F&I and Showroom, NADA 2021

DEVELOPMENTS 8 F I and Showroom NADA 2021 November 2020 the average interest rate on new vehicle financing was 44 down about 90 basis points compared to the same time last year At the macro level real GDP rebounded at an annualized rate of 334 in Q3 of 2020 following an annualized 314 contraction in Q2 of 2020 NADA anticipates GDP will decline by around 4 for 2020 with 4 growth in 2021 In the labor market unemployment peaked in April at 147 and has fallen each month since as workers have returned to their jobs or left the labor market At the end of November the unemployment rate was 67 and is expected to continue to fall throughout 2021 as COVID 19 vaccines are administered throughout the country and more Americans return to work Moving into 2021 NADA anticipates new vehicle sales of 155 million units an increase of 72 from 2020 Headwinds for the vehicle market in 2021 include continued increases in COVID 19 cases which could lead to production disruptions along the vehicle supply chain a global shortage of semiconductor microchips used in many facets of auto production and tight inventory on dealer lots particularly for pickup trucks Alternatively tailwinds for 2021 include a potential economic boom in the second half of the year once a coronavirus vaccination is widely available and Americans are able to return to work continued consumer preferences for personal vehicle ownership over rideshare services and public transportation low interest rates and a gradual return of fleet demand for new vehicles While the coronavirus was something that no one in the auto industry expected the industry rallied and adapted to the new state of play said Manzi Looking forward we are optimistic about the continued recovery of the new light vehicle market ANALYSIS OF 2020 AUTO SALES 2021 SALES FORECAST continued from page 6 FLEXIBILITY IN 2021 RECOMMENDED TO ADAPT TO MARKET UNCERTAINTIES EFG Companies EFG Companies foresees several market uncertainties in the first half of 2021 for the retail automotive and F I industries due in part to the pandemic impacted economy consumer confidence the unemployment rate and a new incoming government administration Company leaders recommend that dealer principals agents and lenders approach the year with a flexible strategy designed to maximize revenue compliance and employee effectiveness According to The Conference Board economic forecast issued December 9th several factors will impact the US economy in 2021 including scale of the ongoing COVID 19 resurgence and any resulting lockdowns status of labor markets and household consumption size and timing of additional fiscal stimulus timing and availability of a COVID 19 vaccine and degree to which volatility in the US political transition affects consumer and business confidence While there are many factors at play smart business own GETTYIMAGES COM MARCHMEENA29 continued on page 10