COVID-19 Remains in the Driver’s Seat By Ronnie Wendt, Founder of In Good Company Communications and an editor for F&I and Showroom
NADA economist forecasts supply chain challenges, including the chip shortage, will persist well into 2022. The biggest story of 2021 revolves around how the semiconductor chip shortage has impacted vehicle production across the globe, reported Patrick Manzi, chief economist for the National Automobile Dealers Association (NADA) in the association’s “Third Quarter Economic Update.” Manzi shares the shortage has limited vehicle production, which has tightened dealership inventories, which has driven down sales. Worse, the end is nowhere near in sight, he adds. “At the end of the third quarter inventory in the U.S. was just under one million units (or approximately a 24-day supply). And that 10 | THE FRONT ROW | WSIADA.COM JANUARY 2022
represents a decline of 65% compared to the previous year when inventory at the end of the third quarter sat at 2.7 million units or a 50-day supply. Suppressed inventories are unlikely to change too much before the year’s end and will continue to impact sales in the fourth quarter of 2021,” he noted in the NADA podcast. The third quarter saw a SAAR of 13.3 million units after light-vehicle sales in September fell for the fifth straight month to a SAAR of 12.2 million units. The September SAAR was just 100,000 units over May 2020, but Manzi reminds that in “May 2020, we were still under lockdowns in parts of the country.” Manzi cautioned that low inventory levels are restricting sales and will continue to do so throughout the end of the year. Auto Forecast Solutions reports the microchip shortage has cost the global industry over 9 million units of production, with a loss
of 1.2 million more than expected. North American vehicle production fell over 2.9 million vehicles with a drop of 300,000 units more than expected. “Because of inventory constraints and demand-sales limitations, we have reduced our sales forecast from 16.5 million units to 15 million for 2021,” he said. Skyrocketing Prices Limited new vehicle inventory also continues to impact the used vehicle market, according to Manzi. “Many consumers had to turn to the used market,” he said in the podcast, noting this scenario pushed “record-setting wholesale option and retail prices over the summer.” Auction prices, he noted, cooled in late summer but began heating up again in September. Kayla Reynolds, economic
