The auto business in America has faced unique hurdles over the last year and a half. Demand for cars rose after many people could not visit dealerships due to the COVID-19 pandemic. At the same time, car manufacturers were not able to supply enough vehicles, primarily because of a shortage of the chips used in cars, SUVs, crossover, and pickups.
The shortage has been a mixed blessing for car companies. Their revenue has been constrained. However, they are able to get higher prices for the cars they sell, and costly incentives have nearly disappeared.
From 2015 to 2017, GM sold over three million cars and light trucks in the U.S. That fell to 2.2 million last year. It will be a challenge for GM’s unit sales to top two million this year. Through the first six months, the number was 1,095,013.
GM has hit its lowest unit sales level in memory just as it starts to spend billions of dollars to build an EV fleet. Most large manufacturers say more than half of their fleets will be all electric by the end of the decade. It remains to be seen whether consumer demand will support that. If it does not, car companies will have wasted huge sums of money.
Another challenge GM faces is that Americans keep their cars much longer than they did a decade ago. The average age of a car on the road topped 12 years for the first time last year. Among the reasons are that cars last longer, and that new cars are either very expensive or not available at all.
GMs sales in America could drop below two million cars and light trucks in 2022. And, there is no guarantee the number will recover much soon.
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