From shortages of crucial semiconductor chips to shutdowns at major assembly plants, plus sky-rocketing car prices and empty dealerships, 2021 was a year to remember for auto manufacturers and consumers alike. But there was also a surge in sales of electric vehicles, and an increasing shift from sedans to SUVs and pickup trucks.
So, what’s ahead for 2022? By some accounts, it may be more of the same, as shortages continue to leave dealers struggling for inventory and consumers facing ever higher prices. But shoppers will also find a lot more options if they’re looking for an electric vehicle.
Here are the storylines we expect will dominate this year:
Ongoing product shortages
As Covid-19 struck, automakers slashed production and parts orders. But, when sales started to rebound, they discovered they couldn’t get all the semiconductors they needed, leading to major production cuts. The industry lost around $210 billion in revenue in 2021, according to AlixPartners business management consultancy. While chip supplies are now loosening up, they’re far from back to normal and production cut be hurt well into 2022. Worse, the industry faces other shortages impacting products like tires and interior plastics and seat foams.
All told, automakers worldwide produced about 8 million fewer vehicles than planned in 2021, due to product shortages. Even if production rebounds, dealers won’t be able to build back inventories until well into 2022, according to J.D. Power analyst Tyson Jominy. As a result, buyers should expect limited choices — while prices will continue rising at a record rate. At the end of 2021, a typical new vehicle cost $45,000, up about $8,000 from December 2020, according to industry data.
Normalization of online car buying
When America went into lockdown, the industry discovered a novel idea. Since customers couldn’t come to dealers, dealers came to them — over the internet. Even after the country opened back up, more and more customers are shopping for their cars online, and many retailers schedule test drives and then deliver new vehicles to a buyer’s home or office. Meanwhile, with showroom lots nearly bare, normally impulse-driven American motorists have begun ordering their cars and waiting — sometimes for months — to take delivery.
EVs start their move into pole position
They account for a modest fraction of U.S. new vehicle sales, but demand for battery-electric vehicles doubled during just the first half of 2021. This year could bring the “tipping point,” contends GM CEO Mary Barra, with the EV market exploding. Several factors will play a role, starting with a plethora of new offerings: Analysts anticipate the number of long-range models will quadruple this year.
The impact of Build Back Better
President Joe Biden has put a lot of emphasis on the auto industry. In December, the White House announced its most…
Read More: What’s ahead for the auto industry in 2022?