Auto Industry News: Record-Setting May, Ford’s New Mini-Truck, GM’s Microchip Maneuver, and Consumers Say “Meh” to EVs

The auto industry celebrates a banner month, with May sales numbers signaling a clear rebound. That’s especially the case for SUVs and trucks — which gain a new recruit in the Ford Maverick. The Blue Oval’s mini-truck stands to heat up the market, attracting younger buyers to a classic segment.

Automakers continue working through COVID-created bottlenecks. We find GM’s most recent solution to be a particularly bold move. And recent survey data shows that despite all the demand for fresh autos, electric vehicles still aren’t gaining much momentum here at home.

All-Time Highs for May

There might be lingering issues with microchip production and supply chain fluidity, but that’s not hindering auto sales, according to recent findings by J.D. Power. The May 2021 joint forecast with LMC Automotive projects May 2021 will be the highest-ever recorded for the month of May. (While we’re almost halfway through June, it’s worth noting that it typically takes until the end of the month to have fresh sales numbers.)

A few key takeaways from the forecast:

• Experts predict retail sales will reach nearly 1.4 million units. That’s a 34% jump compared with May 2020, and a 10.6% increase over May 2019.
• The report expects the seasonally adjusted annualized rate (SAAR) for total new-vehicle sales to be 16.7 million units. That number is up 4.7 million units from 2020, but down 0.7 million units from 2019.
• Consumers are on track to spend $53.1 billion on new vehicles this month — marking the highest on record for any month.
• A healthy mix of trucks and SUVs continue to dominate consumer appetites, accounting for 76.2% of new-vehicle retail sales in May.
• Average new-vehicle prices remain eye-wateringly high, reaching a record $38,255. The previous high for any month was $37,966, set back in December 2020.

Trucks Remain Hot

The data also proves that Americans still love their pickups — particularly the Ford F-150. Car and Driver’s 2021 best-selling cars list sees the Ford F-Series sitting top dog as usual, with more than 203,000 units sold as of April 2021. Chevy and RAM, meanwhile, continue to jockey for second place. Currently, the Bowtie badge comes in at just under 128,000 — trailing RAM’s 149,000. We’re willing to bet the debut of RAM’s fire-breathing 702-hp TRX has something to do with snagging that #2 spot. While it’s outside most consumers’ paygrades, it still works to dazzle audiences. When Chevy’s redesigned 2022 Silverado arrives, expect to see the competition heat up.

Thomas King, president of the data and analytics division at J.D. Power, says the numbers prove the U.S. auto industry is “showing tremendous adaptability in maintaining a record sales pace, despite historically low inventory levels.”

While May is typically a banner month for auto sales, largely because of Memorial Day specials, those incentives aren’t as easy to come by this year thanks to supply constraints. Even so, King says the numbers are still impressively high. However, he cautions June could be a challenge. With sales continually outpacing production, emptier lots may start to hamper the current sales pace.

Aftermarket on Fire

On the aftermarket side, we’re seeing a similar upward trajectory. Data shows the industry is rebounding swiftly. A joint forecast released earlier this week by the Automotive Aftermarket Suppliers Association (AASA) and the Auto Care Association anticipates a “robust” recovery over the next four years.

The report predicts a healthy 11.2% increase in U.S. light-duty automotive aftermarket sales for 2021 alone – totaling $325 billion! Experts expect an additional 5.3% growth for 2022, and upwards of 4% for 2023 and 2024. That would bring the light-duty aftermarket to a staggering $372 billion.

“The aftermarket has once again proved its toughness, and the pandemic affected the aftermarket less severely than other industries and even less than forecasted within our own industry,” said Paul McCarthy, president, and COO, AASA.

SEMA’s Industry Indicators report for May 2021 found similar promising data. Both reports point to the acceleration of the vaccine rollout as an encouraging contributor. Loosening COVID restrictions alongside an aggressive government stimulus are helping to drive the uptick as well, SEMA says.

In addition to broader economic improvements, SEMA’s findings for April 2021 saw:

• Dealers sold a seasonally-adjusted annual rate of 18.51 million vehicles. This marks the strongest month for new vehicle sales since July 2005.
• New car sales climbed 5.3% for the month, while new truck and SUV sales climbed 2.4%.
• SEMA says new vehicle sales are up a whopping 112% from 2019 and up a solid 11.5% over April 2019.

