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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

Trump sues New York Times and his niece over tax report

Former President Trump hosting a boxing match in Hollywood, Florida on Sept. 11. Photo: Chandan Khanna/AFP via Getty Images

Former President Trump filed a $100 million lawsuit against the New York Times and his niece Mary Trump on Tuesday over the news outlet's 2018 reporting on his tax records, the Daily Beast first reported.

Details: The suit, filed in New York's Dutchess County, alleges NYT journalists "engaged in an insidious plot to obtain confidential and highly-sensitive records" and that they "convinced" Mary Trump to "smuggle records out of her attorney's office and turn them over to The Times."

Brazil's health minister tests positive for COVID during UN summit in N.Y.

President of Brazil Jair Bolsonaro (L) and Health Minister Marcelo Queiroga in Brasilia, Brazil, in May. Photo: Andressa Anholete/Getty Images

Brazil's Health Minister Marcelo Queirog has tested positive for COVID-19 while in New York City for the United Nations General Assembly (UNGA), he confirmed Tuesday night.

Why it matters: Hours earlier, Queirog had accompanied Brazilian President Jair Bolsonaro to the UNGA. The Biden administration expressed concern last week that the gathering of world leaders could become a coronavirus "superspreader event."

House passes government funding, debt ceiling bill

Speaker Nancy Pelosi. Photo by Kevin Dietsch/Getty Images

The House passed a bill on Tuesday to fund the government through early December, along with a measure to raise the debt ceiling through December 2022.

Why it matters: The stopgap measure, which needs to be passed to avoid a government shutdown when funding expires on Sept. 30, faces a difficult journey in the Senate where at least ten Republicans would need to vote in favor.