The auto industry in 2022
Published: 02:02 PM,Feb 12,2022 | EDITED : 06:02 PM,Feb 12,2022
The automotive industry has not been doing great. We are all aware of the various issues that are currently plaguing the supply chain, with chip shortage being on of the most damaging elements. But probably the automotive crisis has deeper roots than the recent events might suggest.
For the first time since 1931, General Motors did not come out as the top seller in the USA. Japanese automaker Toyota outsold GM for the first time. The performance does not come as a total surprise.
Toyota has proven to be solidly resilient in the aftermath of the Fukushima nuclear disaster in 2011.
Although the industry is not doing well, 2021 was not the worst year. Looking at the sales chart in the USA, starting from the ‘70s, an observer might feel on a roller coaster ride. The deepest crisis was between 1980 and 1982, with the latter still being the worst year on records, counting 10.3M cars sold. It took just a few years to the industry to recover.
By 1986, car sales crossed 16M for the first time. The next record came in the year 2000, crossing the 17M line. Then the great financial crisis hit hard: in 2009 there were only 10.4M cars sold. Recovery took longer than expected, with sales crossing the 16M mark in 2014, and 17M in 2015. That became the average level for the subsequent years, until Covid hit. In 2020, sales fell below 15M units. and surprisingly also 2021 failed to climb back to 16M cars sold.
However, the market demand is there, with orders placed by customers in the range of 4.5M to 5M, but shortages and supply chain delays are holding back the market.
An evidence that the underpinning issue is not the demand, is the fact that incentives have dried up. A couple of years ago, auto buyers could have been welcomed by up $4,000 in incentives, while now the figure seems to be settling at a mere $1,500. Meaning that there is no need for more buyers, but more inventory. Another strong indicator that the market is ready to buy more vehicles, is the average purchase price, which in the US has reached $45k, a stunning 20 per cent higher compared to last year.
Despite the difficulties, most car makers are investing massively in electric vehicles. In the past month there have been several announcements that have injected a boost of confined in the industry.
Both legacy car makers as well as new players, are “spicing up” the competition. Among the rising starts, EV maker Fisker launched the model Ocean, a beautiful SUV. Meanwhile Ford is increasing the the production of F-150 lightning, GM just unveiled two new EVs: the very aggressively priced Silverado EV pickup truck and the compact SUV Equinox EV.
Finally, Volkswagen is also announcing a new electric vehicle in the market. With all these new Electric Vehicles brought to the market, many are seeing the likelihood that prices will soon start to drop, making EV more affordable.
As for the affordability of used cars, during the past 2 years prices skyrocketed in the second hand market, due to the delays in getting new vehicles. However, as the orders are picking up again for new cars, the price of used one is likely to drop quite significantly.
For the first time since 1931, General Motors did not come out as the top seller in the USA. Japanese automaker Toyota outsold GM for the first time. The performance does not come as a total surprise.
Toyota has proven to be solidly resilient in the aftermath of the Fukushima nuclear disaster in 2011.
Although the industry is not doing well, 2021 was not the worst year. Looking at the sales chart in the USA, starting from the ‘70s, an observer might feel on a roller coaster ride. The deepest crisis was between 1980 and 1982, with the latter still being the worst year on records, counting 10.3M cars sold. It took just a few years to the industry to recover.
By 1986, car sales crossed 16M for the first time. The next record came in the year 2000, crossing the 17M line. Then the great financial crisis hit hard: in 2009 there were only 10.4M cars sold. Recovery took longer than expected, with sales crossing the 16M mark in 2014, and 17M in 2015. That became the average level for the subsequent years, until Covid hit. In 2020, sales fell below 15M units. and surprisingly also 2021 failed to climb back to 16M cars sold.
However, the market demand is there, with orders placed by customers in the range of 4.5M to 5M, but shortages and supply chain delays are holding back the market.
An evidence that the underpinning issue is not the demand, is the fact that incentives have dried up. A couple of years ago, auto buyers could have been welcomed by up $4,000 in incentives, while now the figure seems to be settling at a mere $1,500. Meaning that there is no need for more buyers, but more inventory. Another strong indicator that the market is ready to buy more vehicles, is the average purchase price, which in the US has reached $45k, a stunning 20 per cent higher compared to last year.
Despite the difficulties, most car makers are investing massively in electric vehicles. In the past month there have been several announcements that have injected a boost of confined in the industry.
Both legacy car makers as well as new players, are “spicing up” the competition. Among the rising starts, EV maker Fisker launched the model Ocean, a beautiful SUV. Meanwhile Ford is increasing the the production of F-150 lightning, GM just unveiled two new EVs: the very aggressively priced Silverado EV pickup truck and the compact SUV Equinox EV.
Finally, Volkswagen is also announcing a new electric vehicle in the market. With all these new Electric Vehicles brought to the market, many are seeing the likelihood that prices will soon start to drop, making EV more affordable.
As for the affordability of used cars, during the past 2 years prices skyrocketed in the second hand market, due to the delays in getting new vehicles. However, as the orders are picking up again for new cars, the price of used one is likely to drop quite significantly.