8.8% for all of 2021 Here is the scenario that was hoped for in 2021: the vaccine rollout would expand as the year progressed, COVID would abate, full re-opening would occur, economic recovery would gain steam, and new car sales would head higher. But this scenario is far from guar- anteed and the microchip shortage, and other supply-related bottlenecks have added some uncertainty. If the outlook for 2021 was only a function of demand, vehicle sales would likely be off to the races in the second half of the year, but lean inventories will act as a speed bump that will slow the pace of the recovery. Light truck market share moves above 60% Combined SUV, pickup, and van sales contin- ued to improve. Higher gas prices might give a temporary boost to passenger car sales, but demand for trucks and SUVs should continue to fuel increases in light truck share. Alternative powertrain market improves Hybrid and electric vehicle registrations were up 40% during the first three months of ‘21 versus the 3.6% drop in the overall market. Toyota, Honda, Tesla, Chevrolet, and Mer- cedes are leaders in county market Toyota was the best selling brand in the First Quarter, with an 18.5% share. Honda’s county share was 12.4%, well above its 9.0% share in the U.S. Low interest rates: Interest rates should re- main at historically low levels for the foresee- able future, supporting consumer affordability. Pent up demand: Delayed purchases accrued due to the pandemic will give sales a boost for at least the next two years. Employment: Hiring has accelerated and it’s possible that jobs lost during the pandemic could be recovered by the middle of 2022. Economic stimulus: The Federal government has continued to support the economy, which will boost growth well into next year. Tight inventories: Supply-induced production cutbacks will hold back the rate of growth in new vehicles sales during 2021. Rising gas prices: Higher fuel prices reduce disposable income, but will spur interest in the bevy of electric vehicles hitting the market. Key Factors Driving the County New Vehicle Market