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California New Car Dealers Association Releases Third Quarter Auto Outlook

Supply Restrictions Limit New Vehicle Sales

Electric Vehicles Continue a Strong Rise in Sales, Mirrored by Expanding Options

SACRAMENTO, CA – While demand for vehicles continues to increase to pre-pandemic levels, supply bottlenecks are preventing a full recovery. Earlier estimates hoped for a slightly stronger recovery, with new vehicle sales expected to approach 2 million for the year. The ongoing microchip issue has led to a more bearish outlook, trimming expectations closer to 1.85 million for the year. Despite the slightly leaner estimation, sales are still expected to surpass 2020 numbers by nearly 13 percent.

“The impacts of the ongoing microchip shortage certainly can’t be ignored, but California’s new car dealers are working tirelessly to ensure that the needs of our motoring public are met,” said California New Car Dealers Association Chairperson, Mark Normandin, owner of Normandin Chrysler Jeep Dodge Ram FIAT. “Despite this challenge, with patience from consumers, the nature of California’s competitive automotive marketplace has allowed our industry to continue providing the vehicles sought by buyers, with the same quality of service they have come to expect.”

Major Trends at a Glance

Electric vehicles continued their strong emergence, as consumer demand increases alongside new models entering the market. This week’s LA Auto Show highlighted this growing market, with automakers unveiling an assortment of new electric vehicles in their model lineups. Manufacturers are racing to establish themselves with their consumer bases, as more buyers look towards electrification. This comes as EVs increased their market share in Q3 to 8.3 percent, a full 2 percent over 2020.

Along with EVs, hybrids also showed a strong presence continuing their longtime growth, now commanding 10.3 percent of the market, and plug-in hybrids joined the trend, increasing to 3.3 percent in total sales. Altogether, hybrid and electric sales have expanded to nearly 22 percent of the market share.

The LA Auto Show unveilings also mimicked another growing trend among consumers, the continued desire for SUVs. In the first three quarters of 2021, nonluxury SUVs made of 34 percent of all new vehicle sales, with pickups and vans a distant second at 17 percent.

Despite sales bottlenecks, the new vehicle market continued its strong recovery from last year. As consumer demand remains low for many products, car buyers are returning to dealerships eagerly searching for their next vehicle. Yet, while demand shows a major comeback, the reality of the COVID pandemic remains, with exterior factors continuing to impact global supply chains.

The full Q3 California Auto Outlook can be found by clicking here.

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California Auto Outlook, is produced for CNCDA by Auto Outlook, Inc., an independent research company specializing in the analysis of statewide and regional automotive markets. When reporting these auto industry trends please acknowledge the Data Source: Experian.

About CNCDA

For more than 95 years, CNCDA has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service and repair. Our members sold more than 2 million new cars and trucks in 2019 and employed more than 140,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,100 members—CNCDA serves its members by providing legal compliance and legislative, regulatory, and legal advocacy. 

California New Car Dealers Association Releases Second Quarter Auto Outlook

Improvements Continue in California’s New Vehicle Market, Expected to Approach 1.9 Million in 2021

Sacramento, CA – This year continues to show hopeful signs of recovery in California’s vehicle market. While still not reaching pre-pandemic sales levels, significant signs of improvement over last year persist. The demand for vehicles is making a comeback and we expect California’s new and used vehicle market to continue to rebound this year.

COVID’s impact was felt across nearly every industry in the nation and vehicle sales were no different. While 2020 vehicle sales dropped 14.4 percent in the United States, California was hit especially hard, with sales falling 21.7 percent last year. Despite this drastic decline, the market was still 58 percent higher than the lowest point in 2009 during the Great Recession. According to the California Auto Outlook for the Second Quarter of 2021, sales are expected to increase 15 percent from 2020, approaching 1.9 million units. Absent the ongoing global microchip shortage, units likely would have exceeded 2 million, this year.

“Although current trends are a promising sign for California’s vehicle market, there remain a number of uncertainties for future economic trends. While consumers continue to engage more confidently with dealers, ongoing unemployment, inventory, and looming potential restrictions require businesses to approach these optimistic signs with a sustained sense of pragmatism,” said California New Car Dealers Association Chairperson, Mark Normandin, owner of Normandin Chrysler Jeep Dodge Ram FIAT. “With continued increases in demand, we remain confident in our abilities to continue to provide the same high level of quality goods and services Californians have come to expect from our industry. The safety, health, and wellbeing of our customers and employees will continue to be the top priority for California’s new car dealers.”

Alternative Powertrains

The electric and hybrid vehicle market continued its growth in California through the first half of the year. New hybrid vehicle sales saw a three percent increase to their share, making up 10 percent of the market, with new electric vehicle sales increasing one and a half percent to 7.8 percent. Plug-in hybrids doubled their share to 3.2 percent. In the first six months of the year, the market share for these vehicles increased significantly from 15 percent in 2020 to 21 percent through June of 2021.

New and Used Sales

Breaking a trend seen since early last year, in the first six months of 2021, gains in the new vehicle market outpaced the used market by more than double. Although used vehicle registrations increased by 16 percent in the first half of the year, new vehicle registrations increased by 32.2 percent. While the ongoing semiconductor shortage has provided a boost to used vehicle sales, there is a limit on how high used vehicle prices can go. Consumers are incentivized to sell their vehicles due to high resale values, but equally as high replacement costs act as a counterbalance to potential trade-ins.

Model and Brand Rankings

In the first half of 2021, the Toyota Camry overtook the Honda Civic as the top-selling car in California. The Civic remains a close second, with the Toyota RAV4 an equally as close third, retaining its spot as the best-selling compact SUV with nearly 23 percent of the market segment.

Regional Variances

Markets throughout the state marked significant increases in the first two quarters of 2021, with a 35.1 percent increase, statewide. Southern California led very slightly with 35.3 percent to Northern California’s 34.9 percent. More specifically for selected markets, San Diego County saw a raise in 35.2 percent, LA and Orange Counties an increase of 32.9 percent, and the Bay Area an increase of 29.7 percent.

The California Auto Outlook Second Quarter 2021 Market Report provides comprehensive information on the state’s new vehicle market. The report includes annual trends, two-year perspective, segment watch, including the top five models in each segment, brand scoreboards, regional comparisons, and more. The complete report can be accessed by clicking here, or by visiting CNCDA’s website at: www.cncda.org.

California Auto Outlook, is produced for CNCDA by Auto Outlook, Inc., an independent research company specializing in the analysis of statewide and regional automotive markets. When reporting these auto industry trends please acknowledge the Data Source: Experian

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About CNCDA

For more than 95 years, CNCDA has represented the interests of California’s franchised new car dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also provide customers with automotive products, parts, service and repair. Our members sold more than 2 million new cars and trucks in 2019 and employed more than 140,000 Californians, significantly contributing to our state’s economy. As the nation’s largest state association of franchised new car and truck dealers—with more than 1,100 members—CNCDA serves its members by providing legal compliance and legislative, regulatory, and legal advocacy.

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