SANTA MONICA, Calif., March 30, 2021 /PRNewswire/ -- The car shopping experts at Edmunds forecast that 3,818,503 new cars and trucks will be sold in the U.S. in the first quarter of 2021. This is an 8.6% decrease in sales from the fourth quarter of last year but an 8.9% increase in sales from Q1 of 2020.
"First-quarter sales are starting off on a strong note. The fact that we're surpassing last year's numbers when the pandemic didn't even hit the industry until the last two weeks of March 2020 is no small feat," said Jessica Caldwell, Edmunds' executive director of insights. "As the vaccine rollout continues, there seems to be a light at the end of the tunnel, but we're still very much in the midst of a deadly pandemic. Seeing sales continue at such a strong rate despite all of the challenges presented by COVID-19 is an ongoing testament to the strength of the automotive industry and the confidence of the American consumer."
Edmunds experts note that limited inventory created by pandemic-related production issues and chipset shortages continue to present challenges for the industry. According to Edmunds days-to-turn (DTT) data, vehicles are selling at a much faster pace because inventory is in such short supply: In March 2021, 17% of all new vehicles sold within five days of arriving on a dealer lot, compared to 14% last year. Edmunds analysts note that older new vehicle inventory is harder to come by as well: Edmunds data reveals that just one in five new vehicles sits on the lot for more than 100 days before selling, compared to nearly one in three last year.
"Some consumers seem to be catching on to the microchip shortage and are responding by making more aggressive purchasing decisions," said Caldwell. "Although we've seen calls for legislative action, and automakers taking creative approaches to address the shortages, there doesn't seem to be a resolution for these supply constraints in the immediate future. Shoppers with their heart set on a high-demand truck or SUV need to do a bit of extra research and be prepared to pull the trigger on their car purchase as soon as they can find inventory, because those vehicles are flying off the lots."
Despite the ongoing challenge of inventory shortages, Edmunds experts note that a rise in the average transaction prices (ATP) in the first quarter is a positive trend in terms of profitability for automakers and dealers. Edmunds analysts anticipate that the ATP for new vehicles will climb to $40,320 in Q1, the highest Edmunds has on record for any quarter.
"Higher-earning consumers aren't holding back on purchasing bigger, more expensive vehicles, and dealers and automakers are holding firm on pricing because they can," said Ivan Drury, Edmunds' senior manager of insights. "These aren't great market conditions for bargain shoppers, but consumers who have the advantage of a trade-in toward their next purchase might be able to look forward to getting a bit more for their vehicle than usual as demand for used cars continues to run high."
About Edmunds Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune and Great Place to Work, Edmunds is based in Santa Monica, California, and has a satellite office in Detroit, Michigan. Follow us on Twitter, Facebook and Instagram.