'US New Car Market Hits Bottom, Shows Recovery After "Worst in 10 Years"'

Double-Digit Sales Growth Recorded Due to Easing Supply Shortage

New car sales in the United States have returned to a recovery trend this year. Global automakers, which experienced the worst recession on record last year due to the prolonged semiconductor supply shortage caused by the COVID-19 pandemic, recorded double-digit sales growth rates in the first quarter of this year.

According to market research firm JD Power on the 4th (local time), new car sales in the U.S. for the first quarter (January to March) are expected to reach 3.5 million units. This represents an approximately 6% increase compared to the same period last year.

This increase in new car sales is due to the stabilization of factory operations as the semiconductor supply shortage has significantly eased. The Wall Street Journal (WSJ) evaluated that the global automakers, which recorded the worst sales performance in a decade last year, are entering a recovery phase.

Last year, the automotive industry experienced the worst year on record due to worsening business conditions, including the ongoing semiconductor supply shortage and rising raw material prices caused by the Russia-Ukraine war.

According to Ward Intelligence, an automotive market research firm, the inventory of new cars across the U.S. stood at 1.85 million units as of the end of March, a 50% increase compared to a year ago. However, Ward Intelligence noted that this figure is still low compared to pre-semiconductor supply chain disruption inventory levels, and it will take more time for the inventory cycle to return to normal levels.

[Image source=Reuters Yonhap News]

Major automakers achieved double-digit sales growth rates in the first quarter. General Motors (GM), one of the U.S. Big Three automakers, announced that new car sales in the U.S. increased by 17.6% in the first quarter due to strong demand for pickup trucks.

Hyundai Motor, targeting the U.S. market with electric and hybrid models, recorded a 16% growth rate. During the same period, Japanese automakers Nissan and Honda also showed new car sales growth rates of 17% and 6.8%, respectively.

However, Stellantis and Toyota, which have not overcome supply chain issues, saw new car sales decrease by 9% each in the first quarter. Jack Hollis, Toyota’s North American sales head, said, "We expect new car sales to return to an upward trend in the second half of this year through resolving supply chain issues and normalizing the inventory cycle."

Even if supply chain disruptions are completely resolved, demand pressure caused by the global economic recession and high interest rates remains a negative factor weighing on the automotive industry.

According to Edmonds, an automotive purchase research company, the average monthly loan repayment amount for new car buyers in the first quarter was $730, about $75 higher than the same period last year. This is due to the average new car installment interest rate soaring to 7%.

Randy Parker, CEO of Hyundai Motor America, said that consumer demand remains strong, but high interest rates are affecting purchase intentions, and they plan to increase promotions to boost new car sales.

This content was produced with the assistance of AI translation services.