For the first time in 90 years, General Motors Co. lost its position as leader in U.S. sales — dethroned last year by rival Toyota Motor Corp. in a move experts and the Japanese automaker itself predict is unlikely to be repeated in 2022.
Japan's No. 1 automaker outsold GM by more than 114,000 vehicles in 2021, with more than 2.3 million vehicles sold for the year. The Detroit automaker sold 2.2 million vehicles in 2021, sales numbers show, dropping 13% from the year before as the automaker battled a microchip shortage that crunched inventory levels on dealer lots at home and abroad.
"Yes, we did surpass General Motors in sales," Jack Hollis, Toyota North America's senior vice president of automotive operations, said during a sales call Tuesday. "But to be clear, that is not our goal, nor do we see it as sustainable."
The pandemic-induced global chip shortage pressed some automakers more than others to prioritize production of profit-heavy vehicles as some plants were forced to shut down — in some cases for months. GM allocated chips to its trucks and SUVs. Plus, like other Detroit automakers, it cut most sedans from its lineup over recent years to focus on sales of larger vehicles and investments in electric vehicles. But the lack of inventory is what hurt GM in the end, causing it to lose a decades-old sales crown.
"GM is so far from a sedan brand at this point," said Jessica Caldwell, executive director of insights at Edmunds.com Inc., a vehicle information website. "That was not the issue. The issue was they just didn't have enough of the rest of what they sold ... if they had more trucks and they had more SUVs they would have done better."
Losing the leading market position didn't appear to faze GM shares, which rose 7% Tuesday ahead of CEO Mary Barra's virtual keynote for the Consumer Electronics Show Wednesday. She's scheduled to reveal the electric Chevrolet Silverado pickup and provide details on GM's EV and autonomous strategy.
"All year we focused on delivering as many of our high demand, capacity-constrained products as possible and the strategy worked," Steve Carlisle, executive vice president and president of GM North America, said in a statement. "Our dealers and our engineering, supply chain, manufacturing and brand teams moved mountains to satisfy as many customers as possible in 2021, despite record low inventories caused by semiconductor supply chain issues during the third and fourth quarters."
Stephanie Brinley, principal autos analyst for the Americas at IHS Markit Ltd., noted GM entered the pandemic behind other automakers in inventory following a 40-day United Auto Workers strike in 2019.
"For GM, they've had three years in a row of not being able to produce what they are capable of doing," she said. "GM has more capacity (than Toyota) and can and will be able to get its inventory levels back to where they normally would be."
Still, GM took a major hit in the fourth quarter with a 43% year-over-year drop in sales to 440,745. Sales at the Stellantis NV, the maker of Jeep SUVs and Ram trucks, also dropped as a result of the shortage's impact on inventory. Overall, Stellantis saw an 18% year-over-year decrease to almost 412,000 sales in the fourth quarter, finishing the year with a total of nearly 1.8 million sold vehicles, down 2%.
"2021 had unique challenges driven by the various supply chain issues, but our dealers didn't let that slow them down, and we're proud of their sales performance," Jeff Kommor, Stellantis' U.S. head of sales, said in a statement. "As we head into the new year, demand for our vehicles continues to be strong and our inventory is improving. We anticipate a continuation of the robust demand and sales volumes into 2022 with our existing and new products."
Ford Motor Co., which reports its sales Wednesday, had sold 1.7 million vehicles in the U.S. through November, which was down 5.6% year-over-year. It would need to have sold a significant 600,000 vehicles in December to surpass Toyota. Ford shares closed up 11.7% on Tuesday after it said it was doubling production of the F-150 Lightning electric pickup truck.
Other foreign-owned automakers, however, managed to improve on the pandemic-struck 2020, despite '21's supply constraints: Honda Motor Co. Ltd. sold nearly 1.5 million vehicles, up 9%, last year in the United States. Hyundai Motor Co. sold more than 738,000 vehicles, up 19%. Subaru Corp.'s sales, however, dropped 4.6% to almost 584,000. Worldwide, Tesla Inc. delivered 936,000 vehicles, an increase of 87% year-over-year.
The year of chip woes
Last year started out with strong demand that led to record sales at the start of the year, but that quickly ended when automakers found themselves without semiconductors as a result of pandemic supply chain issues, increased demand from the consumer electronics industry and at least two fires at chip fabricators abroad. The small microchips found throughout a vehicle from the heated seats to the infotainment system led automakers to slash production, resulting in millions of lost vehicles and revenues.
Vehicle prices rose, but demand remained. People returned to work and had additional money in their pocket from federal pandemic relief funds and limited recreational opportunities. Experts believe sales could've reached pre-pandemic levels of 17 million had the vehicles been there to sell.
