December U.S. auto sales: Market closes 2021 on weak note

It was a December and fourth quarter to forget for many automakers.

The month, usually a blowout for the industry, registered the steepest year over year sales decline -- 27 percent — of 2021, LMC Automotive said, with the seasonally adjusted, annualized sales rate — 12.4 million — nearly matching 2021's low mark of 12.38 million in September. Motor Intelligence pegged the December SAAR slightly higher at 12.71 million.

Fourth-quarter industry deliveries skidded 21 percent to 3.29 million cars and light trucks — making it the weakest quarter of 2021.

Helped by strong first-half volume, U.S. sales rose 3.3 percent to 15.06 million in 2021, compared with 14.575 million in 2020, when the pandemic upended volume. Yet the final tally for 2021 is still well below the 17 million or more the industry racked up in the five years before the pandemic struck.

Overall, 12 brands — Ford, Lincoln, Cadillac, Chevrolet, GMC, Jaguar, Infiniti, Alfa Romeo, Dodge, Fiat, Jeep and Subaru — reported lower sales last year, while BMW, Toyota, Lexus, Hyundai, Kia, Acura and Nissan generated healthy market share gains.

Toyota Motor Corp., Honda Motor Co., Hyundai and Kia posted lower U.S. sales in December for the fifth straight month, with tight inventories stemming from supply chain disruptions dealing a final blow as the auto industry closed out 2021 on a down note.

Ford Motor Co., after a 5.8 percent increase in November, closed the year down 17 percent in December, with sales sliding 15 percent at the Ford division and 51 percent at Lincoln. It finished 2021 with fourth-quarter deliveries of 504,138 — making it the best-selling automaker in the quarter.

The company said Wednesday it began 2022 with 247,000 vehicles in inventory – up 22,000 from November and what it called "the best stock position in the industry."

General Motors reported a 43 percent decline in fourth-quarter sales, with volume off 45 percent at Chevrolet, 38 percent at GMC, 35 percent at Buick and 48 percent at Cadillac. Nissan Motor Co.'s fourth-quarter deliveries dropped 20 percent, with the Nissan division down 17 percent and Infiniti off 47 percent.

Stellantis, citing "various supply chain issues," said fourth-quarter volume declined 18 percent to 411,513, with sales down 19 percent at Jeep, 16 percent at Ram, 36 percent at Dodge, 64 percent at Fiat and 33 percent at Alfa Romeo. Only the Chrysler brand, up 18 percent behind a 32 percent gain in Pacifica deliveries, saw an increase last quarter.

The company's 2021 sales slipped 2 percent on flat retail business. While fleet demand and orders were strong, Stellantis said it prioritized retail customer orders, resulting in a drop in fleet shipments of 8 percent in the fourth quarter and 13 percent year over year.

Toyota Motor, even with double-digit volume declines in recent months, surpassed GM, the market leader for decades dating to the Great Depression, in U.S. sales by nearly 130,000 units in 2021. 

Toyota Motor's volume slid 30 percent last month, it's biggest decline of 2021, with sales down 29 percent at the Toyota division and 37 percent at Lexus. The Toyota division's car sales tumbled 37 percent while crossover and SUV volume dropped 21 percent and pickup truck deliveries skidded 26 percent.

Toyota said it ended December with a 20-day supply of vehicles, or 125,423 cars and light trucks in stock, most of which — 106,296 units — is at ports or in transit.

Honda Motor's December volume dropped 23 percent behind a decline of 22 percent at the Honda division and 29 percent at Acura; 2021 deliveries rose 8.9 percent to 1.466 million.

At Hyundai, volume slid 23 percent last month, its biggest drop of the year, with retail deliveries off 11 percent.

The company said dealer stockpiles stood at 21,420 cars and light trucks at the end of December, up from Nov.'s tally of 17,096 but down sharply from 143,741 in December 2020. The company's 2021 sales increased 19 percent to 738,081, with record retail volume of 694,349.

Deliveries last month fell 9.8 percent at Kia, it's biggest drop of the final stretch of 2021, but the company still set a U.S. sales record of 701,416 for the year on strong first-half volume.

Sales fell for the seventh straight month at Subaru, down 20 percent in December, and for the fourth straight period at Mazda, off 38 percent last month.

