U.S. Auto Sales Expected to Finish 2022 Down 8% Year Over Year
Tuesday, January 31st, 2023
New-vehicle sales in December are expected to reach 1.27 million units, an increase of nearly 4% compared to December 2021, according to a forecast released today by Cox Automotive. Sales volume in December is expected to rise by nearly 11% compared to last month, mostly due to two additional selling days in December. The December 2022 auto sales pace, or seasonally adjusted annual rate (SAAR), however, is expected to finish near 13.2 million, a large decline from November's 14.1 million pace.
Full-year sales in 2022, based on vehicle counts by Kelley Blue Book, are forecast to finish near 13.9 million units, a decrease of 8% from 2021 and the lowest level since 2011 when total new-vehicle sales were recovering from the Great Recession and reached only 12.7 million. Sales in 2022 are forecast to finish below 2020's total when the COVID-19 pandemic shut down much of the U.S. economy. Sales in 2020, according to Kelley Blue Book counts, were 14.6 million.
In what started as a year with a supply problem, 2022 is ending with a demand problem. Inventory levels have been increasing since late summer, and those gains have helped support increasing sales. The supply gains, however, have been uneven, with many Asian bestsellers nearly unavailable, while many of the Detroit Three's top products have ample supply. In October, the SAAR reached 15.1 million, the best level since January and likely a result of improving inventory. As inventory improved, the Fed's aggressive interest rate increases have driven auto loan costs to levels not seen in more than 20 years, pushing some shoppers out of the market due to vehicle affordability concerns. Since October, the sales pace has declined significantly – by nearly 2 million units.
"This December, there were fewer giant red bows than dealers would have liked," said Charles Chesbrough, senior economist at Cox Automotive. "Given the large improvement in supply levels, it seems likely that rising interest rates are now constraining demand in the retail auto market. With record-high prices and elevated loan rates, the pool of potential new-vehicle buyers is shrinking."
As we head into 2023, Cox Automotive is expecting the economy to see weak growth as the Federal Reserve tightens monetary conditions and consumers wrestle with high interest rates. New-vehicle sales are forecast to increase modestly versus 2022, supported in part by growing fleet volume. Affordability will continue to be a challenge for vehicle buyers in the year ahead. Cox Automotive's 10 Predictions for 2023 were posted last week in the Cox Automotive Newsroom.