In the second quarter of 2023, U.S. new-vehicle sales experienced a minimal increase, despite larger discounts and lower prices, according to preliminary data from Motorintelligence.com. The auto industry analysts anticipate further price drops and potential interest-rate cuts, which could lead to brisker sales in the future.
The overall sales growth was only 0.1% compared to the same period last year, with high prices keeping many potential buyers out of the market. Sales were temporarily affected in late June due to cyberattacks that disrupted software from CDK Global, used by dealerships for sales paperwork.
Discounts vary depending on the demand for vehicles, with smaller, less-expensive models and gas-electric hybrids generally being in shorter supply. Many customers are delaying purchases, hoping for bigger discounts in the future.
Toyota, which sells many popular gas-electric hybrids, posted a 9.2% sales increase from April through June. Honda sales were up 2.7%, while General Motors posted a modest 0.3% gain, and Hyundai reported a 1.8% increase. Subaru had a 5.4% sales gain.
On the other hand, sales at Stellantis fell 20.7% in the second quarter, with the Ram brand off 26% and Jeep sales falling 19%. Nissan sales fell 3.1%, while Kia was down 1.6%.
Together, automakers reported selling roughly 4.13 million new vehicles from April through June. This pace is on track to reach forecasts of nearly 16 million for the year, slightly above last year’s 15.6 million.
Interest rates for new vehicles are averaging just above 7%, a high number for people who bought or leased vehicles years ago but now find they need to replace their rides. Many are opting for the few lower-priced vehicles remaining in the mid- to upper $20,000 range.
For instance, sales of the Chevrolet Trax compact SUV, which starts at $20,400 excluding shipping, were up 152.7% during the quarter.
The U.S. industry is at an inflection point where automakers will have to add discounts to get the prices down or change what they produce to “try to get more attractive price points and try to keep those inventory levels lighter.”
A move toward lower prices could potentially hurt Detroit automakers, which exited the lower-priced small and midsize sedan markets years ago after facing difficulties making a profit on these vehicles.
Since the coronavirus pandemic began in early 2020, there has been a shortage of vital computer chips, which has hobbled production. However, this year, chip supplies have improved, production is up, and supplies are on the rise. As a result, average selling prices dropped 1% to about $48,400 last month, although they are still 20% higher than before the pandemic.
Of the vehicles that sit on dealer lots the longest, all are big pickups or SUVs made by Detroit automakers. Stellantis’ Ram 1500 tops the list, remaining at dealers for 141 days, according to CarGurus. Deals can be had on vehicles that sit on lots longer, as 6% of national dealer new vehicle sales listings are from the 2023 model year.
U.S. electric vehicle sales overall rose 7% during the first half of the year to 599,134, accounting for 7.6% of the U.S. new vehicle market. Sales of gas-electric hybrids skyrocketed 35.3% from January through June to 715,768, eclipsing electric vehicle sales. Plug-in hybrids, which can go a short distance on battery power before a gas-electric powertrain kicks in, also saw a significant increase. Sales were up 24% to 159,399. Both are alternatives for people who fear running out of juice with an EV.
Earlier this week, Tesla reported that its second-quarter global sales fell 4.8%, with a 6.6% decline in the first half of the year. The company does not break out U.S. sales, and Ford is set to release its sales numbers on Wednesday.
