U.S. auto sales to fall in December due to supply constraints – data

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FILE PHOTO: Traffic travels along a highway next to Los Angeles, California

(Reuters) – U.S. auto retail sales are expected to fall in December, as supply shortages and high demand have caused prices to skyrocket, consultants J.D. Power and LMC Automotive said in a report released on Thursday.

Retail sales of new vehicles could fall 17.7% to 2,923,600 units from a year earlier, the report said.

“Intense demand with this limited supply is resulting in prices continuing to increase,” said Thomas King, president of the data and analytics division at J.D. Powers.

Auto manufacturers of all sizes are grappling with the strongest inflationary pressure in three decades, following a relentless rise in raw materials prices.

Average transaction prices are expected to reach $45,743, going above the $45,000 mark for the first time, and 20% higher than December 2020 when prices first breached the $38,000 level.

Production at auto plants rose 2.2% last month after advancing 10.1% in October. But November motor vehicle output remained 5.4% below the levels seen in the same period last year because of a global shortage of semiconductors.

Total new-vehicle sales for December 2021, including retail and non-retail transactions, are projected to reach 1,245,600 units, a 20.5% decrease from last year.

“A mild improvement in the chip shortage may be overshadowed by risk from the surge in Omicron variant COVID-19 cases”, said Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive.

The average new-vehicle retail transaction price in December is expected to reach $45,743, the previous high was in November at $44,515.

The seasonally adjusted annualized rate for total new-vehicle sales is expected to be 13 million units, down 3.5 million units from 2020.

Despite the added risk, the consultants expect 2022 global light vehicle sales to improve to 86 million units, an increase of 750,000 units from last month.

(Reporting by Kannaki Deka in Bengaluru; Editing by Shinjini Ganguli)

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