Automotive Demand Index Strong As The Stimulus Kicks In

Automotive Demand Index Strong As The Stimulus Kicks In

TechnoMetrica's Auto Demand Index shows good momentum and forecasts new car sales will be strong in the coming months.

Robert Austin
Robert Austin

The TechnoMetrica Auto Demand Index (ADI) increased by 7-points, or 3.5 percent, to 185 in April, for the second month in a row.  

The average ADI for the fourteen months since the pandemic began is 167, compared to 185 this month.

What Is ADI?

TechnoMetrica Market Intelligence developed the Auto Demand Index, or ADI, as a way to measure the intent of consumers to buy or lease a new vehicle within the next six months.

Each month we conduct a national survey with 1,200 adult Americans and ask the critical question, "How likely is it that you will buy or lease a new vehicle within the next six months?"  Based on the responses to the question, we compute an index score. For example, in our April survey, 15.1% of respondents said they are very likely to buy or lease a new vehicle, and another 15.5% said they are somewhat likely to do so.  We index these purchase intent levels to our anchor -- i.e., vehicle purchase intent level of 16.5% in the first quarter of 2007 to 100.

TechnoMetrica has been tracking auto demand since 2007, and the data is a good predictor of what will happen in the future.  The index's valuable intelligence can help OEMs and their suppliers plan production and incentive programs and take proactive measures.

From March 31 to April 3, TechnoMetrica polled 1,436 adults online using a sample taken from its online panel network. The credibility Interval for the survey is +/- 2.8 points.


Despite a slight drop in April's momentum, our momentum indicator for auto demand remains strong.   Since we began tracking in February 2007, the indicator reached its all-time highs in December and January at 15.6.

We use the difference between the 6-month exponential moving average (fast average) and the twelve-month exponential moving average (slow average) as our momentum indicator.

The most recent available sales data indicate that the seasonally adjusted annual rate was 17.7 million in March, the highest level since September 2019.

U.S. Bureau of Economic Analysis, Light Weight Vehicle Sales: Autos and Light Trucks [ALTSALES], retrieved from FRED, Federal Reserve Bank of St. Louis;, April 22, 2021.

Sizing Up The Current Environment

As the economy returns to normalcy, consumer spending will increase, resulting in an overall GDP recovery.

At TechnoMetrica, we believe that as we move closer to herd immunity, the economy is getting ready for a significant acceleration.  We anticipate that the rebound will be decisive, allowing us to put the pandemic's dark days behind us. Numerous prominent economists share our enthusiasm.  "A rising tide lifts all boats," and a stronger economy benefits everyone.

According to our TIPP Economic Optimism Index, released earlier this month by Investor's Business Daily, its sponsor, consumer morale is up for the fourth month in a row, a leading nationwide survey on consumer confidence.  After reaching 55.4 last month, the index increased another 1.8 percent to 56.4, drawing closer to the pre-COVID reading of 59.8 in February 2020.

The average for the fourteen months since the pandemic began is 50.2 compared to April's reading of 55.4.

Hot Demographic Segments

The hot demographic segments are parents, households with incomes $100K+, those in the 25 to 44 age group, and urban households.  Regionally the West is most bullish, followed by the Northeast and the South.  The Midwest finishes last. Urban areas are hot, suburbs are moderate, and rural regions are cool.

Time Frame

The average purchase lead time shrank even more to 98 days.  The narrowing time frame reflects the momentum of the market and consumers' eagerness to buy a new vehicle.  The chart below presents the historical data for the past-16 months. Note the decreasing trend line.

Luxury vs. Non-Luxury

The luxury market is booming.  For the third consecutive month, the luxury segment's share increased.  We anticipate a ratio of approximately 44 percent luxury to 56 percent non-luxury sales.

We expect the sales ratio between Asian, European, and American OEMs at 33%, 32%, and 34%, respectively, which may be the closest we have ever seen the market share in this country split equally among the vehicle manufactures of these three global areas.

Hot Vehicle Types

Mid-size (17%), Compact (17%), and luxury SUV (13%) are the most popular, followed by small SUV (12%) and sub-compact (12%).

