US auto sales remained robust in 1Q21 (see Exhibit below), while our checks around Houston suggest car lot inventory has notably diminished and used vehicle values remain robust (2nd Exhibit). They are likely to stay that way in the near-to-medium term.
Source: Bloomberg, C-MACC Analysis, April 2021
The used auto price data in the exhibit below is indicative of how habits have changed during the pandemic. New car availability is limited in some areas because of supply chain disruptions and high demand, but the jump in used car prices show how much consumer behavior has changed – with both the rise in home delivery (especially for food) and some consumers electing to commute via car rather than public transport because of COVID related fears. These factors have increased used car demand, and we have not seen the supply side reaction as people hold on to vehicles that may have been driven a fraction of the normal time over the last 12 months. Less rational decisions are being made here – as an example, it is hard to justify owning two cars, even if there are two drivers if driving is greatly reduced. The incremental cost of using Uber or Lyft for the few occasions when two journeys are concurrent is much lower than the full cost of car ownership. Even in America, we would expect to see a gradual reduction in the average family car ownership if work from home becomes a more normal practice post COVID
Source: Bloomberg, C-MACC Analysis, April 2021
