Most automakers are seeing stronger US new car sales as dealer inventories are replenished by higher production volumes, but those gains are being muted by high sticker prices and surging financing costs.
(Bloomberg) — Most automakers are seeing stronger US new car sales as dealer inventories are replenished by higher production volumes, but those gains are being muted by high sticker prices and surging financing costs.
Sales of new cars last month likely rose by as much as 7.3%, according to a forecast by J.D. Power and LMC Automotive. General Motors Co., Honda Motor Co. and Hyundai Motor Co. posted gains in the first quarter, but Toyota Motor Corp. saw its volumes decline. Other major automakers, including Nissan Motor Co. and Stellantis NV, which owns the Jeep and Ram brands, also will report their latest US sales on Monday.
Ford Motor Co. is expected to release its US sales on Tuesday and Tesla Inc., which provides global numbers, reported its results on Sunday.
Read more: Tesla Shares Decline After Price Cuts Barely Boost Deliveries
The semiconductor shortage that emptied dealer lots in recent years is fading as inventories rose 70% since this time last year, according to Cox. Cars are now sitting on dealer lots an average of 34 days before being sold. That’s up from 24 days a year ago, data from automotive researcher Edmunds.com show. With average new car prices of nearly $50,000, Edmunds expects sales this quarter to decrease 1.8% compared to the fourth quarter of 2022.
Dealers are apprehensive about rising interest rates, which have replaced inventory shortages and the economy as the top problems, a Cox survey of auto retailers showed. Auto loan payments are now $784 a month on average, up about $177 a month since March 2020 when the pandemic began.
“I still believe there is pent-up demand in the marketplace,” Randy Parker, chief executive officer of Hyundai Motor America, told reporters Monday. “The challenge is going to be rising interest rates.”
The annual selling rate is expected to rise to 14.4 million in March, up from 13.5 million a year ago, according to the average forecast of eight market researchers. But that’s still low by historical standards. Prior to the pandemic, annual US auto sales topped 17 million for five consecutive years.
General Motors said it estimates automakers collectively sold vehicles in March at an annualized rate of 15.5 million, indicating strong demand and more supply to meet it.
GM Revs Up
The Detroit-based manufacturer’s deliveries climbed 18% to more than 600,000 vehicles in the first quarter as chip supplies improved and inventories grew more plentiful. The Chevrolet brand sold 124,000 Silverado pickups and GMC chalked up sales of 67,000 Sierra pickups, resulting in a 9% combined rise of deliveries in the lucrative full-sized truck market. Overall, Chevy saw a 16% rise in sales and Cadillac increased 29% in the quarter, the company said.
The Cadillac luxury brand sold close to 1,000 of its all-electric Lyriq SUVs as a production ramp up of that vehicle continues at a slow pace. The automaker delivered more than 20,000 electric vehicles in the three-month period on higher output of its Chevy Bolt model.
“We gained significant market share in the first quarter, pricing was strong, inventories are in very good shape, and we sold more than 20,000 EVs in a quarter for the first time,” Steve Carlisle, president of GM North America, said in a statement.
Toyota’s Tough Start
Toyota said its US sales fell 8.8% in the first quarter and 9.1% for March alone, hinting at lingering supply-chain woes. The results were dragged down by lower deliveries of its best-selling model, the RAV4 compact SUV, which dropped 16.3% both last month and in the year-to-date. Sales of the Highlander SUV also fell by double-digits.
One of the few highlights was deliveries of its family friendly mid-sized sedan, the Camry, which rose 7.4% in the first three months.
“We continue to make improvements to our vehicle inventory to satisfy customer demand,” Jack Hollis, executive vice president for sales at Toyota’s North American unit, said in statement.
Honda’s Hot Hybrids
Honda said first-quarter US sales rose 6.8%, including an 8% gain in March. The best-selling CR-V compact SUV led the way, followed by robust demand for its stalwart Civic compact and Accord mid-sized sedans.
The Japanese automaker said March sales were the best since July 2021 and that it set sales records for the hybrid-electric versions of the Accord and CR-V.
Hyundai’s Record Run
Hyundai saw sales shoot up 16% in the first quarter to a record 184,449 vehicles. March was a strong month for the Korean automaker as it reported an increase of 27%, its fifth consecutive monthly sales record.
The top sellers for the quarter were Hyundai’s Tucson compact SUV, mid-sized Santa Fe SUV and Elantra compact sedan. Fuel-efficient models also drew in buyers with robust demand for hybrid-electric versions of all three of those models.
Transaction prices have held steady as demand for many models outstrips supply, Hyundai’s Parker said, adding that may change as industry inventories continue to expand. “I do see them moderating a bit,” he said.
–With assistance from Keith Naughton.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.