LANSING, Mich. — Car sales in Michigan are expected to remain far lower than they were before the pandemic, and prices for the consumer will likely remain high as dealerships face supply chain issues.
“It has really pushed sales and production of vehicles down dramatically. The last two years and even again this year,” said Glenn Stevens, the executive director of MICHauto.
Annual U.S. car sales dropped from around 17 million vehicles pre-pandemic to 15.1 million vehicles in 2021. Even though they are predicted to increase to 15.5 million sales this year, Stevens predicts a tough year for the industry.
“Transaction prices for vehicles have climbed pretty dramatically over the past year, I believe the average transaction price for a vehicle now is $45,000, which is quite remarkable. So, it will impact the dealerships, and it certainly impacts the consumers,” he said.
Stevens said that the reasons are logistical issues with shipping containers, a shortage of magnesium, and supply chain problems.
“The supply chain issues, as it pertains to microchips or semiconductors, that has been the biggest issue that has impacted the industry,” Stevens said.
Those microchips are being used for a variety of consumer products like play stations, refrigerators, and vehicles.
“There have been tremendous cutbacks in production in Michigan alone with regards to trucks and SUVs and cars that are built in Michigan, because those components have not been available," he said. "Therefore, car availability will not be as great as people would still like it to be.
Stevens pointed out that the dealership network is very strong, and he is optimistic that sales will go back up closer to 17 million in 2023 and 2024.
“The auto industry is the signature industry in Michigan. And it is one of the largest economic drivers of the industry and the economy here in Michigan… Over 1 million jobs in Michigan, which is about 20 percent of the workforce in Michigan, is directly tied to our auto industry,” he said.
As technology advances, there could be an opportunity for growth in the knowledge-based economy for jobs.
“We want to have more research, more technology, more testing and more innovation going on in Michigan. And that's really going to depend on the talent us how the Michigan having the right talent for those knowledge-based economy jobs in the auto industry, the mobility industry in the tech industry,” Stevens said.
Electric vehicles are projected to make up 20 percent of the market by 2030 and hopes that the production of electric vehicles in Michigan increases as well, he said. As of right now, the Ford F-150 Lightning and the GMC Hummer are produced in Michigan. He further stated that some of the 12 assembly plants in Michigan will be electrified very soon.
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