After the bleak year of 2020 with its pandemic-induced downturn, the auto industry is eagerly looking ahead for sales to rebound in 2021. The light vehicle sales of 14.5 million in 2020 meant a steep 15% drop from 2019 and the worst performance in terms of auto sales since the recession-hit year of 2012.
However, the mild recovery experienced during the last two quarters of the year gives the automakers reasons for hope in 2021. Given that there is no more disruption due to widespread lockdown, industry insiders expect things to revert to a more normal range of activities by mid-2021. For the time being, however, not many are risking forecasts for car sales in 2021. There is still a lot of uncertainty in the air (apart from the threat of the virus, the macroeconomic environment is still thought to be at a volatile stage), and predictions are a risky business.
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That said, we still have a couple of forecasts at hand. One of them comes from Fitch Ratings, and Fitch’s projected car sales figure for 2021 stands at 15.6 million. However, the rating agency makes it clear that this is only a highly tentative projection (made on the assumption that widespread lockdown à la 2020 does not return and there is an improvement in the macroeconomic conditions), and the actual figure may eventually vary to a large degree depending on a variety of factors.
The second projection comes from the consulting firm Alix Partners, and they give a slightly higher figure of 15.8 million. This is, however, still a good 8% below 2019. Both entities clarify that they do not expect auto sales to return to the 2019 level even with a successful rollout of the coronavirus vaccine.
All the same, the industry is counting precisely on a successful vaccine campaign for sales to rebound. The chief economist from a major U.S. auto group, for instance, maintains that by mid-2021, even a mildly successful vaccine program coupled with warmer weather should prove to be enough to uplift the consumer sentiment and the job market. Subsequently, automakers can look forward to a significant improvement in sales by that time.
Most automakers expect the same as most of them have already rolled out new models or refashioned models of once iconic cars in a bid to attract the financially secure classes of the country.
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Don Forman Nissan Expects a Promising 2021 for Dealerships and Automakers
Don Forman Nissan, the owner of the Las Vegas Nissan dealership Don Forman Automotive, also predicts a brighter future for the industry in 2021. Forman, a veteran of the industry (he was already fulfilling the responsibilities of the Nissan West General Manager back in 1998) and a knowledgeable man, says that given no more disruptions in the supply chain and no more widespread lockdowns, one has every reason to hope that things will come close to normal by the second half of the year.
Don points out that typical car buyers in the US (normally aged over 50) come from a financially secure section of the society with annual incomes on the north of $75,000. This class was not hit financially by the effects of the pandemic. On the contrary, they have money to spare since they had to forego several usual diversions such as luxury travels, entertainment, and the like. Automakers can count on all that disposable income for sales to revive.
As for the dealerships across the country, Don Forman Nissan said that they will have to adapt to the situation as it comes. He added that even if there is no significant revival in sales of new vehicles, the dealerships can still count on selling used cars. The disposable income mentioned above does not only apply to the wealthier class but to many reasonably well-off middle-class Americans as well. The dealerships can realistically expect to do good business selling used vehicles in good condition to this class’s members.