The big number: Ford, General Motors and other automakers were gleefully anticipating their best sales year ever in 2021: 18 million-plus vehicles sold. Then the chip shortage struck.
Now the auto industry might be lucky to match 2020’s depressed sales.
What happened: Thanks to a resurgent U.S. economy and ultra-low interest rates, sales of new cars and trucks soared in early 2021. Used cars were also hard to find and more people felt comfortable driving instead of using public transportation due to the pandemic.
At one point, the auto industry was on track to sell more than 18 million vehicles in a year for the first time ever. That would have broken the old record of 17.9 million cars and trucks sold in both 2016 and 2015.
Yet a global shortage of computer chips began to bite — and hard — starting in the late spring. Sales tapered off in May, fell again in midsummer and sank at the start of fall.
By September, the annualized rate of sales had tumbled by one-third to just 12.6 million vehicles from as high as 18.8 million in April.
The annualized rate of sales refers to how many vehicles would be sold if the pace of customer purchases in any one month was replicated through every month of the entire year. It’s a standard benchmark used by investors and executives in gauging the strength of sales.
What it means: Unfortunately for automakers, the chip shortage is expected to last into 2022. Automakers will have to wait at least another year, if not longer, to set a new sales record.
And if sales keeping falling, the industry might be lucky to match 2020’s depressed sales of 14.9 million vehicles.
Given the large size of the U.S. auto industry, it also means the U.S. economy can’t grow as fast as it was when car sales were booming and factories were running at full tilt.