ATLANTE, January 13, 2022 /PRNewswire/ — At the start of 2022, the Cox Automotive Industry Insights team presents 10 trends that will shape the automotive industry in the year ahead. Overall, the Cox Automotive team is optimistic for the industry. Sales of new vehicles are expected to reach 16.0 million, an increase of more than 7% compared to 2021, while sales of used vehicles will remain strong and above 39 million. Stocks will continue to be challenged in the first half of 2022 but are expected to improve in the second half. Unlike 2021, the second half of 2022 will likely be stronger than the first half.
Cox Automotive Industry Insights will focus on 10 trends that will shape the automotive industry in 2022.
When it comes to crystal balls and predictions, even the Cox Automotive Industry Insights team knows that looking ahead is never easy.
“As we move forward into 2022, our team has a number of expectations for the industry,” notes Cox Automotive’s chief economist. Jonathan Smoke. “We believe the automotive industry will have a good year. Yes, there will be unexpected pitfalls, but those who remain flexible and nimble will do very well in the coming year.”
The Cox Automotive Industry Insights team will particularly focus on these 10 trends that will shape the automotive industry in 2022.
#1: Vehicle demand will remain robust, especially in the first half
Although the pandemic has been tough on many U.S. consumers, market demand is sufficient to support healthy new and used vehicle sales in the coming year. Recent surveys indicate that consumers expect vehicle prices to rise in 2022, but enough buyers will be in the market to support 16 million new vehicle sales, according to Cox Automotive’s 2022 forecast. used vehicles are expected to be 39.3 million, down slightly from 2021, but still a healthy volume.
#2: Used vehicle values will depreciate Again, after the spring
Last year, with a historically low inventory of new vehicles, demand for used vehicles increased significantly, driving up prices. At auction, the value of used vehicles set new records in each of the last four months of 2021, according to the Manheim Used Vehicle Value Index. Retail prices followed, with the average used vehicle listing price above $28,000 in December 2021, a record. Used vehicle prices normally rise in the spring, so the market will see further gains. In the second half of 2022, however, the team expects price increases to end and a more normal pattern of depreciation to resume.
#3: Tight vehicle supply will gradually improve
The central story for the auto industry in 2021 was inventory crunch. Supply chain disruptions and production slowdowns due to COVID outbreaks have taken their toll on product availability, and never in memory has new vehicle inventory been lower. In the second half of 2021, inventories were around a third of the pre-pandemic level, passing under one million units. It will be a slow process, but the Cox Automotive team believes new vehicle inventory issues will gradually improve over the coming year: the worst of “empty lot syndrome” is likely in the rearview mirror.
#4: Electric vehicle growth will outpace industry growth
While the overall new vehicle market struggled in 2021 and grew only 3.5% from a tough 2020, the electrified vehicle market exploded. Sales of hybrids, plug-in hybrids and pure battery electric vehicles surged, with new entries and many newly interested buyers. Tesla is still the dominant brand in the pure electric vehicle market, but new products from Ford, Hyundai, Kia, Volkswagen and Volvo are driving solid growth. Gasoline prices are high through 2022, and 38% of new-vehicle buyers are now considering an electric vehicle. In 2022, further strong growth is expected, especially as high-level EV pickups begin to enter the market. Production of the new Rivian RT1 pickup is underway; the Ford F-150 Lightning should be on the road in the spring.
#5: Auto loan rates will go up
Low interest rates on auto loans helped dampen the rapid rise in vehicle prices. Unfortunately, the end is near. Inflation is at the highest level since 1982, and the Federal Reserve is poised for it with expectations of three quarter-point rate hikes in 2022, followed by three in 2023 and two more in 2024. Generally speaking, the Cox Automotive team is waiting for a car loan rates will be higher by the end of 2022. From a historical point of view, the rates would still be low and attractive. However, the increase would mean an end to the 2021 funding trend that has helped alleviate some of the vehicle price inflation.
#6: Rental demand will improve in 2022
Retail lease penetration had risen above 30% in 2019, but was significantly lower during the pandemic and below 25% in the second half of 2021, the lowest point since 2013. Cox Automotive’s team predicts the share of leases will rise as inventories replenish and consumers look for ways to lower monthly payments. In a recent Cox Automotive survey, 69% of consumers agree that the average price will rise until owning a new vehicle is out of reach for the average consumer, up from 51% in 2021. Leasing can offer a solution for some, with a monthly drop. Payments. An increase in leasing in 2022 will also help the used vehicle market mid-decade.
#7: The service revenue opportunity will continue to be robust for dealerships
The average vehicle on the road today is over 12 years old, according to research firm IHS, and the vehicle fleet is at an all-time high of over 280 million. With new vehicle prices higher than ever, research from Cox Automotive indicates that more consumers will focus on repairing rather than replacing. Plus, while traditional commutes may be a thing of the past, our research shows that 50% of Americans expect to drive more in 2022 than they did last year, avoiding the public transport; driving instead of flying; return to a hybrid work situation. With the miles added, service visits are also expected to increase. Overall, service channels should continue to be an important part of the franchised dealership business equation.
#8: Robust dealer consolidation will continue
As dealer profitability soared in 2021, consolidation activity also increased. Tight inventories and rising costs are prompting auto dealers to re-evaluate their competitive position and consider the benefits of being part of a larger operation. Large dealer groups have better access to capital, technology and human resources, many experts suggest. According to Cox Automotive research, 59% of dealers expect the consolidation or acquisition trend to continue in the coming year. This story is far from over and will be one to watch carefully in 2022.
#9: The shift of consumers to the web is becoming dominant
While the global COVID pandemic has upended lives, it has actually made the process of buying a vehicle more satisfying. In recent Cox Automotive Car Buyer Journey studies, two trends are clear. First, consumers are taking more car buying steps online. Second, overall satisfaction with buying a car, and specifically satisfaction with the dealership experience, has improved. Importantly, consumer preference for online shopping is not expected to wane this year, with 70% of consumers preferring to shop online rather than physically visit a dealership, essentially unchanged from 2021. .
#10: The Direct-To-Consumer model will force dealers to adapt
It all started in earnest with Tesla’s direct-to-consumer model, with no franchise dealerships. In 2021, Tesla delivered over 300,000 vehicles in the United States. And now here comes Lucid, Rivian and others, other electric vehicle startups following Tesla’s lead. The traditional concession model in United States is strong and according to recent polls, provides a high level of buyer satisfaction as the sales process becomes increasingly digital. A majority of consumers value access to a network of franchises. Still, the Cox Automotive team believes that the industry and national franchise laws will continue to evolve in ways that improve efficiency and consumer satisfaction. This development will include an increase in direct-to-consumer vehicle sales.
About Cox Automotive
Cox Automotive Inc. makes it easier for everyone to buy, sell, own and use vehicles. The 27,000+ team members and global company family of brands, including Autotrader®, Dealer.com®, Dealertrack®, Dickinson Fleet Services, Kelley Blue Book®, Manheim®, NextGear Capital®, VinSolutions®, vAuto® and Xtime®, are passionate about helping millions of car buyers, 40,000 automotive dealership customers across five continents and many more around the world. the automotive industry thrives for generations to come. Cox Automotive is a subsidiary of Cox Enterprises Inc., a privately held, AtlantaNew York-based company with annual revenue of nearly $20 billion. www.coxautoinc.com
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SOURCE Cox Automotive