TLDR: Experts agree all signs point to a solid rebound.

Little Pickup, Big Plans: 2022 Ford Maverick Debuts

Ford made headlines this week with its unveiling of the 2022 Maverick. While big news, it’s not necessarily a big model. In fact, this smaller truck is technically Ford’s first compact unit since the original Ranger went by the wayside in 2012. The Maverick will also be the cheapest option in the lineup when it’s released this fall, coming in at $21,490. (Though, it’s only $150 less than the EcoSport, which isn’t a significant jump.)

On a surface level, the manufacturer is marketing the truck towards demographics who may not traditionally gravitate to the segment. For starters, Ford touted the Maverick’s rollout out with a TikTok video walkthrough, complete with emojis and jaunty music sure to catch the attention of younger millennials and Gen Y’ers. Ford is also calling the proprietary bed design, dubbed FLEXBED, a “makerspace,” with spots for drivers to add DIY racks for bikes or watersports gear. (Get it? Because you “make” your own “space.”)

New World, New Truck

Digging deeper on the truck’s build, we find that Ford’s done more than churn out a flashy new compact design.

The Maverick uses a 2.5-liter, four-cylinder standard hybrid engine and continuously variable transmission (CVT). Ford says it’s the “first pickup in America with a standard full-hybrid powertrain – providing better-projected city fuel economy than a Honda Civic.” The model boasts an EPA-estimated 40 mpg city and 500 miles range on a single tank and offers a standard payload of 1,500 lbs and the volume to carry a standard ATV.

Those drivers who want to steer clear of CVTs and hybrid design, can upgrade to a 2.0-liter EcoBoost gas engine delivering 250 horsepower and 277 lb.-ft. of torque with an 8-speed automatic transmission and standard front-wheel drive or available all-wheel drive.

Ford’s certainly targeting younger demographics, as well as women, with the Maverick. But the lower price point and design signal that it’s looking to redefine the compact truck segment — a smart move, judging from recent numbers.

In an April 2021 study by Cox Automotive, consumers cited fuel efficiency and price as the top factors for choosing a compact truck. That same study also found only 31% of consumers are even aware that compact trucks will be launching this year, and only about 20% may consider one in the future. Other models in this category include the Hyundai Santa Cruz, the Volkswagen Tarok Concept, and the Ram 700, currently only available in Latin America. With just a few other compact truck models on the market for 2022, this sees Ford seizing an opportunity to heighten consumer awareness in that market sector.

Lukewarm EV Acceptance

A compact design is a big draw, but what about energy consumption? It’s hard to say combustion-engine autos will ever completely disappear, but the prominence of electric vehicles is gradually bubbling to the surface. The openness to EV technology, though, is almost split in half among consumers.

Pew Research shared a report earlier this month that 47% of U.S. adults support a proposal to phase out the production of gasoline-powered cars and trucks by 2035, while 51% oppose it.

That split falls largely across age demographics, too. Pew says a majority of Gen Z and millennials (56%) are in favor of the 2035 phase-out, while Gen X (45%) and Baby Boomers (38%) aren’t as resounding.

Shoppers in the market for a new ride are even less likely to purchase an EV option, research shows. Roughly 39% of Americans said they’re “somewhat likely” to consider the option. In comparison, 46% say it’s not likely they’ll purchase one at all.

Hesitant Steps Forward

It’s been an uneven road in the U.S. for EV acceptance. However, there have been a couple of high-profile moves in the past year towards transition, including California Gov. Gavin Newsom’s executive order last fall banning in-state sales of new gas-powered vehicles. Since then, other states have followed suit.

Automakers, while aggressively pursuing battery-electric vehicles, are more cautious in their PR, referring to ambitious EV goals as “targets” rather than “promises” – i.e., GM “hopes” to sell only emission-free vehicles by 2035. In an April 2021 interview, GM North America chief Steve Carlisle said the company “intend(s) to win wherever we’re competing and irrespective of propulsion system.” (Emphasis ours.)

Carlisle’s statement echoes one of the chief concerns over the switch to EV cars and trucks: whether they’ll sell or not. Suppose U.S. automakers can’t see themselves turning a profit by turning their entire production line over to electric vehicles. In that case, it’s hard to get excited about the technology.

