Analysts said they are expecting a strong finish this week for second-quarter auto sales, but new car loans at credit unions are still in reverse.
Edmunds on Tuesday said their analysts expect new vehicle sales to stay strong in the second quarter. The car-buying analytics company based in Santa Monica, Calif., forecast 4.5 million new cars would be sold in the second quarter, up 14.8% from the first quarter and up 51.6% from the second quarter of 2020.
“New vehicle sales in the second quarter started off with a bang in April thanks to a combination of a speedier-than-anticipated vaccine rollout and many Americans itching to jump into a new vehicle and on the road toward some semblance of normal life,” Jessica Caldwell, Edmunds’ executive director of insights, said.
“Unfortunately the chipset and inventory shortages really came to a head and outstripped supply in June,” Caldwell said. “This isn’t a problem that’s going away anytime soon, but the silver lining for automakers and dealers in the meantime is that consumer demand continues to run high and shoppers are clearly willing to pay inflated prices for the vehicles that they want.”
Cox Automotive Group on Monday forecast that new cars sold at a seasonally adjusted annual rate (SAAR) of 16.4 million vehicles in June, up 23.9% from a year earlier, and down from May’s “robust 17.0 million pace but up from June 2020’s COVID-19 inflicted pace of 13.0 million,” according to the report from the Irvine, Calif., data analytics company.
Used cars sold at retail at a SAAR of 21.3 million in June, down from a peak of 23.9 million in April and 21.9 million in May. Used car sales, which fell 6.2% last year to 19.7 million, are expected to rise 9.1% this year to 21.5 million.
Cox Automotive found new car inventory was historically low at the beginning of June, running 43% behind levels for the same period in 2020 and 54% below early June 2019. As a result, the average new-vehicle incentive has fallen to its lowest level in nearly 10 years.
“While new-vehicle sales volume in the first half of 2021 is healthy — and on par with the first half of 2019 — the market could be stronger if not for the lack of available supply,” Charlie Chesbrough, Cox Automotive’s senior economist, said. “Concern about the supply situation really cannot be overstated as we are in untested territory for the market.”
Meanwhile, CUNA Mutual Group’s Credit Union Trends Report released Monday showed credit unions held $138.2 billion in new car loans as of April 30, down 5.6% from a year earlier. Used car balances rose 6.4% to $246 billion. Non-automotive loans (mostly mortgages) rose 6.6% to $820.4 billion.
New car balances were also down 0.2% from March 31, marking the fifth month in a row of consecutive declines. Used car balances rose 0.6% from March, allowing total automotive loan balances to rise 0.3% to $384.2 billion, breaking a four-month streak of declines.
“We should have more auto loans, but that is being constrained to some extent by some of these supply-chain challenges,” CUNA Senior Economist Jordan van Rijn said in its Economic Update video posted June 24.
“Demand remains very high for vehicles,” he said. “We see a lot of pent-up demand. A lot of people are choosing to do vacations in their vehicles, instead of other means of transportation.”
But van Rijn said vehicle production continues to be constrained by the shortage of micro-chips, reducing the number of vehicles on the lots and driving up prices not only for new cars, but used ones as well.