The US car market continued to be hot in April, but dealer inventories have fallen to an all-time low.

The shortage of chips has become a problem that all major automobile companies must face.

The U.S. car market continues to be booming, driven by the government's stimulus package, with sales of light vehicles reaching 18.5 million in April, as measured by the seasonally adjusted annualized sales rate of SAAR, according to market research firm Motor Intelligence. This is the second month in a row that SAAR has exceeded 18 million. In other words, at that month's sales rate, US light vehicle sales this year will reach 18 million.

According to the data released by the United States at the end of April, the initial annualized quarterly rate of GDP in the first quarter was 6.4%, and the actual quarterly rate of personal consumption expenditure also reached 10.7%. It seems that the $1.9 trillion economic stimulus package formally passed in March did restore the US economy, and it is reasonable for the automobile market, as an important part of social consumption, to benefit from it.

In response, analysts at JD Power,Cox Automotive and TrueCar also said that US car sales would grow by nearly 100 per cent to more than 1.3 million vehicles in April from a year earlier because of strong retail demand.

Although such a large increase is due to the impact of the novel coronavirus epidemic in the same period last year, sales fell to the lowest point in nearly 10 years-- the SAAR dropped to 8.6 million vehicles, but the 1.3 million vehicles in April were roughly the same as those in the same period in 2018-2019, which shows that the US automobile market has indeed basically returned to the pre-epidemic level recently.

Hidden worries are hidden under joy

As a result, car companies that disclose monthly sales have announced the good news for April, only to meet concerns about inventory shortages at the same time.

Among the car companies that reported sales, Toyota was the highest, with the group's sales rising 183 per cent to 239311 in April from a year earlier, with Toyota up 183 per cent to 212283 and luxury Lexus up 177 per cent to 27028, all of which were the best sales of the three in the same period in recent years. The excellent performance is due to the roughly tripling of deliveries in the sedan, cross-border and SUV segments, with the biggest increase among the best-selling models, the Hanlanda, whose sales rose 350% to 27679 vehicles year-on-year.

But Toyota also said that at the end of April, the group's inventory of light vehicles in the US market had dropped to 205285, down 21% from March and 46% from the same period last year. Since May, it can only guarantee the supply of light trucks for 19 days.

Compared with the former, Ford, one of the top three in Detroit, was slightly inferior, growing by only 64.8% in April and failing to exceed 200000 units. This is due to the fact that with the discontinuation of some cars, Ford Group's car sales fell 21% compared with the same period last year, resulting in certain losses. Fortunately, the SUV and crossover more than doubled year-on-year, and pickups grew by 48%, which allowed the Ford brand to grow by 63% and Lincoln by 115%.

However, Ford has slightly less pressure on inventory than Toyota, which had a total of 265000 light vehicles, or 35 days of supply, at the end of April, but warned that inventory days could be reduced by another 10 days.

In April, cars rose 125 per cent year-on-year, thanks to a 207 per cent year-on-year increase in the group's light card sales to a new record of 98828, while Honda gained 171 per cent in April and hit an all-time high of 156482 over the same period. In terms of brands, Honda and Acura grew by 166% and 226%, respectively. As HR-V and Passport achieved their highest monthly sales since entering the US market, CR-V and Pilot also achieved the best results for the same period, and Honda also achieved a peak of 140023 vehicles for the same period.

Subaru also recorded sales for the same period, selling 61389 vehicles, up 101 per cent from a year earlier. But at the same time, Jeff Walters (Jeff Walters), senior vice president of American sales at Subaru, also revealed that the company's future performance will be restricted by inventory because the chip shortage affects the production of the entire automobile industry.

Hyundai Motor Group, which has long claimed that its production has not been greatly affected by the chips, also seems to be in trouble.

Sales of the Hyundai brand rose 146 per cent in April, while sales rose 128 per cent year-on-year to 77523 vehicles, the second month in a row that the brand set an all-time high. And Hyundai said that although fleet turnover fell 27 per cent, it accounted for only 3 per cent of April sales. This means that the modern market is rising, mainly due to strong demand in the retail market.

The Telluride, Sportage and Seltos achieved the highest sales in the same period as the new generation of K5 and Forte achieved the best results since entering the United States, and Asia also broke the best sales for the second month in a row since April, surging 121% to 70177 vehicles. In response, Sean Ewan (Sean Yoon), CEO of Kia, said frankly that there was already a large number of customers in dealers' stores before the border was reopened in the summer, so there is reason to believe that Kia will continue to have a strong trend this year.

However, a spokesman for Hyundai Motor Group USA also said that the inventory of US dealers at the end of April was 123046 cars and light trucks, down 13% from 141425 at the end of March and 27% from 169058 at the end of April 2020.

Inventory has fallen to an all-time low

While car companies are anxious, forecasters are also worried about the future of the car market.

Charlie Chesbruff (Charlie Chesbrough), a senior economist at Cox Automotive, says the average daily supply of the auto industry (65 days in an ideal market) could soon fall to about 30 days.

The agency's data show that large trucks and SUV, medium-sized cards, minivans and luxury SUV stocks are the most tight, all with less than 40 days of supply. In view of the recent economic recovery, interest rate expectations and consumer confidence, consumers' desire to buy cars will not abate in the short term, but insufficient inventory has become an important obstacle affecting sales in the auto market.

Adam Jonas (Adam Jonas), an analyst at Morgan Stanley, also revealed that after record results in April, the problem now is that vehicles in stock may be used up. And he points out that current industry inventories have fallen to a record low of just 33 days.

Indeed, after falling 14 per cent year-on-year for the whole of 2020, coupled with a 12 per cent year-on-year increase in light vehicle sales in the first quarter of this year, a further rebound in sales for the whole of this year could have been expected. However, the continuing shortage of chips since the beginning of this year has led to more or less suspension of production by automakers around the world, seriously affecting the inventory of dealers and making the next trend of the car market unclear.

Some dealers and analysts even believe that new car sales lost their strong growth momentum at the end of April due to insufficient inventory. Cox Automotive said directly that the supply of light vehicles fell by more than 1.25 million in April, which is very bad news for the U. S. auto industry, which focuses on spring sales. Brian Finkelmeyer, the agency's senior director of new car sales strategy, also revealed that the current performance of the car market is determined by inventory, not incentives, and that the situation will worsen as the chip shortage continues to intensify.

In fact, according to, JD Power, 1/3 of vehicles were sold within 10 days of their arrival at dealers in the first 10 days of April, compared with 1/4 in the same period in 2019. Thus it can be seen that the dealers sold most of the cars almost as soon as they got their hands on them. Therefore, most dealers are doing their best to ensure the supply of inventory.

It is precisely because of the shortage of new car inventory that discounts for major car brands in the United States continue to decline. JD Power estimates show that the auto industry enjoyed only $3191 per car in April, down from $4953 in the same period in 2020 and $3573 in the same period in 2019. Truecar forecasts also show that discounts fell 28 per cent to $3191 in April from a year earlier.

With reduced incentives, tight inventories, strong consumer demand, and cash-rich government stimulus packages, car prices have risen instead of falling. JD Power expects the average transaction price to rise 6.7 per cent to $37572 in April, a new high for the same period. And it is also the second highest average transaction price recently, after $37966 in December 2020.