Optimism for Sales Recovery in Second Half
U.S. light-vehicle sales are set up for a major comeback in the second half of 2021, but the industry isn't yet in the clear as it enters a testy winter wracked by an ongoing rise in coronavirus cases, reports Automotive News. While the health crisis continues to keep the public on alert, there have been encouraging developments that could boost consumer sentiment in the months ahead and bolster vehicle sales. The industry built momentum toward the end of 2020, achieving year-over-year sales gains in September and October after battling back from a brutal second quarter. Automakers and dealers closed the year on a high note for profitability as well, with average transaction prices for new vehicles in December projected by some to top $40,000 for the first time. Industry experts expect sales to tick up from roughly 14.5 million in 2020 — the first time they would finish below 17 million since 2014 — to as high as 16.2 million this year. Automakers are scheduled to report their final 2020 results on Tuesday, Jan. 5. Read more here (Source: Automotive News).
FCA-PSA Set to Kick Off Year with Completion of Merger
Barring a surprise setback, shareholders at Fiat Chrysler Automobiles and PSA Group are expected to formally approve the merger of the two companies, creating what will become Stellantis, the world’s fourth-largest automaker by sales volume. The Detroit Bureau reports that the deal was originally announced in late 2019 but took more than a year of planning, negotiating and the winning of regulatory approvals on both sides of the Atlantic. Officials with the two companies have promised that the merger will yield a significantly stronger automaker, helping drive down manufacturing costs while also making it easier to prepare for the many changes set to sweep through the auto industry in the coming decade, notably the shift to electrified and autonomous vehicles. But the merger also raises numerous questions, starting with the broad range of brands each of the new partners bring to Stellantis. Read more here (Source: The Detroit Bureau).
Hyundai, Kia Expect Auto Sales Rebound in 2021 After Two Straight Years of Declines
South Korea’s Hyundai Motor Co and affiliate Kia Motors Corp on Monday forecast combined global vehicle sales will jump 11.5% in 2021 after sliding for two consecutive years. According to Reuters, their target of 7.08 million vehicles comes after the coronavirus pandemic sent sales last year tumbling 12% to a decade low of 6.35 million vehicles. That result is also more than 20% off a peak reached in 2015. While the automakers have missed their sales predictions for the past six years, analysts described this year’s target as realistic. Shares in Hyundai Motor also finished 8% higher on Monday, bolstered by investor hopes for strong electric car sales this year. Hyundai’s Kona Electric has been bright spot for the automaker, with analysts saying sales have been solid despite a global recall after a series of fire incidents. Read more here (Source: Reuters).
Dealers Face Choice: Invest for EVs or Get Benched
The electric revolution disrupting an auto industry set in its ways for more than a century is pushing dealerships to make a choice: invest in the future or sit on the sidelines, reports The Detroit News. Take Cadillac: General Motors Co.'s leading electric brand told its 880 dealers to invest at least $200,000 each to sell future EVs starting in 2022 or get out of the business. Between 180 to 200 smaller volume dealers opted to take a buyout from GM, choosing not to take part in selling Cadillac's all-electric lineup coming by 2030. Dealers mostly recognize that electric vehicles, which still make up less 2% of auto sales annually, are the future for many of the brands they sell. And there's already a push by governments for more electric vehicle sales, so investment is seen as a necessity for the long-term survival of legacy automakers and their sprawling networks of independent dealers. Read more here (Source: The Detroit News).
Car Buying Has Changed Forever
It took a pandemic to drag the car-buying process into the 21st century — and consumers are never going back, reports Axios. After COVID-19, consumers can now buy cars online as they do almost everything else, with the ability to complete the entire transaction digitally and take delivery without ever setting foot in a showroom. "Consumers really like it. Surveys show they want more of it, and dealers are getting on board that this is how it's going to be,” says Michelle Krebs, executive analyst at Cox Automotive. It turns out that dealers are more profitable than ever since shifting to online sales, Krebs noted. “The deal happens faster because the consumer knows exactly what they want, and there's not a lot of haggling on the price," she said. Dealers are now touting their "omnichannel" tech strategy to provide consumers a seamless buying experience whether they shop online, in store, or both. Read more here (Source: Axios).
Webinar: Tax Planning for an Uncertain Year
Join the next AutoTalk webinar on Thursday, January 7, 2021 at 2:00 p.m. EST to understand the best tax planning strategies for your business.
Topics will include:
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Explore tax opportunities under CARES act
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Updates on PPP loan taxability
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How inventory levels could impact your taxable income
Around the Web
What Was the Last New Car You Could Buy with Under 50 Horsepower? [AutoWeek]
Tesla Reports 499,550 Vehicle Deliveries for 2020, Slightly Missing Target [CNBC]
Rolls-Royce Introduces a Car for the 'Post-Opulence Era' [Yahoo! Finance]
Donuts on the Interstate: Video Goes Viral After Cars Purposely Shut Down Memphis Interstate [Fox13]
