Patrick Manzi, Chief Economist at NADA
The National Automobile Dealers Association (NADA) is forecasting 15.5 million sales units for 2021 in the United States, with the expectation that those numbers will reach back into the 16 million range in 2022, according to Patrick Manzi, Chief Economist, NADA.
Manzi offered an economic outlook for the U.S. during the 2021 virtual NADA Show in February, noting that 2020 ended better than expected and that he is optimistic that the industry would continue to see recovery in both the new and used vehicle sales market, along with some improvement in the fleet business.
“Looking ahead at 2021, I expect that fleet business is going to come back throughout the year as more people get vaccinated and are more comfortable travelling around the country,” said Manzi during an NADA Live Stage session. “We’re going to see more demand for those fleet vehicles, so that’s one side of the coin. I also expect that retail sales are going to continue to increase and return to their pre-COVID levels throughout the year.”
From a more macro perspective, Manzi said the $900 billion stimulus from the federal government and talks of another stimulus could at least marginally help increase new vehicle sales. He said some consumers may go out and buy a car, either a new model or if not a used, which is still good news for dealers.
The federal reserve also does not plant to touch interest rates this year, according to Manzi. He expects interest rates to be at the lower spectrum, of between 0 per cent and a quarter per cent for all of 2021 and most of 2022.
“This is good for dealers, because it likely means it’s going to be 0 per cent financing offers to consumers in the door. This is also going to help dealers with their floor planning financing cost,” said Manzi. “Also, we are looking at a wave of pent-up demand to be unleashed once everyone is vaccinated and returning to normal — and that is also good news for vehicle sales.”
Currently however, there remains much uncertainty, in part because absenteeism along vehicle supply chains can lead to more inventory shortages, and also because of the global shortage of semiconductors (microchips), which are being used in all aspects of vehicle production.
“There are some headwinds, but in general I think by the end of the year we’re going to be looking back and saying, ‘Wow, this was another solid year for franchise dealers.’ And the conditions right now seem poised for (that),” said Manzi.
