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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

Austria approves COVID vaccine mandate for adults

A vaccination center installed at the Barbara Chapel of St Stephen's Cathedral in Vienna, Austria. Photo: Alex Halada/AFP via Getty Images

Austria's lower house of parliament voted on Thursday in favor of making COVID-19 vaccinations compulsory for most adults from next month.

Why it matters: The bill is expected to soon pass the upper house and be signed by President Alexander Van der Bellen in order for the law to take effect Feb. 1, per Reuters. It'd make Austria the first EU nation to impose such a sweeping mandate.

Hope King, author of Closer
Updated 3 hours ago - Economy & Business

Peloton pumps its brakes

Data: FactSet; Chart: Axios Visuals

Peloton’s popularity is falling as swiftly as it shot up.

Why it matters: Not all pandemic habits stick around. Peloton's trajectory over the past two years exemplifies how challenging it's been for companies to gauge shifts in consumer demand — particularly in sectors heavily altered by the pandemic.

Mitch McConnell's remarks on Black voters raise ire

Senate Minority Leader Mitch McConnell during a Capitol Hill news conference earlier this year. Photo: Anna Moneymaker/Getty Images

Senate Minority Leader Mitch McConnell (R-Ky.) has been widely criticized for comments he made this week about Black American voters.

Driving the news: When asked by a reporter Wednesday about concerns among voters of color, McConnell said "the concern is misplaced, because if you look at the statistics, Black American voters are voting in just as high a percentage as Americans."