Hyundai and Kia Experience Seventh Consecutive Month of Sales Growth

Hyundai and Kia had an impressive month in February 2021, setting a record for sales with 57,044 and 60,859 vehicles respectively. This was due to improving inventory and higher retail demand, as well as the microchip shortage which caused automakers to prioritize more profitable retail volume. Other automakers, such as Toyota Motor Corp., Honda Motor Co., Subaru and Mazda, also reported higher sales for the month. The U.S. light-vehicle sales are projected to rise 3.9 percent to 7.2 percent in February, with fleet shipments across the industry expected to come in at 209,200, up 54 percent from February 2022. Despite this, the retail volume is estimated to be flat and pent-up demand is still strong due to inventory shortages. The seasonally adjusted annual rate of sales is projected to come in at 14.4 million to 14.6 million vehicles, which is down from January’s 16.21 million rate but a sharp rise from February 2022’s 13.96 million pace.

Inventory levels are slowly stabilizing, with Cox Automotive estimating industry stockpiles rose 700,000 units, or 66 percent, from a year earlier, to about 1.7 million vehicles in February. Honda, Toyota, Lexus, BMW, Subaru, Kia, Porsche and Land Rover had the tightest supplies last month, while Jeep, Volvo, Buick, Chrysler, Dodge, Infiniti and Ram had the most abundant stockpiles. J.D. Power-LMC Automotive estimates retail inventory stood at 1.22 million units in February compared to 830,000 a year earlier and 2.17 million in February 2021.

New-vehicle transaction prices continue to rise, with the average price reaching a February record of $46,229, a 4.8 percent increase from a year earlier, J.D. Power-LMC Automotive said. The average incentive per new vehicle last month was expected to reach $1,335, up from $1,275 in February 2022, J.D. Power said. Incentive spending as a percentage of average MSRP was expected to fall to 2.8 percent, J.D. Power said, down 0.1 percentage point from February 2022. TrueCar estimates incentives fell by $135 from February 2022 to $1,522 last month, but rose 9 percent from January’s $1,396 level.

Overall, February was a successful month for automakers, with Hyundai and Kia setting a record for sales and other automakers reporting higher sales. Despite the higher sales, pent-up demand still remains strong due to inventory shortages and new-vehicle transaction prices continue to rise. The seasonally adjusted annual rate of sales is projected to come in at 14.4 million to 14.6 million vehicles, down from January’s 16.21 million rate but a sharp rise from February 2022’s 13.96 million pace. Inventory levels are slowly stabilizing, with industry stockpiles rising to about 1.7 million vehicles in February. The average incentive per new vehicle last month was expected to reach $1,335, up from $1,275 in February 2022, while the average discount on cars was expected to total $1,320, up $9 from a year earlier. With improving inventory and higher retail demand, automakers appear to be on track for a successful 2021.