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Auto analysts: New car sales run red hot, then cold, in year like no other

computer chip
Mike Perini
/
Closeup of installed smart phone computer chip (the silicon wafer is inside)

New car sales in 2020 came in with a roar like the proverbial lion — and ended up sputtering like an engine with bad spark plugs.

Auto analyst Michelle Krebs of Autotrader said her firm's first rosy sales forecast had to be revised several times because of the extensiveness and tenacity of a global shortage of computer chips.

"The year started out like gangbusters," said Krebs. "We had sales rates like we never saw. We had always suspected that there might be some kind of supply chain disruption. We never thought it was this tiny little computer chip that would wreak havoc on the industry."

Demand for computer chips has skyrocketed, as manufacturers place them in all sorts of devices that never had them before, from self-sanitizing water bottles to ATM cards — and that ubiquity happened at the same time that natural disasters and COVID-19 outbreaks shut factories both in the U.S. and abroad that produce and package computer chips.

Krebs said chips are a little less scarce now, and auto production and inventories are up a little, too. "It's nowhere near what it needs to be, but it's going in the right direction," she said.

Krebs says the number of new car sales by year's end will be just shy of 15 million, and next year should reach 16 million, but because of scarcity and high demand, new car prices will likely remain high, with incentives a pre-pandemic memory.

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