TrueCar, Inc. projects 16 million new light vehicle sales for 2021, an increase of 10 per cent from the previous year.
Retail sales are expected to reach 13.9 million, representing an increase of 9.6 per cent from 2020.
“The year 2020 was a challenging one for the automotive industry and the economy at large, but the recovery came faster than most expected, providing strong momentum and pent-up demand going into 2021,” said Nick Woolard, Lead Industry Analyst at TrueCar. “Retail demand is healthy and will remain the driving force for total vehicle sales in 2021. Fleet sales will also increase, but at a much slower pace, due to the uncertainty surrounding travel.”
2020: a record-breaking year
Q4 2020 saw record-breaking average transaction prices for new vehicles, as incentives eased and consumers opted for more expensive SUVs and trucks. The trend towards more expensive vehicles continues in 2021.
Average transaction prices are projected to increase 3.1 per cent year over year to $37,925. In previous years, the average transaction increased roughly four per cent year over year.
“As the K-shaped recovery takes shape in 2021, we expect higher-income households, who have not been financially impacted by the pandemic, to continue making new vehicle purchases,” added Woolard. “Continued trends towards large trucks, SUVs, and a growing array of electric vehicles as well as additional safety and technology content will lead to even higher average transaction prices in 2021.”
Average interest rates for new vehicles in 2020 were 4.74 per cent, and interest rates for used vehicles were 8.47 per cent. TrueCar forecasts that interest rates for 2021 will remain similar to those we saw in Q4 2020.
“Car shoppers in 2021 can expect interest rates for new and used vehicles to remain at the low levels we saw towards the latter part of 2020 with support from the Federal Reserve,” said Alain Nana-Sinkam, Vice President of Strategic Initiatives at TrueCar. “The Fed is signaling continued support into 2021 as the U.S. economy recovers from the pandemic. The low interest rates are likely to stay at least through the end of the year.”