Chip shortages continue to pinch auto sales

Just as Punxsutawney Phil last week saw his shadow and predicted a lingering winter, January's U.S. light-vehicle sales signal no imminent relief from the semiconductor-related woes that have dogged auto makers for nearly a year now.

New-vehicle deliveries slid 9 percent to just more than 1 million last month, according to LMC Automotive, as continued chip shortages suppressed production and drove up prices. Of the seven auto makers that report monthly sales, only Hyundai Motor America recorded a gain.

Dealer inventory last month fell 61 percent from January 2021 levels, resulting in 1.2 million fewer cars and light trucks available at the start of 2022, compared with early 2021, Cox Automotive said. That helped propel average transaction prices to a January record of $44,905, according to J.D. Power.

Still, there were signs of progress.

While January is traditionally one of the industry's slowest months, the seasonally adjusted annualized rate of sales clocked in at 15.2 million, the strongest showing since June (15.4 million) and up from 12.7 million in December.

"Although the start of 2022 is disappointing from a sales standpoint, the underlying health metrics of the industry have never been stronger," said Thomas King, president of the data and analytics division at J.D. Power. "The overall industry sales pace will continue to be constrained by procurement, production and distribution, and all indications are that deliveries will not rise substantially for the industry in aggregate.

"February will likely be another month of suppressed sales volume offset by near-record-level pricing and profitability."

Toyota Motor Corp., the market's top seller in 2021, posted its smallest decline since August with a 5.1 percent dip last month. It ended January with a 19-day supply of cars and light trucks, or 123,686 vehicles, with 18,345 in dealer stock and 105,341 at ports.

At Hyundai, retail deliveries rose 18 percent, offsetting zero fleet shipments last month.

The company set a January record with 47,872 deliveries largely behind four models—the Venue, up 70 percent; Tucson, up 64 percent; Palisade, up 12 percent; and Ioniq, up 51 percent—that also posted record deliveries for the month.

Hyundai said it ended January with just 18,060 cars and light trucks in stock, down from 21,420 at the close of December and 151,930 at the end of January 2021.

Ford Motor Co. sales were roughly flat compared with January 2021, although retail volume rose 0.8 percent.

Deliveries edged up 1.4 percent at the Ford division but slumped 26 percent at Lincoln. Sales at Ford's luxury brand have now dropped for eight consecutive months.

The auto maker said gross vehicle stocks stood at 202,000 at the end of January—enough for a 34-day supply—down from 243,200 in December and 413,500 in January 2021. Still, Ford noted its inventory position is among the strongest in the industry and pointed to a growing order bank (up 20,000 vehicles since December) and strong interest in its latest models as cause for optimism.

"Ford market share increased over a year ago on strong demand for our newest products such as Bronco, Maverick and Mach-E. Ford took in a record 90,000 new-vehicle orders in January," said Andrew Frick, vice president, Ford sales U.S. and Canada. "Vehicles are turning at a record pace on dealer lots as we work to fill these orders."

Sales at American Honda, Mazda and Volvo fell double digits while Subaru of America posted a 4.8 percent drop.

American Honda blamed record- low U.S. inventories—it started 2022 with about 55,400 cars and light trucks on hand, down from approximately 300,000 in early 2021—for its sixth-straight double-digit decline.

Honda anticipates inventory will improve as February unfolds but warned the "supply situation remains fluid."

Despite the inventory challenges, J.D. Power's King says dealer profitability remains strong.

He said total retailer profit per vehicle was on pace to reach $5,138 in January, an increase of $2,969 from a year earlier and the fourth consecutive month above $5,000. Total aggregate retailer profit from new-vehicle sales is projected to jump 117 percent from January 2021 to $4.3 billion last month, King said.

Matt Sneed, director of operations at Power Ford in Albuquerque, N.M., said consistently high profits have helped make up for the lack of inventory. Last month continued the trend that began when the chip crisis started last year, he said.

"The lots are still very, very bare, and most of the cars that get here are pre-sold," Sneed said. "But the profitability is up because the grosses are higher on a per-unit basis. On one hand, you want more units to sell, but the profitability is nice."

David Phillips contributed to this report.