Cars are spending an absurdly short amount of time on dealership lots, thanks to a Covid combo of supply shortages and pent-up demand. That and more in The Morning Shift for August 3, 2021.
1st Gear: Cars Sell Twice As Fast As A Year Ago
If you’re an automaker facing supply and allocation issues, watching with a mix of wonder and horror as Americans snatch up everything you put in front of them, you’re not alone! This is how things are these days, as Automotive News reports:
In July, more than 45 percent of vehicles were sold within 10 days of arriving at a dealership, up from 43 percent in June 2021 and up from only 26 percent in July 2019, [J.D.] Power said. The average number of days a new vehicle sits on a dealer lot before being delivered was on pace to fall to a record low of 31 days in July, down from 75 days a year ago, and down 6 days from last month, Power said.
Some dealers are promising faster deliveries if customers order a new vehicle. And some automakers are offering extra discounts if customers order a vehicle to be delivered later.
“Available vehicle supply has fallen every week since Feb 15th,” Cox Automotive senior economist Charlie Chesbrough said.
As we have said before, now is a great time to shop for a car if you hate getting a good deal or having any leverage.
2nd Gear: Also Yeah Hyundai/Kia Sales Up As Inventories Down
That news on the speed of cars selling out is part of a larger story from Automotive News on Hyundai/Kia, which is facing all kinds of supply and inventory shortages amid the continuing global pandemic. Of course, sales are up:
Hyundai and Kia racked up another month of solid U.S. sales gains in July, even as inventories continue to fall broadly across the industry because of severe microchip shortages and other supply-chain disruptions.
Volume rose 19 percent to 68,500 last month at Hyundai, with the brand’s retail deliveries setting a July record of 61,227, a gain of 14 percent. Only three models — Ioniq, Palisade and Veloster — posted lower sales last month. Hyundai said it ended July with 46,113 cars and light trucks in U.S. dealer stock, down 65 percent from July 2020 and off 32 percent compared to the end of June.
Kia, with one of the lowest inventory levels in the industry, said deliveries rose 34 percent to a July record of 70,099.
If we never go back to giant, sprawling dealerships packed with poorly-spec’d cars, I will not be mad.
3rd Gear: Subaru Revenue Jumped 39 Percent In Three Months
It’s a similar story at Subaru, which is seeing “booming sales in the recovering U.S. market,” as AN reports. Little Subaru is back into profitability, in a big way:
In the April-June period, the all-wheel-drive niche player said net income returned to positive territory, notching 18.5 billion yen ($169.0 million). That erased a net loss of 7.7 billion yen ($70.3 million) in the same quarter the previous year.
Revenue jumped 39 percent to 635.2 billion yen ($5.80 billion) in the three months.
Remarkably, while worldwide sales were up 32 percent, sales in Europe (excluding Russia) rose only 200 units. I can only assume that all 200 of these cars were wealthy Belgians buying Group N cars for rally duty.
4th Gear: And Stellantis And BMW Up Projections
Subaru did raise its profit forecast for the year on the back of these rising sales, and both BMW and Stellantis did as well, as Reuters reports.
BMW (BMWG.DE) raised its 2021 profit forecast on Tuesday after strong quarterly results, but said the global semiconductor chip shortage and rising raw materials prices would hurt its performance in the second half of the year.
BMW has been less affected by the chip shortage than some of its peers which has been attributed to its strong relations with its suppliers.
Carmaker Stellantis said on Tuesday it was raising its full-year target on its adjusted operating profit margin after strong first-half results, which included record margins in North America and progress on cost savings.
Stellantis, formed in January by the merger of Fiat Chrysler and Peugeot maker PSA, said it aimed for an adjusted operating profit margin of around 10%, compared with a previous forecast of between 5.5%-7.5%.
Milan-listed shares in the world’s fourth largest carmaker rose as much as 5.3% and were the best performer in Italy’s blue-chip index (.FTMIB).
“The market was taken by surprise and did not expect the results to be so good,” a Milan-based trader said.
I guess Stellantis is as surprised as anybody that it’s doing well.
5th Gear: EVs Are Beating OPEC’s Projections
Maybe we should take the projections from OPEC with a grain of salt, but still this is fun to see. As Bloomberg lays out:
I spent the weekend thinking about long-term oil market outlooks (yes, my weekends are exciting). I started following these closely around 2015, when I was scoping out what our newly formed transport team at BloombergNEF would focus on. One report in particular sticks out — OPEC’s 2015 World Oil Outlook. It was one of the first that I dug into, and I quickly recognized that it highlighted how some groups were thinking about the future at the time.
Most long-term outlooks by definition take a quite a while to be proven wrong or right. But occasionally that happens sooner and this gives us the opportunity to consider why. OPEC’s 2015 Outlook is a good example of being wrong sooner rather than later — it expected a fleet of 4.7 million battery electric vehicles on the road in 2040, with over 98% of the world’s vehicle fleet to be powered solely by an internal combustion engine. OPEC was not alone in this view — Exxon and BP had similar numbers in their outlooks at that time.
The global fleet of battery electric passenger vehicles hit 4.7 million at the start of 2020, meaning OPEC’s 2040 scenario arrived 20 years ahead of schedule. There were over 400,000 fully electric vehicles sold in June alone; by the end of this year there will be almost 11 million on the road, more than doubling OPEC’s 2040 number.
All of this EV market is still just a sliver of the market at large. I am becoming increasingly convinced that this current trajectory of “just electrify cars as they are” will never fully switch us over to electric drive.
Reverse: Nothing Like The Great American Road Trip, Huh
Neutral: Have You Bought A Cars Lately?
And why was it an Alfa Romeo?