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Ford F-150 pickup trucks for sale at a dealership in Colma, Calif. (Photo: David Paul Morris/Bloomberg via Getty Images)

Carmakers saw gangbuster sales in March, boosted by consumers' $1,400 stimulus checks, but analysts warned of volatility ahead as production troubles mount.

Why it matters: Car prices are rising because of inventory shortages, and as the spring selling season begins and consumer sentiment improves, it could be harder for shoppers to find the vehicle they want at an affordable price.

Driving the news: Automakers reported strong demand in March, and forecasters say they expect overall first-quarter sales to rise about 8 percent over a pandemic-wracked early 2020, Automotive News reported.

  • Toyota, Honda, Kia and Hyundai were among those reporting strong sales in March.
  • "The first quarter ended strong, setting the market up for an incredible spring from a demand perspective," said Jonathan Smoke, chief economist at Cox Automotive.
  • Stimulus payments, tax refunds, vaccination progress and warmer weather are all helping to boost consumer sentiment, he said.
  • "All those things are coming together right now, and the industry would likely be setting all-time sales records if it were not for tight supplies and elevated prices."

What's happening: After two months of factory shutdowns early in the pandemic, the industry is now getting hit with shortages of key components, notably computer chips that power vehicle electronics.

  • The chip shortage has snowballed into a bigger crisis, with multiple factories temporarily closed, said Jessica Caldwell, Edmunds’ executive director of insights.
  • "We’re seeing the industry being hit hard on both sides: Retail customers are being offered fewer choices and paying higher prices, while fleet customers are likely seeing their orders delayed."

By the numbers: New vehicle inventory on sale at dealerships is down by 36% in March 2021 compared with a year ago, according to Edmunds.

  • The average transaction price for new vehicles in March was estimated to be $40,563, versus $38,601 a year ago.
  • Used vehicles sold for an estimated $22,663, on average, up from $20,273 last year.

Trucks and SUVs have been hit the hardest. Although their high profit margins have been a bright spot for automakers during the pandemic, supplies are running low because of the chip shortage.

  • Truck inventory was down by 60% in March compared to a year ago, per Edmunds.
  • The average transaction price for a new full-size pickup is estimated at $54,763 compared to $51,164 a year ago.

The bottom line: It's a basic issue of supply and demand.

Go deeper

Scoop: Biden eyes Russia adviser criticized as soft on Kremlin

Photo: Alexander Shcherbak\TASS via Getty Images

President Biden is considering appointing Matthew Rojansky, head of the Wilson Center's Kennan Institute, as Russia director on the National Security Council, according to a source familiar with the situation.

Why it matters: Rojansky has been praised for his scholarship on Russia and is frequently cited in U.S. media for his expert commentary. But his work has drawn criticism — including in a 2018 open letter from Ukrainian alumni of Kennan that blasted the think tank he runs as an "unwitting tool of Russia’s political interference."

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Annelise Capossela/Axios

  1. Health: Coronavirus cases hold steady at 65,000 per day — CDC declares racism "a serious public health threat" — WHO official: Brazil is dealing with "raging inferno" of a COVID outbreak.
  2. Vaccines: America may be close to hitting a vaccine wall — Pfizer asks FDA to expand COVID vaccine authorization to adolescents — CDC says Johnson & Johnson vaccine supply will drop 80% next week.
  3. Economy: Treasury says over 156 million stimulus payments sent out since March — More government spending expected as IMF projects 6% global GDP growth.
  4. Politics: Supreme Court ends California's coronavirus restrictions on home religious meetings.
  5. World: Iran tightens COVID restrictions amid fourth wave of pandemic.
  6. Variant tracker: Where different strains are spreading.

Maryland lawmakers override Hogan vetoes of police accountability legislation

Marion Gray Hopkins with Coalition of Concerned Mothers speaks during a rally promoting police reform on March 4 in Annapolis, Maryland. Photo: Bonnie Jo Mount/The Washington Post via Getty Images

Maryland's Democratic-controlled legislature on Saturday voted to override Republican Gov. Larry Hogan's vetoes of police accountability legislation.

Why it matters: Maryland is the first state to repeal its Law Enforcement Officers Bill of Rights, the Washington Post notes.