Last Year US New Car Sales Slightly Rebounded... This Year's Outlook 'Uncertain'

Last Year US New Car Sales Increased by 13%
Not Considered a Good Report Card
"This Year's New Car Sales Similar to Last Year"
Interest Rates Still High, Electric Vehicle Popularity Slows Down

Last year, new car sales in the United States increased by 13%, marking a successful rebound. However, since 2022, the previous year, was an exceptionally poor year for car sales in the U.S. due to production disruptions caused by the COVID-19 pandemic, this performance is not considered a particularly ‘good report card.’ Due to the continued impact of high interest rates and a slowdown in electric vehicle sales, there are also analyses suggesting that the outlook for the U.S. auto market this year is not very bright. It may take a long time to reach pre-COVID-19 vehicle sales levels.

On the 3rd (local time), The Wall Street Journal (WSJ) reported that new car sales in the U.S. auto industry in 2023 are expected to reach about 15.5 million units. This represents a 13% increase compared to the previous year. General Motors (GM) and Toyota sold 2.6 million and 2.3 million units respectively, up 14% and 7%. The year 2022, when about 13.7 million vehicles were delivered in the U.S., was recorded as the worst sales year in the past decade due to global supply chain disruptions and semiconductor shortages caused by COVID-19.

WSJ stated, “Last year, these issues were resolved, allowing new car sales to rebound.” The increase in vehicle inventory led to new car price reductions, which in turn encouraged consumer purchases. However, considering the base effect from the low sales in 2022 caused by inventory shortages, the overall performance is not regarded as a strong one.

The outlook for this year is also not very positive. The automotive market research firm Cox Automotive predicts that new car sales in the U.S. this year will slightly increase to about 15.6 million units compared to last year. This is because interest rates remain high, reducing consumers’ spending power, and many consumers expecting further price reductions are delaying their purchases. Randy Parker, CEO of Hyundai USA, forecasted, “2024 will undoubtedly be a very difficult year.”

The growth of electric vehicles is also slowing down. According to market research firm JD Power, electric vehicle sales in the U.S. from January to October last year reached 869,000 units, a 56% increase compared to the same period the previous year. This growth rate has slowed compared to 2022, when sales growth exceeded 70%. Factors contributing to the slowdown include the still high prices despite price cuts by EV manufacturers, and the lack of sufficient electric vehicle charging infrastructure. As demand for EVs decreases, GM withdrew its plan to produce 400,000 electric vehicles by mid-year, and Tesla postponed the construction schedule of its Mexico factory.

Although Tesla proactively reduced prices for models such as the Model 3 and Model S last year and delivered 480,000 units in the fourth quarter, it lost the global electric vehicle sales top spot to Chinese EV maker BYD, which sold 520,000 units during the same period. Despite increasing production, Rivian’s vehicle sales dropped 10% quarter-over-quarter to 14,000 units. Additionally, starting this year, electric vehicles using Chinese-made battery components are no longer eligible for U.S. government tax credit subsidies, which is another negative factor. Popular models such as Ford’s Mustang Mach-E have been removed from the subsidy list.

Analysts say it will take a long time to reach the pre-COVID-19 sales volume of 17 million units. For the time being, the U.S. auto industry plans to seek a breakthrough through hybrid vehicles. Mamadou Diallo, head of vehicle sales at American Honda Motor, said, “Many in the industry know that hybrids are currently the most popular models in the market.”

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