The top title in American auto sales last year ultimately came down to the almighty chip.
In a year where semiconductor shortages have vexed the industry, triggering production stoppages amid robust demand, Toyota and its stockpile of computer chips managed to snap General Motors' 90-year run as the nation's top-selling automaker. It's the first time a foreign manufacturer has claimed the top slot, an unexpected (and analysts say, probably short-lived) byproduct of the topsy-turvy pandemic auto market.
GM's U.S. sales hit 2.2 million in 2021, a 13% decline from the previous year that the Detroit-based auto giant attributed to supply chain struggles, namely the scarcity of computer chips. It's triggered shutdowns of factories and kept inventories at historically thin levels. The average gas-powered vehicle has roughly 1,000 chips, while electric vehicles can have twice as many.
Though GM had been the U.S. leader since the Great Depression, Toyota was better positioned last year to weather the supply chain challenges: The Japanese auto giant loaded up on chips and other key parts early on, allowing it to maintain production levels when its competitors could not. Americans bought 2.3 million Corollas, Camrys and other Toyotas in 2021, a 10% increase from the year before.
Cox Automotive estimates that nearly 15 million cars were sold in the United States last year, up 3.5% from 2020 but well below pre-pandemic levels. While consumer demand held up throughout the year, "inventory did not," the company said in its end-of-year forecast.
"In the second half of 2021, having the right product, in the right color and trim, in the right metro market was a challenge for all automakers," Cox said in a news release. "Those with smaller dealer networks, better supply chains, and the right portfolio of products benefited the most - Toyota, Hyundai, Kia, to name a few."
Industry experts don't expect the shift to be permanent, with many projecting GM will reclaim the top spot once supply chains recover. That's the thinking at Toyota, too: On Tuesday, the company's senior vice president of automotive operations in North America told reporters that beating out GM is "not our goal, nor do we see it as sustainable."
But the change nonetheless reflects the unpredictable nature of the auto market, which along with formidable challenges brought on by the pandemic is also undergoing a major transformation as the push toward electric vehicles rewrites the rules of engagement. Tesla's more than $1 trillion market capitalization is currently worth more than that of GM, Toyota, Ford and Volkswagen combined, even though it has just a fraction of their output. The EV leader said it delivered 936,000 cars in 2021 despite the chip shortage, an 87% increase from the year before.
David Caldwell, GM's director of finance and sales communications, declined to comment on the dethroning by Toyota but told The Washington Post in an email that the company's strategy in the face of the semiconductor shortage was to focus on its highest-demand models. He said the company expects to see growth in the coming year, bolstered by deliveries of hotly anticipated EVs.
GM is aiming to sell only zero-emission cars and trucks by 2035, and has committed to spending $35 billion to build up its electric and autonomous vehicle infrastructure as it attempts to position itself as the automaker of the future. Toyota, an early leader in electrification, says it will spend $17 billion to bring 30 EV models to market by 2030.
"Toyota should get credit for a successful year in which they are now at the top of the auto mountain," Dan Ives, managing director at Wedbush Securities, told The Post in an email. "However we believe GM will retake the lead in 2022, especially with its massive EV ambitions going after the green tidal wave."
The chip shortage dampened sales of GM's top-selling vehicle, the Chevrolet Silverado, which dropped 10.8% in 2021 to less than 530,000 units. And sales of its most popular electric car, the Chevrolet Bolt, took a hit after more than 140,000 units were recalled due to a defect that could cause the lithium-ion batteries to explode.
But the company has big plans for 2022, including the release of the electric Hummer and Cadillac and the unveiling of the electric Silverado, Steve Carlisle, GM's executive vice president, said Tuesday in a news release.
"In 2022, we plan to take advantage of the strong economy and anticipated improved semiconductor supplies to grow our sales and share," Carlisle said. "We will also further strengthen our industry leadership in trucks and begin our drive to EV leadership in North America."
Ford Motor Co., another Big Three automaker, reported Wednesday that its U.S. sales declined 6.8% last year to about 1.9 million cars and trucks. But the company touted its best EV sales in 2021, putting it second to Tesla in the EV market. And it still claimed the nation's most popular vehicle - the F-series trucks, including the F-150 - for the 40th consecutive year.
The gradual easing of supply chain bottlenecks is poised to lift sales this year, but pent-up consumer demand is likely to keep inventory levels lean, Thomas King, J.D. Power's president of data and analytics, said in the company's most recent forecast. The average price for a new vehicle hit a record high of more than $45,700 in December, according to J.D. Power, up 20% from last year.
"2022 is likely to be another year of record setting pricing and profitability," King said.