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Record-High Car Prices Again In February: Low Supply, High Demand

By News Creatives Authors , in Business , at February 25, 2022

Low, new-vehicle inventory continues to limit U.S. auto sales in February, and prop up record-high prices, according to sales forecasts based on online shopping through the first part of this month.

For February 2022, the U.S. auto sales forecast from J.D. Power and LMC Automotive is for just under 1.1 million cars and trucks, down 11% vs. February 2021.

Separately, Cox Automotive announces a similar forecast. New-vehicle inventory is 62% below last year, according to Charlie Chesbrough, senior economist at Cox Automotive.

Thomas King, president of the data and analytics division at J.D. Power, says separately the inventory shortage is behind a February record-high, estimated average transaction price for the month of $44,460. That’s an increase of 18.5% vs. a year ago.

Conversely, J.D. Power says the average incentive spend for February is on pace to hit $1,246, down 42% vs. a year ago. “The new-vehicle supply situation is not displaying signs of near-term improvement,” King said.

The low-supply, high-demand, high-prices scenario is a familiar one — first, because of auto factory and dealership shutdowns in 2020 due to COVID-19, and second, because of a shortage of semiconductor chips and other supply-chain issues, in 2021, especially in the second half.

In January, U.S. auto sales were down 9% vs. a year ago, to just over 1 million, according to LMC Automotive. That was the weakest January since 2014, LMC Automotive said. For all of 2022, LMC Automotive expects U.S. auto sales of 15.9 million units. That would be an improvement of 7% from 2021.

A positive sign is that LMC Automotive estimates the effect of the computer chip shortage of overall volume in the first quarter of 2021 should be about half of what it was a year ago, “and we expect continued improvement throughout the year,” the company said.

Sales numbers in this story contain both retail and fleet sales, unless otherwise noted. That’s how the auto industry typically tracks sales, although the industry also keeps track of retail-only sales to individuals, as opposed to fleets.

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