Augusto Amorim, Senior Manager, Americas Vehicle Sales Forecasts
02 December 2020
02 December 2020
US Sales: How much of 2020 will we see in 2021?
With fewer than 30 selling days left before 2020 comes to an end, we look back to a normal January and finetune our expectations for 2021. To call this a tumultuous year would be an understatement, and many of us will be glad to see the back of it, but a calendar reset does not automatically mean that the US Light Vehicle market will stabilise.
So, what are the key takeaways from 2020 and what can we expect in 2021?
The Pickup segment was a highlight in 2020, with sales on track to close the year down by just 6% when compared with 2019 – a far better outcome than the 15% drop expected for the overall industry. Having reached 25.6% in April, market share for the segment contracted to 19.5% in October, but Pickup sales should still account for nearly 20% of the full-year volume, an increase of more than two percentage points from 2019. We expect this level of market share to remain steady in 2021 as more people will likely opt to travel by RV, rather than by commercial airline in order to avoid possible contagion. We have also seen the emergence of a post-lockdown trend as people ‘reward’ themselves with a brand-new Pickup Truck to hit the open road after months in isolation. This, together with low fuel prices, near-zero interest rates and the arrival of an updated Ford F-150 will also support Pickup sales.
Vehicle transaction prices have reached record highs this year, remaining above US$35,000 for six months until October, when they rose to US$36,755. Monthly payments, however, picked up by just US$16 in the month, versus 2019, thanks to ultra-low interest rates (which are likely to last until 2024) and longer loan terms. Meanwhile, incentives have been cut as low inventories will help with the model-year transition. Whether automakers will keep incentives low in 2021 remains to be seen, but high transaction prices should not be a concern for the market next year.
The pandemic has led to a significant drop in driving rates, while consumers are leasing vehicles to travel fewer miles, sometimes as little as 7,000 miles/year. The implications of this may not be felt in 2021, but within the next two to three years, a flood of lease returns will reach the used-car market, many with attractively low mileages. This could impact sales of new vehicles in 2022 and even more so in 2023. Alternatively, dealerships and OEMs may seize the opportunity to boost sales of certified pre-owned vehicles.
For the most part, we should see a comparatively calmer market next year. Sales are not expected to return to the 17 million-unit mark just yet, but a leaner industry might not be a bad thing.