Car sales in 2020 are expected to reach their lowest point in nearly a decade

Analysts at several research companies expect vehicle sales in the U.S. to total 14.4 million to 14.6 million in 2020, a drop of about 15% from the previous year and the lowest level since at least 2012. The decline would break an unprecedented five-year period in which sales exceeded 17 million vehicles annually.

Among the car companies that outperformed the industry in general were two of their biggest players, General Motors Co.

GM 2.74%

and Toyota Motor Corp.

TM -0.04%

GM said on Tuesday that it saw a large increase in the fourth quarter in deliveries of pickups and large SUVs, its most profitable vehicles. Its overall sales fell 11.8% in 2020, better than the expected result for the sector as a whole.

Toyota said its sales in the U.S. fell 11.3%, as steady demand for the Rav4 SUV and the Tacoma pickup truck was offset by steeper drops in its car line, including the Corolla and Camry sedans.

Nissan Motor Co.

The company’s sales fell more than any major automaker in 2020, falling 33%, the Japanese automaker said.

Tesla, maker of electric vehicles Inc.

it also gained momentum in 2020. The company’s sales in the US increased by about 15% until November, to almost 180,000 vehicles, according to an estimate by market research firm Motor Intelligence.

Tesla, which does not disclose the US results, said last week that its global sales for the year increased by about 36% to almost 500,000 vehicles.

The decline in industry sales in 2020 tells only part of the upside-down year in the auto business, which included factory outages across the industry last spring, high prices for new and used vehicles and changes in the way Americans buy cars.

Now, analysts say conditions are ripe for further results this year, driven by near-record interest rates and another round of federal stimulus, including direct payments to some Americans starting this week. Dealers and executives are optimistic that the consequences of the pandemic will spur demand for new cars, as some consumers choose to own personal vehicles rather than public transport or shared travel.

Still, the potential pitfalls remain, including the unknown duration of the pandemic, a continuing shortage of reseller stocks and possible supply chain obstacles, including irregular availability of semiconductor chips.

Jeff Guyton, President of Mazda Motor Body

North American operations see the sector’s recovery continuing this year, but believe it “is likely to be more gradual than explosive”. Mazda recorded a sales increase of less than 1% in 2020, among the best results in the industry, largely thanks to a renewed line of SUVs.

The return of the auto industry is a relief to executives who feared the worst last spring, when their North American factories were closed because of Covid-19 for almost two months and analysts were wondering if people would buy cars amid a pandemic. Some meteorologists predicted that sales in 2020 would fall below the 13 million vehicle mark.

In late spring, however, car buyers began to appear in unexpectedly high numbers. Automakers, which quickly implemented safety protocols to prevent the spread of coronavirus among factory workers, have been struggling to meet demand ever since.

Now, the industry faces a stock crisis that is expected to last until 2021, say retailers and executives. New vehicle inventories at US dealerships have been nearly 25 percent below normal for months, with more severe shortages in large pickup trucks. This restricted general sales, but also resulted in a sales market, causing prices to skyrocket to record levels, along with the profits of some automakers, dealers and parts suppliers.

The average price paid for a vehicle in December was about $ 38,000, up from about $ 34,000 in early 2020, research firm JD Power estimates. Resellers whose batches are only half full have been more petty about discounts, said Tyson Jominy, vice president of data and analytics at JD Power. In addition, buyers are moving to larger, more expensive vehicles, such as pickups, he said.

Another factor, dealers say, is that some American consumers tired of quarantine – forced to forgo travel and dining out – have spent their money on expensive items like boats, home projects and new cars.

Chicago-area dealer Mike Maheras said his three Chevrolet dealerships in Illinois have struggled to meet demand for sophisticated pickups. The stores, which normally maintain more than 100 days of supply of trucks on their lots, are operating for less than a month.

“We see a lot of pent-up demand for trucks,” he said. “Instead of taking a vacation, customers are taking care of themselves when buying their vehicles.”

Analysts predict that automakers will remain in recovery mode over replenishing inventory for much of the year, likely resulting in better profit margins for manufacturers and dealers – and less business for consumers.

Research firm IHS Markit recently said it expects tight inventories to last until 2021. It estimates U.S. vehicle sales in 2021 at about 16 million, which would represent an increase of about 10% over last year.

Write to Mike Colias at [email protected]