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Sales skid as supply woes continue

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The rate of new-car and new-truck sales slid for a fourth consecutive month in August, but even more pain is on the horizon as the semiconductor shortage continues to strangle supply.

The seven automakers that reported results for last month chalked up 628,571 U.S. light-vehicle sales, down 13 percent from a year earlier. But Morgan Stanley analyst Adam Jonas calculated that sales for the broader industry skidded 17 percent.

IHS Markit analyst Chris Hopson was dour in his sales outlook.

“Inventory constraints are expected to limit any upside potential to U.S. auto demand levels moving through the rest of 2021, with little recovery expected even in the first half of 2022.”

The seasonally adjusted annualized rate for new-vehicle sales stood at 13.1 million, according to Motor Intelligence, a far cry from the 18 million-plus pace set in the spring.

Many automakers and dealers were confident earlier in the year that the global chip shortage would blow over quickly. But all but two of the seven automakers that disclosed August sales reported a year-over-year decline.

Toyota Motor North America, which previously had been able to navigate tight supplies, saw sales dip 2 percent last month. The Toyota division suffered its first monthly sales decline this year, with deliveries down 2.4 percent.

Ford Motor Co.’s August sales fell 33 percent, American Honda’s skidded 16 percent, and Subaru of America’s dropped 15 percent.

Hyundai-Kia dipped 1.3 percent, reflecting a 5.3 percent decline by Kia and a 2.4 percent gain by Hyundai Motor America.

In a spot of good news, Mazda North America sales climbed 4.6 percent in August, while Volvo Car USA sales rose 3 percent for the Swedish automaker’s 15th consecutive monthly advance.

Analyst Jonas estimated that market share for the Detroit 3 in August dropped to 38.1 percent, a decline of 6.7 percentage points from the same period last year.

Asian automakers accounted for 52 percent of the U.S. market, while European automakers took a 10 percent share.

The crumbling retail sales picture lies squarely at the feet of the supply chain crisis over semiconductor scarcity, which has crimped factory output and dealer deliveries all year.

Based on announced factory stoppages, LMC Automotive estimates the chip shortage has resulted in the loss of 1.7 million vehicles from automaker production plans in North America. LMC forecasts the toll could rise to at least 2.5 million by year end.

“The volatility suggests we are not going to see any stability until at least the second half of next year,” said Jeff Schuster, LMC’s president of forecasting.

But Hyundai Motor America sales boss Randy Parker sounded a note of optimism that things will turn around in time for the holiday shopping season.

“We’re coming into what we call the bottom of the trough,” Parker told Automotive News. “August and September are going to be the worst part of the year for us in terms of availability. But we expect production and availability to improve as we start to get into Q4 of this year.”

The factory disruptions have left industry days’ supply hovering at near-record lows — at 23 days for August, compared with 50 days one year earlier, Jonas noted.

And what is available is flying off dealership lots. According to a forecast from J.D. Power, the average number of days that a new vehicle sits on the lot before being sold was on pace to fall to a record low of 26 in August, down from 62 days a year earlier.

Because of depleted stockpiles, many new-vehicle sales are subject to price adjustments by dealers. That has helped buoy retailer profit per vehicle, which was on pace to reach an all-time high of $4,430 in August, an increase of $2,321 from a year earlier, J.D. Power reported.

Jonas warned that the industry may now face a strike by buyers, citing “nosebleed” pricing above the sticker.

“Maybe the consumer has decided to ‘wait it out’ until prices fall?” Jonas wondered.

Laurence Iliff contributed to this report.