"Which is pretty amazing considering we are still in a pandemic," Caldwell said. "But the economy has been strong, the job market has been strong, housing prices have been strong, so all of that really helped."
That means there's possibly as many as 2 million Americans who would've bought a new car last year, but didn't, Brinley said.
"That's just a big number to pull out of a market," she said. "The decline in sales in December wasn't necessarily as bad November. That signals that inventory levels may be at least stabilizing. 2022 won't have a lot more inventory, but some instability is probably going to ease up."
It's not just chips, though. Automakers still have to contend with a labor shortage, supply constraints on other key products, including steel, and parts delivery issues in 2022. Still, GM executives anticipate inventory levels will recover in '22.
"Consumers want to drive as much as before the pandemic, based on recent high levels of vehicle usage," said Elaine Buckberg, GM chief economist, in a statement. "High vehicle usage and deferred sales mean pent up demand for new vehicles in the millions and building. That pent up demand will support sales as vehicle supply improves."
Jill Williams, 43, of Jackson was in need of a replacement for the '04 Jeep Grand Cherokee she was driving that was "about ready to fall apart," she said. She went out the weekend after Thanksgiving — only to find almost every new car in Jackson had been bought on Black Friday. She was interested in a Ford Edge, but there wasn't one in a 50-mile radius.
"I couldn't believe it," she said. "I talked to colleagues at work and said I was looking at new cars. They said, 'Yeah, good luck!' I thought, 'What? OK, I might not get the color I want.' But you literally can't buy a new car."
She did find a single new Grand Cherokee in Jackson to buy. The price was about the same with her employee discount as a one-year-old used Ford Edge.
"They were trying to talk me into that," she said. "We were like, 'No, we would rather wait for a new car than buy a used one for the same price.'"
In the fourth quarter, the average monthly payment for new vehicles is expected to have reached $636 — the highest level on record at Edmunds. That's a 9.5% increase year-over-year.
Brian Wheeler, 39, of Rochester's monthly lease went up slightly when he turned in his Grand Cherokee for a Ram pickup truck two weeks ago.
"It was kind of expected given the inventory levels, but it wasn't too much of an increase," said Wheeler, an auto supplier consultant. "It didn't scare me away."
He was able to drive the new vehicle off the lot, a sign that inventory levels may be improving: "We went out and talked to a new dealer," he said, "and it worked out for us."
Dealers made profit
In 2021, dealers adapted to the shortage of new cars by encouraging customers to order vehicles sometimes months in advance and obtaining used cars to sell. Although inventories are starting to improve, dealers still expect they'll need more used vehicles to make up for the lack of stock. Getting those vehicles is increasingly more difficult.
"A lot of us new car dealers turned into used car dealers that sometimes sell new cars, which added to the headache," said Dmitry Agapitov, sales manager of Northwood Chevrolet and Hyundai dealerships in Eureka, California.
"As far as used buying ... it's still pretty crazy as far what certain things go for. And a lot of dealers overpaying for inventory. You run into situations where you know a certain one-year-old used vehicle it's worth more ... than a new vehicle."
The dealerships, which sold more used vehicles than new last year, are still low on new inventory, especially on the Chevy side with just eight vehicles on the ground and three years ago there would have been about 70. But even though volume isn't there, the profits per sale are.
The low volume situation, however, is improving — at least for some. GM noted in its sales release that dealer inventory, including vehicles on their way to dealers, was 128,757 units at the end of the third quarter and 199,662 at the end of the fourth. The automaker parked thousands of vehicles awaiting chips throughout the year and has "made tremendous progress on completing and shipping vehicles in fourth quarter," GM spokesman David Caldwell said in a statement. Caldwell declined to share specific numbers "other than to say the quantity of these has greatly reduced in recent weeks."
Inventory at Matthews-Hargreaves Chevrolet in Royal Oak is better now than it has been "in quite awhile," General Manager Walt Tutak said: "We have over like 150 units now. We were down to like maybe 10 or 20 at one time."
Jim Walen, dealer principal of Chrysler Dodge Jeep Ram of Seattle, has a little over 50 vehicles at the dealership compared to about 70 at his Hyundai of Seattle dealership. He predicts he'll have sold that many and more before the end of the month.
The "Jeep brand is a bright spot" for the dealership, which in recent months has seen the first arrivals of the three-row, Detroit-built Jeep Grand Cherokee L as well as the revived Wagoneer and Grand Wagoneer.
"The people we see want a new car and can afford a new car in a lot of cases," Walen said. "A lot of people who have cars that are totaled have to get a new car. In Seattle, it's really a good economy: There are a lot of people moving in from other areas and around the world. They need transportation."
