New Car Sales Have Dropped By 26% — What’s Next?

The worsening chip shortage continues to bring down the automotive industry.

Recent reports show the hesitation to buy has become more pertinent than months prior. Initially, the limited supply and consequent rise in price led to record profits per vehicle sold. Although a financial win, the supply shortages are causing automakers to cross a new threshold. The only way to endure the ongoing chaos is to limit or pause production timetables. A decision that is not made lightly by any automaker.

On the premise that things continue in this direction, the automotive market will continually trend downward. As a result, consumers are really starting to lose patience and form an overall disinterest in purchasing a new vehicle. I mean really — who wants to pay above MSRP for a car? Most drivers would rather keep their vehicle for longer until the storm passes.

The rising car prices on both new and used vehicles are ultimately keeping buyers at bay. With no major urge to rush and overspend, it puts all buying decisions at a standstill. If automakers thought the supply shortages were bad, just wait until the yearlong production struggle catches up to them. In fact, it already has.

We’ve been staying up-to-date on the progression of the semi-conductor chip shortage along with its loathsome impact on new car sales. For the latest information, keep reading to see where new car sales currently stand for automakers in the third and fourth quarters.

Reports show new car sales have dropped by 26%

September delivered some painstaking realities for the automotive sector. After a summer of stagnating new car sales, the realtime effect is starting to sink in. That said, new car sales have dropped by 26% last month alone. Even quarterly reports showed some grim outlooks. For instance, General Motors’ new car deliveries from July to September were down by 33% from the previous year.

These high percentages give us reason to panic. The plummet in sales is hitting all automakers pretty badly, but this issue is even weighing down our economy on a grander scale. The spike in car prices has had a direct impact on U.S. inflation.

Impact on automakers

Unfortunately, the drop in new car sales have trickled down to just about every automaker. Even those who strategically cut down production to stymie the inventory shortage are feeling the burden of supply disruptions. Statistics show automakers took the heaviest hit in September. Honda new car sales decreased by 25%. Toyota saw a 22% drop in car purchases. And Volkswagen’s sales were down by 8%.

It’s likely these numbers will increase should the chip shortage linger on much longer. As many analysts have reported, the aftermath of low inventories and production halts will cripple the automotive industry for years to come.

Can we expect a peak in sales by holiday season?

The holiday season is notoriously a big time for consumers to buy. With Black Friday deals and Cyber Monday incentives, buyers can get all their shopping done in practically one weekend. On top of that, dealerships across the nation roll out impressive lease deals and offer low APR rates to entice to new car buyers. A new car is honestly one of the best ways to commemorate the holidays. Plus, it’s always nice to treat yourself during the most festive time of year.

However, we can’t expect this year to be like years past. The pandemic may have started the mayhem, but now things have definitely gotten out of hand. Automakers are feeling the impeding impact of low customer retention more than ever. How long can things last like this? We’ll have to wait and find out.

Tell us your opinion on the current new car sales drop, including what you think the outlook is like for 2022.