Edmunds Forecasts 15.5M New U.S. Vehicle Sales in 2021

The U.S. auto industry is on track for greater stability and should sell 15.5 million new vehicles in 2021, according to a forecast from automotive sales information provider Edmunds.
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Edmunds in forecasting 15.5 million new U.S. vehicle sales in 2021. // Stock photo

The U.S. auto industry is on track for greater stability and should sell 15.5 million new vehicles in 2021, according to a forecast from automotive sales information provider Edmunds.

Edmunds, which has an office in downtown Detroit, notes that this would represent a 6.5 percent increase compared to last year.

“2020 was an incredibly tumultuous year for the industry, but some unique market conditions helped retail sales end up in a much stronger place than anticipated, and the good news is that these should serve as some decent tailwinds into 2021,” says Jessica Caldwell, executive director of insights at Edmunds.

“Despite the economic hardships faced by so many Americans during the pandemic, there’s still a large population of well-off consumers who have been taking advantage of favorable financing conditions and sustaining healthy demand in the new car market.”

Analysts at Edmunds have identified three trends that will shape the automotive retail market in 2021. They are an increase in vehicle prices, the rollout of the COVID-19 vaccines, and new products.

The new vehicle market will continue to grow more pricey as the pandemic drives an income divide among Americans, says Edmunds. In December 2020, the average transaction price for a new vehicle hit an all-time record high of $40,573. Edmunds analysts expect this number to go up as affluent consumers, benefiting from lower interest rates and healthy stock and housing markets, continue buying bigger and more expensive new trucks and SUVs.

At the same time, more-affordable options in the new car market are growing increasingly scarce as automakers shutter their car lines, which Edmunds says will create a barrier to entry for many consumers and force them into the used car market.

COVID-19 vaccines will help keep auto sales steady but won’t boost them dramatically, according to the company. Unlike other industries such as airlines or entertainment, automotive sales are not expected to see a dramatic retail lift post widespread vaccination distribution since in 2020, retail sales were down 8.6 percent. Edmunds experts, however, say that a return to an in-person work environment should help maintain sales, and they anticipate a boost in daily rentals in 2021, which generally make up 12 percent of new vehicle sales but sank to 7.4 percent in 2020.

New products will help breathe life into the automotive industry as 2021 is expected to be a standout year for new vehicles. It will see the birth of a brand-new segment in EV pickup trucks, at least seven new electrified SUVs, and some off-road nameplate revivals including the Ford Bronco and Jeep Wagoneer.

“It comes down to production cycles and a little bit of luck, but every so often there’s a truly exciting product year for the automotive industry like we’re about to witness in 2021,” says Caldwell. “Between the GMC Hummer, the Tesla Cybertruck, and a debut vehicle from Rivian, the EV pickup truck segment is about to explode and we’re going to see even more electrified SUVs enter the market. And under the new presidential administration, there could be the possibility of new tax credits or incentives for individuals that could finally help move the needle for electric vehicles, which for years have been slow to grow in popularity in the U.S.”

Although 2021 is looking to be an exceptional year for the industry from a product standpoint, Edmunds notes that there are a number of uncertainties that could negatively affect sales.

“The chip supply shortage could throw a big wrench in production for automakers, which have only just gotten back into a good groove after shutting down during the pandemic,” says Caldwell. “And there is the bigger question about what consumer demand for vehicles is going to look like in a post-vaccine world. Lots of additional wealth and resources have been pushed into new car purchases for now, but people have been cooped up for nearly a year. They might choose to shift their spending to experiences rather than goods, which could be a threat to car purchases.”

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