September 8, 2021
Unit car and truck sales plunged 10.7% in August to a 13.057 million pace after having fallen 5.5% in July. Indeed this is the fourth consecutive decline in sales. It is important to remember that the March and April spike in sales was due in large part to the $1,400 tax refund checks associated with the $1.9 trillion fiscal stimulus package passed in March.. Prior to those couple of months sales were averaging about 17.0 million. But since then the declines appear to be attributable to the widely-discussed chip shortages which is curtailing the manufacturers ability to produce. Many respondents to the Institute of Supply Management’s monthly survey of manufacturing firms cite shortages of critical electronic components as their biggest challenge. These shortages are going to last at least through the end of this year. So the drop is not attributable to reduced demand, but the curtailment of supply. Dealers simply have few cars in their showroom to sell.
While the drop in new car sales will bring down retail sales in August remember that retail sales also include used car sales which have been super strong. We’ll just have to wait and see how all that turns out. But the weaker sales are now, the stronger they will be when chips once again become available..
We expect GDP growth of 8.9% in Q3, and 10.5% growth in Q4.