b"Seller's Market recognizing the higher profitabilityAnother significant development in carrying tighter inventories. in the automotive industry is in-Nevertheless, he believes that ancreasing demand for battery-pow-them to full-size pickups and SUVsoverbuild of 1 million to 1.5 millionered electric vehicles. He said bat-at the expense of sedans and otherunits still is needed to adequatelytery EV sales were only 1% of the less popular and less profitable ve- replenish dealers, which he doesnttotal a couple of years ago but now hicles. He expects that trend to con- expect before 2024. are approaching 6%. Continued tinue for the remainder of this yeargrowth is expected over the next and likely into next year as well untilSignificant Developments two years, he said, due in part to the semiconductor flow returns to nor- In the meantime, Anderson re- United States passage of the Infla-mal levels. ports that vehicle sellers and buy- tion Reduction Act, which among Prior to the COVID-19 lockdowns,ers are benefiting from a trend to- other things seeks to incentivize the he noted, U.S. vehicle dealers gen- ward digital retailing in which, foradoption of EVs.erally carried roughly 3.5 to 4 millionexample, sellers tell buyers that theyOn the supply side, Anderson units of inventory, which translateddont have a desired vehicle todaycontinues to see heavy investment to about 70 days of supply. but that they can order it for deliv- in battery EVs.With lockdowns in place, how- ery in two or three months. SellersOEMs are gearing up for their ever, you couldnt build vehicles,like this arrangement, he said, be- long-term electrification plans and Andersonsaid.And(with)thecause they can acquire a customerhow those products are going to fit semiconductor shortage, we basi- even if the vehicle that the customerin their portfolios, he said.cally wiped out 3 million units of in- wants isnt available right away. InAt present, Anderson said some ventory. So almost 75% of the inven- addition, he pointed out that OEMsOEMs are using multi-energy tory has been depleted and has notselling this way usually dont need toplatforms to produce vehicles with been replenished. incentivize as heavily as in the past.internal combustion engines, as Even when semiconductor sup- As for customers, he said they canwell as batteries. Most investment, ply normalizes, he doesnt expectorder vehicles with the exact speci- however, has been directed toward dealer inventory to get back to 4fications they want, which is proba- all-electric skateboard architec-million units. bly a reason for early indications thattures with a flat floor, he said.OEMshavechangedtheircustomer satisfaction with digital re- With the battery, you dont need perspective,Andersonsaid,tailing is increasing. an engine, transmission, oil pans S&P Global MobilityThe graph shows that a rapid recovery to a pre-pandemic level is not expected. Semiconductor constraints through 2023 limit forecast figures for North American production, though the situation has been improving.14DECEMBER 2022 Yearend.indd 14 11/15/22 12:02 PM"