Steel Markets

U.S. Auto Sales Soar in April Despite Chip Shortage

May 4, 2021

U.S. automotive sales were robust in April despite production challenges from the continuing shortage of semiconductor chips. April sales were estimated at a seasonally adjusted annual rate of over 18 million vehicles and may be one of the best months ever, said Cox Automotive. April sales were well over Cox Auto’s forecast of 16.5 million.

Sales volume increased nearly 50% for some auto manufacturers compared to a year ago when the industry was at a low point in the pandemic. On a year-to-date basis, Honda, Hyundai and Mazda are up 45% or more. Volvo sales leapt 63% so far for the year. Demand is expected to remain strong, but consumers will find it harder to locate the perfect vehicle as inventory tightens further from supply chain disruptions.

Inventory is well below year-ago levels at auto dealers and days’ supply for the industry could fall to an unheard-of-low in the mid-30s, said Cox Auto Senior Economist Charlie Chesbrough. The chip shortage has caused rolling production outages and cuts to volume at several OEMs. Ford announced during first-quarter earnings that production in the second quarter will be reduced by 50%.

“There are more whitewater moments ahead for us that we have to navigate,” said Ford CEO Jim Farley. “The semiconductor shortage and the impact to production will get worse before it gets better.”

That sentiment was echoed by Intel Corp. CEO Pat Gelsinger. In an interview with CBS News this week, Gelsinger said it will take several months for the chip shortage to even begin easing. He noted that only 12% of semiconductor manufacturing is still done in the U.S.

“We have a couple of years until we catch up to this surging demand across every aspect of the business,” Gelsinger said.