New vehicle sales are recovering, analysts say at SAA Auto Outlook Conference

Vehicles for sale at CarMax in Henderson, Nev. (Jason Rzucidlo/AmericaJR)

Detroit — New vehicle sales are expected to be better in 2022 as it continues to recover from the pandemic, analysts agree. Due to Covid-19, the 35th annual Society of Automotive Analysts (SAA) Automotive Outlook Conference was virtual this year.  However, it was still informational and very productive.

Elaine Buckberg, Chief Economist at General Motors, was the first up and she stated that the economy is a complex picture yet still exceeded pre-pandemic levels.   “The United States real GDP is done with the recovery.  Growth remains strong in 2022.  GDP forecast showed a slowdown in December and January due to Omicron.  The pace is really good in the fourth quarter, 4.5 percent.  The labor market is the heartbeat of the economy with a pretty impressive outlook.  People are still worried about the virus.  Lot of people have not come back to the workforce.  We are looking at labor shortages looking forward.”  She noted that wage gains accelerated in December 2021; overall up 3.8 percent.  “Inflation is the highest it’s been in decades since the 80’s.  The problem is alleviating bottlenecks.  Vehicles and housing are top contributors to recent inflation.  The chip shortage has driven up new and used vehicles prices.

“Consumers accumulated savings have not been spent.  Auto loan interest rates are low and we expect a modest rise in 2022.  Auto sales totaled 15.4 million in 2021 constrained by low inventories and resulting in higher prices. It will be better in 2022 with 16 million in light vehicle sales. Incentives fell over 60 percent year to year, even though prices are up. We will continue to build new vehicle sales.  People have decided it’s a bad time to buy.  However, consumer spending is up.”

GM announced in January its plans to phase out petroleum-powered vehicles and trucks by 2035.  Median forecast for 2025 is 11 percent, and in 2030,  29 percent.  Electric vehicle entries have increased substantially.  We expect 153 models by 2025.  

Tyson Jominy, Vice President of Data & Analytics at J.D. Power, announced new vehicle sales were recovering from the pandemic but supply shortages are hitting inventory.  “Production is the key determinant of sales pace.  We have four million units of pent up demand.   In 2022, we expect production will start to improve.  Forty percent of vehicles are selling in about a week after arriving in dealerships.  However, inventory won’t improve til Q4 of 2022.  It will take two full years to rebuild stock.”  In the past year, prices have gone up.  Prices are up 13.4 percent or $61 billion versus 2019.  Prices have reached an all-time high as customers compete for scarce inventory.  There is a massive shift from $20,000 cars as consumers stretch to higher price brands,” says Jominy.

“EV growth in the U.S. is stronger than ever.  The rate of growth is accelerating 3 percent. New products are driving growth.  Model Y (Mustang Mach-E and ID.4) increased 1.9 percent.  All other EV’s (including Tesla Model 3) increased 2.1 percent.  I am very bullish on EV side of industry,” noted Jominy.

Lack of supply is the main driver behind weaker sales outlook, says Joe Langley, Associate Director North American Forecasting, IHS Markit.  The trend is focused on higher end vehicles.  U.S. inventory stock is 23 days supply or 1.03 million units.  Year to year, that is down 61.7 percent or 1.65 million units.  Supply chain and logistics issues continue to hamper demand and production.

“Production recovery stages were down March to May 2020, restarted 2Q 2020 to 4Q 2020, then there was a false start in 1Q 2022 to 4Q 2022 due to supply chain, logistics and worker issues.  Restock is next in 2023 to 2024 back to normal inventory levels.  2025 and beyond is where we can align vehicles to production.”  

“The focus is on utility and truck phase and Battery EV.  Robust product activity remains.  We expect an electrifying future of 22 percent or 3.8 million units on BEV’s,” says Langley. 

Kevin Riddell, Senior Manager of Powertrain Forecasts at LMC Automotive, says the BEV market global sales increased 4.6 percent in 2021 versus 2020, but global BEV sales increased 107 percent.  The Chinese increased their market share with an auto sales forecast in 2025 of 32 million, 2030 expect 38 million and 2035 40 million.

“Battery costs for BEV’s went down $79 per year in past 10 years.  Global electrification sales will increase in the future.  China and EU (European Union) remain leaders in BEV sales throughout the forecast.  The U.S. market is expected to steadily grow.  Global battery demand also expects to increase.  Cell capacity is gearing up to meet demand, raw material mining and processing will not keep up.  Lithium will be the main bottleneck.  Cobalt is the most expensive metal.  The trend is towards reducing the amount of cobalt in the battery or cobalt-free chemistries,” says Riddell.

Mark Barrott, the Director of the Mobility Intelligence Center at Plante Moran, asks what are the challenges facing us?

  • Road and weather conditions
  • Safety inside and outside the vehicle 
  • Traffic
  • Accident liability, insurance
  • Radar and sensors
  • Artificial intelligence
  • Consumer acceptance

“Automated driving is progressing and aggressively moving towards full self-driving technology.  We are creating new realities in future mobility.  Our current phase is the testing and validation in autonomous technology.  In 2025-2030, we are launching geo-fenced autonomous, ride sharing, etc. and in 2030 full autonomy,” says Barrott.

Sheryl Connelly, Chief Futurist at Ford Motor Company, talked about the planet and the concerns people have.  “Two thirds of people surveyed are overwhelmed by the changes taking place in the world.  People are worried about climate change, war, Covid, etc.  Also consumers are getting used to a low level of anxiety.  Younger people are not adapting to changes as well as they should.  People feel lonely on a regular basis.  So, therefore, people use vehicles to relax, for privacy and work.” 

Ford Motor Company is leaning into change, seeking to understand global citizen’s attitudes and aspirations towards the future.  Experts project the global population will grow to 10 billion by 2050.  There were technical difficulties that has cut her presentation short.  So we will move on.

There was a question-and-answer session hosted by Jamie Butters, Executive Editor at Automotive News.  

What is the top selling vehicle in China?  “The budget models are number one.  Number two is Tesla Model 3, and number three is Tesla Model Y,” Riddell answered.

What is the risk of vehicle demand to make up for the lost time?  “We don’t think that will happen.  The behaviors of people who are not going to work and work from home will still move around in other ways.  Taking 10 percent of people off the roads, the speeds are faster,” said Buckberg.

How do you look at EV charging infrastructure?  “Infrastructure is going to be huge.  Most people will be able to charge from home. House plug-ins are easy.  Apartments are the problem.  How long to stay at the charger is the question.  The Infrastructure Act will help and depends on how easy and accessible we can make it.  We don’t have a standardized approach.  Better infrastructure is important,” Langley answered.

What are thoughts on hydrogen and fuel cells, is there a future?  “Yes, in larger and heavier vehicles like commercial and long haul trucks due to its faster refueling capabilities.  It is not going to be the mainstream in the light vehicle market,” Buckberg explained.

Automotive supplier Marelli planned to host an in-person SAA Outlook Conference at their regional headquarters in Southfield, but due to the recent spike in Omicron cases has pivoted to virtual.  However, Marelli will host SAA Purchasing Summit on May 24, 2022 onsite for their grand opening of their new regional headquarters in late spring.

The next event for the SAA is “BI & Data Trends 2022” on February 17. For more info, go to for latest updates.

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