Hottest Brands

We see a three-way tussle between Ford, Toyota, and Chevrolet for the non-luxury segment. BMW, Audi, and Tesla lead the luxury segment.

Bob Austin's View

Americans continue to express their optimism through the purchase of new cars.

While expressing increasing concerns about global warming and the environment, their desire to drive larger SUVs has not diminished.

Ford, with its new electric Mustang Mach E, and GM with its new electric Hummer EV, may find themselves parked exactly at the intersection of environmentalism and SUV practicality!  It will be interesting to watch.

Another factor that can positively affect car sales is the "return to the suburbs," precipitated by being trapped indoors with small children during the COVID lockdown for the past year.  While young families had been getting more urban over the past decade, the lockdown has shown them that, particularly for young families, it is convenient to have green space outside that you can call your own.

Raghavan Mayur's View

TechnoMetrica's auto demand forecast was accurate, as evidenced by actual auto sales.  

We expect that auto sales will likely reach an all-time high in the coming months, surpassing the previous high of 17.9 million units annual rate set in September 2017.

The broader economy is improving, which will have a positive effect on the automotive segment.  As the pandemic situation improves, a significant increase in demand is reasonable.

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TIPP Takes

China Rebukes Australia For "Cold War Mentality" After Belt And Road Accords Cancelled

  • Australia said that it canceled two accords between Victoria state and China on the Belt and Road Initiative because they were out of line with the federal government's foreign policy, which sees a "free and open Indo Pacific" as a key goal.
  • A Chinese foreign ministry spokesman responded by urging Australia to abandon its "Cold War mentality and ideological bias" and "immediately correct its mistakes and change course."
  • According to Australian Prime Minister Scott Morrison, the accords were canceled because his federal government did not want other levels of government to enter into agreements that contradicted Australia's foreign policy.
  • Under a new process, Australian states must consult with the foreign minister before signing agreements with other nations.
  • Diplomatic relations between Australia and China have worsened since Canberra called for an international inquiry into the origins of the coronavirus, prompting trade reprisals from Beijing.
  • Fitch Ratings said economic co-dependencies between Australia and China would restrain Beijing from targeting major exports such as iron ore.

U.N.: 3 Million Facing Hunger In Coup-Hit Myanmar

  • Food aid reliance is set to triple to 3.4 million people in Myanmar within months, the World Food Program (WFP) has warned, as the country reels from a coup, endemic poverty, and the pandemic.
  • Appealing for $106 million in extra funding, the WFP said families were already "skipping meals" in the ten poorest suburbs of Yangon, Myanmar's largest city.
  • Prices for staples — such as rice and cooking oil — had risen nationwide. The cost of fuel is estimated to have increased by "roughly 30% nationwide."

Syrian Government Reportedly Building Tribal Force In Hasakah

  • Hasakah province is currently under the control of the U.S.-backed Syrian Democratic Forces (SDF).
  • The Syrian government is seeking to expand its influence and strengthen its military presence by relying on the Arab tribes in Hasakah province.
  • The Syrian government's alleged efforts to establish a tribal army within the Syrian Democratic Forces' areas in Hasakah are backed by Russia and Iran, both of which place a premium on strategic regions in northeastern Syria rich in agricultural and oil resources.
  • By recruiting tribe members, Iran and Russia aim to build a tribal army to control the province in the event of a sudden U.S. withdrawal.

Egypt To Manufacture Russia's Coronavirus Vaccine Sputnik V Locally

  • Egypt's pharmaceutical company Minapharm and the Russian Direct Investment Fund (RDIF) agreed to manufacture over 40 million doses of Russia's Sputnik V coronavirus vaccine in Cairo.
  • It will initially supply over 40 million doses a year for global distribution through its biotech facility in Cairo.
  • The Russian vaccine has been registered in 61 countries to cover more than three billion people.
  • Sputnik V will be Egypt's second locally manufactured vaccine. Earlier, Egypt signed a deal to locally produce the Chinese Sinovac vaccine through its state-owned vaccine marker Vacsera, which officials say can make 80 million doses annually.


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