A year after losing its nearly century-long title as America’s top car seller, General Motors is back on top.
(GM) On Wednesday, 2.3 million vehicles were sold in the US. Strong fourth-quarter sales, up 41% from a year ago, allowed it to end the year with sales nearly 3% off the 2.2 million U.S. vehicles sold in 2021, after a 13% decline.
In each of the past two years, industry-wide vehicle sales have been limited by a shortage of parts. Computer chips, to build cars and trucks that consumers want. When final industry-wide sales results are announced later this week, total U.S. new vehicle sales are expected to fall to just under 14 million vehicles.
That was the lowest total sales since the country emerged from the Great Recession in more than a decade. Sales fell to 10.5 million in 2009, the year GM and Chrysler filed for bankruptcy and received federal bailouts, and only rose to 12.7 million in 2011, the last year industry sales fell below 14 million.
Sales were 17 million in 2019, the year before the pandemic upended both the economy and the supply chain.
Most forecasts suggest that supply chain issues are improving, allowing automakers to ramp up production in 2023. They point to better sales in the fourth quarter than a year earlier, albeit with more cars. Prices and rising interest rates make it more expensive for buyers than in the past.
This in turn led to forecasts that a modest increase in sales this year would again be north of 14 million vehicles.
But many experts caution that the forecast for increased sales does not depend on the US economy Falling into recessionAnd instead Simply experiencing slow growth. Uncertainty about what will happen to the economy makes the outlook for car sales more uncertain than in previous years, they say.
“I’ve been forecasting the auto market for decades. This next year is going to be very challenging,” said Charlie Chesbro, chief economist at Cox Automotive. “We generally know which way it’s going.” But this year it may increase or decrease.
Despite the faltering economy, there are several factors that should support new car sales in the coming year. For one thing, car rental companies haven’t been able to buy the new cars they need in the past two years because automakers have sold off all or nearly all of the cars they have, limiting the supply of low-cost cars. but rather to the consumer.
“Rental companies are operating at half of what they’re used to buying,” says Evan Drury, director of insights at Edmonds.
If automakers begin to see weakness in consumer demand, Drewry said, they could bring back incentives, including low-rate financing, that they haven’t had to offer in recent years when demand outstripped supply.
“There have been no incentives lately,” he said.
So far demand is still strong, as demand is high from potential buyers who have delayed purchases because they couldn’t find the vehicle they wanted. But both Drury and Chesbro say high average prices and high interest rates are already driving buyers out of the market.
A turn in the economy, especially if historically low unemployment rates begin to rise, could quickly dampen new car sales.