Analyst Sees No Quick Relief From New-Vehicle Shortages

It’s likely to be late this year, or even next year, by the time U.S. new-vehicle inventory starts to catch up with demand, according to LMC Automotive.

“Demand is far outstripping supply,” LMC Managing Director Pete Kelly says during a Feb. 1 webinar. “It is particularly acute in mature markets, and that will persist for a while.”

Globally, the semiconductor shortage has hit production harder in wealthier, mature markets. That’s because the level of features and options is higher, and that requires many more chips per vehicle, Kelly says.

U.S. days’-supply has improved “marginally” in the past 90 days, LMC Auto says, but inventory is “still well below normal levels and below the pace of demand.”

Pete Kelly, LMC

The good news? Demand is still high, he says. “At the moment, if you can produce a vehicle, you can probably find a buyer for it.”

LMC Automotive expects light-vehicle sales in North America of 18.7 million in 2022, including the U.S., Canada and Mexico. That would be an increase of about 6.3% vs. 2021.

There’s a lot of pent-up demand because of the COVID-19 pandemic and supply-chain problems in 2020 and 2021. Disruption, mostly from the chip shortage, cost an estimated 2.3 million units of production in 2021, LMC Auto says.

Some of those sales are likely to be made up, but not all, Kelly says, because a lot of new-vehicle shoppers turn to used, instead. Recovering all 2.3 million lost units “would be assuming they’re just sitting on their hands, and not actually doing anything else,” he says. “That’s not the case.”

Besides, LMC Auto expects supply disruption to continue in 2022, to the tune of about 4.8 million lost units globally, about half the global impact in 2021.

“Inventory has not had a chance to build,” Kelly says.