U.S. Vehicle Sales (November 2021)

US vehicle sales disappoint in November   

• U.S. vehicle sales declined by 0.7% month-on-month (m/m) in November, falling to 12.9 million units. The reading fell well short of the consensus forecast, which called for a gain to 13.5 million.  
• Unadjusted volumes were 1.0 million units in November, down 4.1% from the month prior and 16.5% below year-ago levels. Measured by daily selling rate, sales were 41,723 in November – calculated over a 24 selling day period – which was down from the year-ago reading of 52,136 – calculated over 23 selling days.
• Sales of passenger vehicles (+1.2% m/m) were modestly higher on the month, while sales of light trucks edged lower by roughly the same amount. Even still, light trucks accounted for nearly 77% of sales – up 3.6 percentage points from November 2020.      

Key Implications

• Any hope that sales could build off October's momentum was quickly dashed with this report. Historically tight inventories meant that most dealerships didn't offer any Black Friday discounts this year, which resulted in November (NSA) sales volumes falling below that of the month prior – an atypical seasonal pattern. 
• As we close out 2021 and look to next year, monthly sales will continue to be dictated by the number of vehicles available, rather than underlying demand. This will likely remain true through the first half of 2022, as supply constraints continue to hinder production. While it is hoped that these pressures ease through the second half of next year, the recent emergence of the Omicron variant posses considerable downside risk, particularly to already strained supply chains. Further outbreaks will only prolong the time it takes chip makers to catch-up on the existing backlog, which would zap any hope of production normalizing in 22'H2, and leave the market very thinly supplied for at least another whole year. Buckle up, 2022 is fast approaching and it's likely bringing more unexpected sharp turns!     

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