Among other luxury brands, Audi's fourth-quarter sales skidded 47 percent but the company ended 2021 with an overall gain of 5 percent.

Volvo, after a hot streak to start the year, saw sales drop for the fourth straight month, with December volume down 27 percent. It finished with a gain of 11 percent for all of 2021.

Genesis' December volume increased 61 percent to 4,999, with 2021 deliveries rising 203 percent to a record 49,621.

Widespread bottlenecks, notably the severe shortage of microchips controlling everything from heated seats to key fobs to windshield wipers, have left new-vehicle showrooms empty for months, putting a big dent in December volume even as inventories slowly rebound.

Across the industry, December sales dropped 27 percent to 1.19 million, in the middle of the range of forecasts, LMC Automotive said.

Core retail sales were projected to decline 20 percent to 1,105,800 from December 2020, J.D. Power and LMC said.

The final month of the year, behind heavy marketing promotions, outgoing model closeout offers and holiday deals, is traditionally a blowout for automakers.

But while many automakers advertised, there simply were not enough new vehicles available to meet consumer demand, prompting many shoppers to wait until selection improves and prices moderate.

Tyson Jominy, vice president of data and analytics at J.D. Power, said December was one of the weakest months of the year, and the weakest December since 2011.

Monthly retail stockpiles continue to improve and were tracking at just more than 1 million for the first time since July, according to Thomas King, president of J.D. Power's data and analytics division.

GM said it entered the final quarter of 2021 with record low inventories while fourth-quarter output and wholesale deliveries rose "significantly from the third quarter" as semiconductor supplies improved.

The automaker's dealer inventory, including in-transit units, tallied 128,757 at the end of the third quarter and 199,662 at the close of the fourth quarter.

The seasonally adjusted, annualized rate of sales for December -- 12.4 million -- came within the range of forecasts -- 11 million to 13 million from TrueCar, Cox Automotive, J.D. Power and LMC Automotive. It is a sharp drop from December 2020's 16.49 million rate and down from the 13.12 million rate in October and November.

The average manufacturer incentive per vehicle was on pace to hit a low for the month of December, at $1,598, a decrease of $2,291 from a year earlier, J.D. Power and LMC said. TrueCar estimates average incentives slid 55 percent to $1,756 year over year in December. (See charts above and below.)

While the market is slowly coming back, it is getting a boost from growing sales of electrified vehicles, driven mostly by surging volume at Tesla Inc. 

Cox Automotive Senior Economist Charlie Chesbrough said industry sales in the second half of 2021 were the slowest in a decade.

"Demand is healthy, but supply and production disruptions kept the industry in check," Chesbrough said. "You can't sell what you don't have."

The lack of new cars and light trucks continues to drive prices to all-time highs and discounts to record lows.

King said average transaction prices in December were expected to reach a record $45,743 -- the first time ever above $45,000 and 20 percent higher than in December 2020, when prices eclipsed $38,000 for the first time.

• There were 27 selling days last month vs. 28 in December 2020.
• Light trucks — pickups, crossovers, SUVs and vans — are on pace to account for a record 80.2 percent of new-vehicle retail sales in December, J.D. Power and LMC Automotive estimate.
• December fleet sales are expected to fall 29 percent from a year earlier and 3 percent from November, adjusted for the same number of selling days, TrueCar estimated. J.D. Power said fleet shipments are expected to total 140,000 in December, down 3 percent from December 2020, on a selling day adjusted basis. Fleet volume is expected to account for 11 percent of total light-vehicle sales last month, down from 15 percent in December 2020.
• The average interest rate on new vehicles was 4.3 percent last month, TrueCar said, and the average loan term on a new vehicle was 70 months.

“The key constraint for sales continues to be reduced inventory levels as a result of the semiconductor shortage. Those inventory levels are beginning to recover against a backdrop of strong fundamental demand conditions, with ample job openings, high household savings and low interest rates. Consumers want to drive as much as before the pandemic, based on recent high levels of vehicle usage. High vehicle usage and deferred sales mean pent up demand for new vehicles in the millions and building. That pent up demand will support sales as vehicle supply improves.”

 -- Elaine Buckberg, GM chief economist