US auto sales set to drop in third quarter as industry chip shortages hit

DETROIT – Auto sales in the United States are expected to fall in September, leading to a decline of at least 13% in new vehicle purchases in the third quarter as chip shortages continue to disrupt production, according to new estimates from industry.

Forecasts from Cox Automotive, Edmunds and JD Power / LMC Automotive forecast July-September vehicle sales to be below 3.4 million, down 13% to 14% from the same period last year , when volumes had been depressed due to the coronavirus pandemic.

The sharp drop, including an expected drop from 24% to 26% in September, is due to the continued shortage of semiconductor chips for new vehicles.

The shortage of parts has caused automakers to sporadically shut down factories for weeks, if not months. Lack of production combined with strong consumer demand caused vehicle inventories to drop to record levels.

“The entire US auto industry – including Asian automakers, who were doing a bit better than their domestic counterparts until recently – is in an incredibly volatile position right now and we are seeing inflated retail prices across the board. the domains, ”said Jessica Caldwell, executive. director of ideas at Edmunds.

Stockouts worsened throughout the year. Forecasters expect just 1 million vehicles to be sold in September, which Cox Automotive said would be among the lowest volume in the past decade.

The pace of sales in the US market has declined every month since peaking at 18.3 million in April. It is expected to be 12.1 million to 12.2 million in September.

Cox analysts predict the vehicle supply will improve slightly in the fourth quarter and continue to improve through 2022, but will not return to “normal” until 2023 – if ever. Automakers have pledged to reduce inventories in the future to boost profits and vehicle prices, which have reached record levels.

JD Power expects average transaction prices to hit a new record high of $ 42,802 in September, marking a fourth consecutive month above $ 40,000.

“The mismatch between strong consumer demand and limited inventory is driving up vehicle prices,” said Thomas King, president of the data and analytics division at JD Power.

The majority of automakers that sell vehicles in the United States are expected to report third quarter sales on Friday. Ford Motor is expected to publish sales on Monday.

Edmunds expects General Motors and Ford to register the largest third-quarter sales declines of 31.5% and 29.3% respectively. An outlier for the quarter is expected to be Hyundai / Kia, which Edmunds forecast will be up 10.1%. Cox Automotive also expects Tesla’s third-quarter sales to be up about 26%.