Autos Uncertain Path Forward

• Year-over-year comparisons for domestic production and inventories jumped

• New vehicle sales increased but remained below pre-pandemic levels

• New vehicle transaction prices declined slightly but continued to be above MSRP

 

Year-over-year comparisons for manufacturers and dealerships jumped as supply chain constraints eased; domestic production improved (-3% MoM/ 13% YoY/ -39% YoY4), and inventories grew (-4% MoM/ 56% YoY/ -86% YoY4). New vehicle sales increased but remained below pre-pandemic levels (18% MoM/ 5% YoY/ -5% YoY4). Sales vary by nameplate, but electric-vehicle (EV) penetration gained and doubled its share last year. As competition heated up in the EV market, price cuts were commonplace.

Average new vehicle transaction prices declined slightly yet remained above pre-pandemic norms (-1% MoM/ 6% YoY/ 31% YoY4). Buyers also still pay significantly over the manufacturer’s suggested retail price (MSRP). Leases – typically subsidized via discounts and other types of promotions – represented one-fifth of purchases last year, compared to one-third pre-pandemic. Long-term implications include loss of repeat business and pipeline disruption of preowned inventories.

Sellers expected to fill the demand backlog once production normalized, but interest rates for vehicle loans and amounts financed per vehicle – both functions of monthly payments – climbed. Paired with an uncertain economic environment, it weighs on buyers.