Is the U.S. even ready?

And that hesitation isn’t just a gut feeling. In a separate study, Pew found the EV market is slow-going in the U.S. (17% compound annual growth rate from 2016-2020), compared to Europe (60%) and China (36%).

Widescale EV adoption in the U.S. is a bit of a chicken-or-the-egg situation, too, since it’s not just manufacturer or consumer sentiment that affects the growth rate. The lack of charging stations across the country also stifles growth. Both coasts have a steady supply of charging outlets in major cities like Boston, New York, Los Angeles, and Seattle. Still, areas like Northern Texas, the Midwest, and the Dakotas have spots where the count is less than 50. The Biden Administration has a provision in its infrastructure proposal for 500,000 charging stations, but that’s not an overnight solution.

Along with charging stations, the Biden Administration is pursuing other EV-related initiatives. Early last week, the White House said the U.S. needed to work with international allies like Canada, Finland, Australia, and Chile to secure minerals for producing EV batteries. The plan is multi-pronged — lessen a dependency on China, improve the global supply and production of EV metals, and ensure new metal production meets stronger environmental standards.

GM Makes A Bold Move

Last week, GM said it planned to build some 2021 pickups and SUVs without the stop-start fuel-saving system that turns an engine off when a vehicle stops moving. The move is a reaction to the ongoing microchip shortage affecting everything from cars and trucks to home appliances and, believe it or not, dog-washing businesses.

The company is removing the feature on select models of the 2021 Chevy Tahoe, Suburban, GMC Yukon and Yukon XL, and Cadillac Escalade and Escalade ESV SUVs. It’s phasing out the function on certain Chevy Silverado and GMC Sierra pickups too.

In a report by Detroit News, GM spokesman Kevin Kelly said the move will enable the company to keep up with high demand for its full-size SUV and pickups while the industry rebounds. Kelly also said most affected vehicles would experience a “minor reduction in fuel economy.” Owners of those vehicles will receive a $50 credit on MSRP.

Some Fans Say Yay

GM scrapping the start-stop feature isn’t devastating news for everyone, as some drivers never liked the feature in the first place. (Some say it drains battery life. Others complain it wears down the starter. Still, others simply find it annoying.)

The ultimate goal with these devices is to help reduce emissions. But what we’ve seen over the years is that sometimes globally-minded plans don’t always sync up with manufacturers’ goals, even with the best intentions. (We’re looking at you, Volkswagen.) On the end-user side, it’s a much less extreme situation. Plenty of blogs and DIY auto geeks present tips and tricks on how drivers can disable their stop-start system without getting a dealer or automaker involved. There are also aftermarket options drivers can buy, branded as auto-stop disablers.

Automakers & Dealers Adapt

GM’s Detroit-based neighbors are honing their own strategies. Ford is diverting resources to its important new releases, like the Bronco and Mach-E. Stellantis is focusing on high-margin pickups and SUVs for its U.S. business. Even with an 11% dip in production due to the shortage, analysts said the company’s profitability was “running ahead of expectations.”

Things aren’t getting easier for dealers, though.

As people start moving back towards normal pre-COVID activities like traveling and car shopping, auto lots are looking thinner in many places across the country. Dealers are looking to the used market while new models trickle in. In some areas, dealers are even cold-calling their customers offering to buy their used vehicles. It’s caused prices to spike both on the new and used front, making the current climate indeed a seller’s market. Perhaps, not as ideal if you’re ready to get out on the road for a summer vacation with some new wheels…

On a national level, the Biden Administration recently pitched a new strategy to improve supply chains, including microchips. The President said he’s appointed a task force to address the issue. Part of that plan dedicates roughly $50 billion in funding for research and production in the U.S. of chips.

Whether we’ll see such homegrown manufacturing is hard to say just yet. But, it does appear that the administration is interested in moving things along. Jared Bernstein, a member of Biden’s Council of Economic Advisers, told Bloomberg that the council was looking to act in “weeks, not months.”

The Engine Block is your one-stop source for any and all auto industry news. Keep an eye on our weekly round-up of enthusiast coverage, product reviews, vehicle spotlights, auto show/expo features, and more. Eyeing up a winch-ready bumper for spring? Check back Wednesday when we break down what you need to know when shopping for this off-road upgrade.