It’s not surprising that Americans bought more vehicles in the first quarter of 2021 than they did in the first quarter of 2020. After all, the economy was beginning to shut down in response to the COVID-19 pandemic a year ago. It’s beginning to open up in response to vaccines for that same illness now. What is surprising, though, is just how much sales have accelerated.
In the first quarter of 2021, Americans bought new vehicles at a pace not seen since 2017. Like a sprinter, sales were still speeding up as they crossed the finish line. Total new vehicle sales were up 59.7 percent in March compared to March 2020, according to Cox Automotive (parent company of Kelley Blue Book).
You’ll notice, however, that we’re careful to say new vehicles there. Americans aren’t buying cars the way they used to. Car sales were down three percent over results from one year ago. High-end luxury car sales suffered the most – a decline of nearly 20 percent.
Trucks and SUVs Hot
Instead, Americans bought SUVs and trucks. March 2021 was the strongest quarter for light trucks in history, with a seasonally adjusted annual rate (a rate that considers normal season fluctuations) of 13.9 million. In fact, the three strongest months ever recorded for light truck sales were December 2020, January 2021, and March 2021.
But light trucks weren’t the strongest sellers. That title went to subcompact SUVs and crossovers. Americans bought 58 percent more of those vehicles in the first quarter of 2021 than they had one year ago.
Analysts don’t expect any of these trends to end soon. Accelerating vaccination campaigns have already reached nearly 20 percent of Americans, and stimulus campaigns have put money in their hands to bolster the economy. All of this may result in more people walking into showrooms.
But a hot sales market has its costs. The wholesale prices dealers pay for used cars have increased, presaging a spike in used car prices. Auto dealers are carrying less inventory than normal. And an ongoing global microchip shortage is slowing car production. All of those signs could point to a price increase for many new cars in the second quarter.
