22 San Diego Dealer x 156572 152543 143314 138349 119841 139335 139500 0 50,000 100,000 150,000 200,000 2016 2017 2018 2019 2020 2021 2022 Forecast New light vehicle registrations Covering First Quarter 2022 Volume 22, Number 2 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market Market Summary Annual Trend in San Diego County Market Domestics consist of vehicles sold by GM, Ford, Stellantis (excluding Alfa Romeo and FIAT), and Tesla. Data Source: AutoCount data from Experian. The graph above shows annual new retail light vehicle registrations from 2016 thru 2021 and Auto Outlook’s projection for 2022. Historical Data Source: AutoCount data from Experian. Forecast for San Diego County New Retail Light Vehicle Registrations in 2022 Baseline scenario: 139,500 up 0.1% vs. ‘21 Alternative upside: 146,900 up 5.4% vs. ‘21 Alternative downside: 132,400 down 5.0% vs. ‘21 The observations below provide a concise review of key trends in the San Diego County new vehicle market. Sales remained below average in the First Quarter of this year. New retail light vehicle registrations in the county declined 5.3% during the first three months of 2022 versus a year earlier. The drop-off was expected as sales continued to be held back by lean supplies. Larger decline expected in 2Q. Registrations could fall by 15%, or more, in the Second Quarter of this year as tight inventories will continue to be a factor. The market would have struggled to exceed year-earlier levels even if supplies were plentiful. Registrations during the Second Quarter of last year exceeded 40,000 units, the highest total since the Third Quarter of 2016. New vehicle affordability has taken a turn for the worse. About 18 months ago, strong affordability was a primary ingredient contributing to the relatively upbeat outlook. Income growth was solid, interest rates were near 0%, inflation was under control, and transaction prices were relatively stable. Just about all of that has changed. Lean supplies have pushed prices significantly upward and higher interest rates are boosting monthly payments. Higher wages have helped, but monthly vehicle loan and lease costs as a percent of disposable income have moved higher during the past several months. Demand for new vehicles could soften over the coming months; but it’s not likely to impact sales. As mentioned above, affordability has weakened, gas prices have surged, and there’s a war in Europe. In normal times, these simultaneous events would have pushed new vehicles sales sharply lower, but these are definitely not normal times. Vehicle production, not demand, will be the controlling factor that will dictate sales levels for at least the next year, and most analysts are predicting only a gradual improvement in production over the next several months. Baseline forecast for county new light vehicle registrations in 2022: 139,500 units, about even with 2021. 2022 is likely to be the fourth straight year of registrations below 140,000 units. It’s beginning to sound like a broken record, but since the onset of the pandemic, there has been a great deal of uncertainty related to the forecast. Vehicle supply constraints and the war in Europe have added to the risks. One thing we do know: significant pent up demand is accumulating which will provide a boost to sales in the coming years. Market shares for Tesla, BMW, Hyundai, Nissan, and Kia moved higher in early 2022. Typically, improving brand market share is a function of new product, effective marketing, incentives, and dealership sales performance. But in 2022, practically none of that matters. Brands that have benefitted from even a mild improvement in vehicle availability have had a boost in market share, while those with dwindling stocks lost share. FORECAST Pent Up Demand Will Give Market a Boost When Supplies Improve YTD '21 YTD '22 % Chg. Mkt. Share March March '21 to '22 YTD '22 TOTAL 34,510 32,682 -5.3% Car 10,033 9,572 -4.6% 29.3% Light Truck 24,477 23,110 -5.6% 70.7% Domestic 10,356 10,162 -1.9% 31.1% European 5,420 5,106 -5.8% 15.6% Japanese 15,939 14,303 -10.3% 43.8% Korean 2,795 3,111 11.3% 9.5%
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