In the second quarter of this year, U.S. new-vehicle sales experienced a minimal growth, despite increased discounts and lower prices, according to Motorintelligence.com. The slow growth can be attributed to the high prices that kept many potential buyers away. The situation might change in the near future as analysts predict further price drops and potential interest-rate cuts, making car loans more affordable.
The overall sales for the second quarter were up by 0.1% compared to the same period last year, with approximately 4.13 million new vehicles sold from April to June. The sales figures are on track to reach forecasts of nearly 16 million for the year, slightly above last year’s 15.6 million.
Sales were affected by the cyberattacks in late June, which disrupted software from CDK Global used by dealerships for sales paperwork. The problem pushed some deliveries into the third quarter, affecting companies such as General Motors.
Automotive analysts reported that inventories on dealer lots are growing, particularly for pickup trucks and other high-priced vehicles. 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, waiting for bigger discounts.
Toyota, which sells many popular gas-electric hybrids, posted a 9.2% sales increase, while Honda sales were up by 2.7%. General Motors experienced a modest 0.3% gain, and Hyundai reported a 1.8% increase. Subaru saw a 5.4% sales gain. Sales at Stellantis fell 20.7% in the second quarter, with the Ram brand off by 26% and Jeep sales decreasing by 19%. Nissan sales dropped by 3.1%, while Kia was down by 1.6%.
Interest rates for new vehicles are currently averaging just above 7%, which is relatively high for people who bought or leased vehicles in the past. Many consumers are opting for more affordable vehicles in the mid- to upper- $20,000 range.
The U.S. automotive industry is facing an inflection point, where automakers will need to offer discounts to lower prices or produce more attractive, lower-priced vehicles to keep inventory levels manageable. A move towards lower prices could present challenges for Detroit automakers, who exited the lower-priced small and midsize sedan markets years ago.
The ongoing shortage of vital computer chips has contributed to the lack of cars in supply since the coronavirus pandemic began early in 2020. The shortage drove average prices to near $50,000 by December 2022, but this year, chip supplies have improved, and production is up, leading to an increase in supplies. As a result, average selling prices dropped 1% to about $48,400 last month. While this is 3% below the peak of near $50,000 in December 2022, it remains 20% higher than before the pandemic.
U.S. electric vehicle sales for the first half of the year rose 7% to 599,134, accounting for 7.6% of the U.S. new vehicle market. Sales of gas-electric hybrids skyrocketed by 35.3% from January to June, eclipsing electric vehicle sales. Plug-in hybrids also saw a significant increase in sales. Both are popular alternatives for people who fear running out of battery power with an electric vehicle.
Tesla reported a 4.8% decline in its second-quarter global sales, with a 6.6% decline in the first half of the year. The company does not break out U.S. sales, and Ford will release its sales numbers on Wednesday.
