Pub. 9 2020-2021 Issue 2

PUB YR 9 2020-2021 | ISSUE 2 21 Covering Second Quarter 2021 Volume 21, Number 3 San Diego Auto Outlook Comprehensive information on the San Diego County new vehicle market Market Summary Annual Trend in County Market 156885 156572 152543 143314 138349 119841 136750 0 50,000 100,000 150,000 200,000 2015 2016 2017 2018 2019 2020 2021 Forecast New light vehicle registrations YTD '20 YTD '21 % Chg. Mkt. Share thru June thru June '20 to '21 YTD '21 TOTAL 55,677 75,263 35.2% Car 19,509 22,951 17.6% 30.5% Light Truck 36,168 52,312 44.6% 69.5% Domestic 15,499 21,156 36.5% 28.1% European 8,282 11,636 40.5% 15.5% Japanese 26,950 35,563 32.0% 47.3% Korean 4,946 6,908 39.7% 9.2% FORECAST Supply Issues To Hold Back Sales in ‘21, But Should Strengthen Rebound in ‘22 Data Source: AutoCount data from Experian. Domestics consist of vehicles sold by GM, Ford, Stellantis (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 all of 2021. Preliminary forecast for 2022: 145,000 units, up 6% vs. 2021 Forecast for San Diego County New Vehicle Market As mentioned in the previous release of Auto Outlook, if new vehicles sales in 2021 were solely a function of demand, the county market would have been off to the races. And this was evident in the first half results. Even with sup- ply bottlenecks and inventory shortages, new retail light vehicle registrations soared 35.2% versus depressed year-earlier levels, and were up compared to historically strong results in 2019. Second Quarter registrations this year were the highest they have been since 2017. If inventories were plentiful, it’s possible that county registrations could have increased by more than 25% in 2021. Healthy sales so far this year are due to un- precedented strength in the three key pillars of demand. Consumers have an elevated abil- ity , want , and need to purchase new vehicles. Individually and collectively, these three forces are at levels unseen for perhaps the past 30 years. Each is summarized below. Consumers have the ability to purchase new vehicles. The combination of historically low interest rates, rising wages, accumulated sav- ings during the pandemic, record high house- hold net worth, and elevated trade in values have supercharged consumer affordability, putting a new vehicle purchase within reach for a significant percentage of households. Consumers want to purchase new vehicles. It’s evident that the desire for personal trans- portation has spiked as a result of the pan- demic. In addition, the bevy of new products hitting the market that offer an unprecedented array of body styles, powertrains, and safety features have undoubtedly lured many shop- pers to enter the market. Consumers need to purchase new vehicles. The average age of vehicles on the road in the U.S. exceeds 12 years old. The average 12 year old vehicle is practically antiquated compared to cars and trucks on the market today. And the 13.4% decline in registrations last year has resulted in accumulated pent up demand. These postponed purchases will oc- cur at some point in the future. But sales volumes are determined by both de- mand AND supply. And perhaps more than at any point in the industry’s past, supply issues and inventory shortages are clearly the con- trolling factor putting a ceiling on sales this year. It goes without saying that dealerships never like to turn customers away, but there is a “silver lining” that partially offsets the pain of having more buyers than cars to sell: a cooling of the market, perhaps lasting for the rest of this year, will help to smooth out, and lengthen the post-pandemic sales recovery. Predicted new retail registrations for all of 2021: 136,750 units, up 14.1% vs. 2020 Historical Data Source: AutoCount data from Experian. Continued on page 22