Increased new-car demand amid Covid-19 has US auto sector optimistic about 2021
Increased demand for new vehicles during the Covid-19 pandemic helped General Motors Co and other automakers report strong fourth-quarter US sales on Tuesday, and executives voiced optimism the rebound from low sales during the April-May production shutdown will continue in 2021.
GM reported a 4.8% increase in US sales in the fourth quarter, while Toyota Motor Corp and Volkswagen AG saw their sales rise 9.4% and 10.8%, respectively.
Industry officials expect the US auto sector to finish the year with 2020 sales in the range of 14.5 million to 14.6 million, which would be down from 17.1 million in 2019. But with vaccines being rolled out, low interest rates and strong consumer savings, officials expect demand this year to rebound.
Toyota officials said they expect 2021 US new-vehicle sales of 16 million, while VW forecast 15.6 million.
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"We're ready to rock 2021," David Christ, Toyota Motor North America group vice president and general manager of the Toyota division, told reporters on a conference call, describing the US consumer as resilient.
Volkswagen of America Chief Executive Scott Keogh agreed on 2021 expectations in a separate call. "I'm as optimistic as one can be."
GM Chief Economist Elaine Buckberg said the US automaker sees an "inflection point" for the US economy in the spring. The Detroit automaker's average transaction price per new vehicle set a full-year record of $39,229 in 2020.
"Widening vaccination rates and warmer weather should enable consumers and businesses to return to a more normal range of activities, lifting the job market, consumer sentiment and auto demand," she said in a statement.
Consumers in the financial position to buy a new car during the coronavirus pandemic aren't holding back on upsizing their purchases in favour of bigger vehicles with more amenities, according to industry consultant Edmunds.
The average down payment for a new vehicle climbed to $4,734 in the fourth quarter, from $4,329 a year ago, Edmunds said.