Supply chain troubles drove US auto sales down 8% last year

DETROIT — Shortages of computer chips and other parts have continued to hamper the U.S. auto industry over the past year, helping vehicle sales fall 8% from 2021 to their lowest level in more than a decade.

But there’s good news for consumers in the grim numbers: Vehicle inventories on dealer lots are growing, albeit slowly, and automakers expect at least modest price relief this year as inventories grow.

Automakers reported on Wednesday they sold 13.9 million cars, trucks, SUVs and vans last year as parts shortages limited factory production amid high demand for new vehicles. It was the lowest number of sales since 2011, when the economy was recovering from the Great Recession.

But sales edged up slightly in the fourth quarter and inventories grew as spare parts deliveries improved enough to boost production a bit. Analysts now expect sales to rise by about 1 million to about 14.8 million this year as demand remains strong. But they will still be well below the normal 17 million per year before the pandemic.

With many models still in short supply, the average new car price rose 2.5% in December to a record just over $46,000, according to JD Power.

However, there are signs that prices may soften somewhat as inventories expand.

Toyota, for example, ended the year with nearly 24,000 vehicles at Toyota and Lexus brand dealerships nationwide. That’s up from about 19,000 at the end of 2021, but still well below the 300,000 in normal years before the pandemic.

The improvement, while small, allows consumers to haggle a bit on some slower-selling vehicles like sedans and even some luxury vehicles. But they still get top bucks for gasoline-electric hybrids and other more popular vehicles that are sold before they arrive on lots, said David Christ, general manager of the Toyota division.

For most of the last year people who wanted new vehicles had to pay a sticker price or more and grab whatever models and colors dealers could get their hands on. But dealers have told Christ that things have changed a little in the last two or three months for models that aren’t as popular. In addition, more people are interested in cheaper vehicles because inflation and higher interest rates are putting a strain on their budgets.

“They come in and they’re like, ‘Hey, can I get a deal here?'” Christ said. “I think that with some vehicles, not just with our brand and in the entire industry, there has become something more of a buyer’s market where the customer can negotiate.”

It remains to be seen whether this will hold up all year round. If demand stays strong and people are willing to pay the sticker price, retailers will get that, Christ said. But if demand falls or supply increases dramatically, discounts could increase and prices fall somewhat.

Jessica Caldwell, executive director of insights at Edmunds.com, said Toyota’s experience is likely to be replicated across the industry with small price cuts on some models.

“There’s not that much disposable income that can be put into a vehicle,” she said. “We’ve seen high prices before, but we’ve never really seen higher prices with the (higher) interest rates.”

But electric vehicles and other top sellers will remain expensive because people want to buy them now, she added.

Caldwell doesn’t see vehicle supply or prices returning to pre-pandemic levels this year, and she’s not sure we’ll ever get back to 2019 levels.

The shortage of computer chips dates back to spring 2020, when rapidly rising COVID-19 cases forced automakers to close factories. Chipmakers shifted production to consumer electronics to fuel a sales boom in computers and games when people were stuck at home. When car factories started up again sooner than expected, chipmakers weren’t making as many semiconductors for cars that have to withstand vibration and extreme temperature extremes.

Autochip production has improved but is still not back to pre-pandemic levels, so auto factories are still not back to full capacity.

As a result, the 13.9 million vehicles automakers sold last year were about 1.2 million below 2021 figures, according to Motorintelligence.com.

General Motors recaptured its traditional place as the nation’s top-selling automaker with annual sales up 2.5%. Toyota, which won the crown in 2021, saw its sales fall 9.6% last year. Ford reports sales on Thursday.

Sales at Stellantis, formerly Fiat Chrysler, fell 13%, while sales at Honda fell 32.9%. Hyundai posted a nearly 1% gain to outpace Nissan, whose sales fell 25.4%. Kia sales fell 1.1% for the year, while Subaru fell 4.7%.

Electric vehicle sales reached more than 807,000 last year, up nearly 65% ​​from 2021.

Pickups and SUVs accounted for 77.3% of sales, while cars fell to 22.7%.

Copyright 2023 The Associated Press. All rights reserved. This material may not be published, broadcast, transcribed or redistributed without permission.

https://www.local10.com/business/2023/01/04/supply-chain-woes-caused-us-auto-sales-to-fall-8-last-year/ Supply chain troubles drove US auto sales down 8% last year

Sarah Y. Kim

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