Car sales in 2020 are projected to reach their lowest point in almost a decade

Analysts from several research firms expect vehicle sales in the U.S. to reach 14.4 million to 14.6 million in 2020, down about 15% from the previous year and the lowest level since of at least 2012. The decline would produce an unprecedented five-year stretch sales exceeded 17 million vehicles annually.

Among the automotive companies that surpass the broader industry were two of its main players, General Motors Co.

GM 2.94%

and Toyota Motor Corp.

TM -0.15%

GM said Tuesday that it saw a sharp fourth-quarter increase in deliveries of large pickup trucks and SUVs, its most profitable vehicles. Its overall sales fell 11.8% in 2020, better than the expected result for the industry as a whole.

Toyota said its sales in the US fell 11.3% as constant demand for RV4 SUV and Tacoma vans was offset by sharp falls in its range of vehicles, including the Corolla and Camry sedans.

Nissan engine Co.

Sales fell more than any of the major carmakers in 2020, falling 33%, the Japanese car company said.

Manufacturer of electric vehicles Tesla Inc.

it also gained momentum in 2020. The company’s sales in the United States increased by about 15% through November, to nearly 180,000 vehicles, according to an estimate by market research firm Motor Intelligence.

Tesla, which does not break U.S. results, said last week that its global sales for the year increased by about 36%, to nearly 500,000 vehicles.

The fall in industry sales in 2020 only tells part of the story of a very complicated year in the car business, but that included factory shutdowns across the industry last spring, raising new vehicle prices and used and changes in the way Americans buy cars.

Now, analysts say conditions are poised to further boost this year’s results, driven by near-low interest rates and another round of federal incentives, including direct payments to some Americans from this week. Dealers and executives are optimistic that the consequences of the pandemic will stimulate demand for new vehicles, as some consumers opt for ownership of personal vehicles over public transportation or shared travel.

Still, possible pitfalls remain, including the unknown duration of the pandemic, a continuing shortage of dealer stock, and possible supply chain problems, including the low availability of semiconductor chips.

Jeff Guyton, president of Mazda Motor Corp.

U.S. operations see the industry’s recovery continue this year, but believe it “will probably be more gradual than explosive.” Mazda recorded a sales increase of less than 1% in 2020, among the best results in the industry, thanks in large part to a revamped range of SUVs.

The return of the auto industry is a relief for car executives who feared the worst last spring, when their US factories were closed due to Covid-19 for nearly two months and analysts wondered if people would buy cars in the middle of a pandemic. Some predictors had predicted that 2020 sales would drop from 13 million vehicles.

In late spring, however, car buyers began to come in unexpectedly strong numbers. Automotive companies, which quickly established safety protocols to prevent the spread of coronavirus among factory workers, have struggled to meet demand ever since.

Now, the industry is facing a reduction in inventory that is expected to last until 2021, say distributors and executives. Stocks of new vehicles at U.S. dealerships run approximately 25% below normal for months, with more severe shortages in large trucks. This has slowed overall sales, but has also led to a vendor’s market, which has sent prices to record levels, along with profits for some car companies, dealers and parts suppliers.

The average price paid for a vehicle in December was about $ 38,000, up from $ 34,000 in early 2020, according to research company JD Power. Dealers whose lots are only half have been stiffer with discounts, said Tyson Jominy, vice president of data and analytics at JD Power. In addition, shoppers are moving to larger, more expensive vehicles like vans, he said.

Another factor, dealers say, is that some American consumers tired of quarantine — forced to give up travel and eating out — have spent their money on items with big tickets like ships, home projects, and new cars.

Chicago area dealer Mike Maheras said his three Illinois Chevrolet dealerships have struggled to meet the demand for high-end pickup trucks. Stores, which typically hold more than 100 days of truck supply to their lots, operate with less than a month’s worth.

“We see a lot of accumulated demand for trucks,” he said. “Instead of taking vacations, customers are engaged in their vehicle purchases.”

Analysts predict that carmakers will remain in inventory recovery mode for most of the year, which is likely to result in better profit margins for manufacturers and dealers and fewer offers for consumers.

Research firm IHS Markit recently said it expected tight inventories to last well into 2021. US vehicle sales of about 16 million are set for 2021, an increase of 10% over last year.

Write to Mike Colias to [email protected]