Within the first months of 2021, what was good for the auto business was decidedly good for the American financial system.
Spending on motor automobiles and components rose nearly 13 p.c within the first quarter, making a big contribution to the increase in gross domestic product, the Commerce Division reported Thursday. Sturdy gross sales of latest and used automobiles had been propelled by customers who had delayed purchases earlier within the pandemic and by others who — due to the virus — wished to rely much less on public transit or shared transportation providers like Uber.
Two rounds of stimulus funds since late December had been an enormous issue. Low rates of interest, available credit score, rising residence values and inventory costs, and powerful trade-in values for used fashions additionally eased the trail for customers.
In actual fact, demand within the first quarter was sturdy sufficient that the auto business was capable of publish wholesome outcomes regardless of a scarcity of pc chips that compelled short-term shutdowns of many automobile crops.
The variety of new automobiles and lightweight vans bought elevated 11 p.c from the comparable interval a yr earlier, to three.9 million, in keeping with the auto-sales information supplier Edmunds.com.
On Wednesday, Ford Motor reported it made a $3.3 billion profit within the quarter, its highest complete since 2011. Whereas it produced 200,000 fewer automobiles within the quarter than it had deliberate, the common promoting value of Ford fashions rose to $47,858, 8 p.c increased than within the first quarter a yr in the past, Edmunds reported.
The mixture of robust shopper demand and tight inventories — partly a results of the chip scarcity — has produced one thing of a dream situation for auto retailers. At AutoNation, the nation’s largest chain of dealerships, many automobiles are being bought close to or at sticker value even earlier than they arrive from the manufacturing facility.
“I’ve by no means seen a lot preselling of shipments,” stated Mike Jackson, the chief government. “These automobiles are coming in and going proper out.”
Within the first quarter, AutoNation’s income jumped 27 p.c, to $5.9 billion, and the corporate reported $239 million in revenue. That was a turnaround from a loss a yr in the past, when the pandemic crimped gross sales and compelled AutoNation to shut shops.