Cox downgrades new car forecast amid supply issues

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ox Automotive has downgraded its new car forecast for the rest of 2021 due to supply issues, despite consumer demand being higher than expected. The revised forecast would see the year’s third quarter end on 522,425 new car transactions, down 17.7% on the 2000-2019 average.

The full 2021 forecast has also been adjusted downwards by 2.48% versus Cox Automotive ‘s April forecast. This scenario assumes that there will still be a modest demand throughout the summer, however supply issues are likely to persist.

Global car supply has dropped significantly during the pandemic due to manufacturers trying to adjust to new ways of working, fix supply chains and source materials for new car production.

Cox’s Philip Nothard said: “Arguably, the used car market has never had this much influence on the industry as a whole. Buyers are flocking towards used cars with money to splash after a largely inactive year, and dealers are enjoying an uplift in activity as a result. But this can only go on for so long, as supply isn’t there to meet demand.”

The effects of the lack of new car supply are being felt most by fleet and rental market companies who are extending contracts and utilising vehicles they already have rather than their typical vehicle replacement processes.

Nothard added: “We don’t expect new car supply shortages to be resolved until 2022, so the knock-on effects in the used car market will be around for some time yet. However, while trade price realignments are expected, we are unlikely to see a flood of vehicles into the used market, so the prospect of a significant drop in values is small.”