Progress Of US Auto Sales Remains Unsteady

Republished By Plato

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New light vehicle sales in April are expected to
maintain the pace of the preceding months; uncertainty remains for
remainder of year

S&P Global Mobility estimates new light vehicle sales volume
in April 2023 to reach 1.29 million units, up approximately 4% from
April 2022 and representing the ninth consecutive month in which
volume has improved from the year-ago level. This volume would
translate to an estimated sales pace of 15.2 million units SAAR
(seasonally adjusted annual rate), in line with the first quarter
2023 average of 15.3 million units.

“Auto sales remain stuck at current levels,” said Chris Hopson,
principal analyst at S&P Global Mobility. “With an auto sales
environment currently defined by the mixed signals of mildly
advancing production, inventory and incentives on one hand, and
rising affordability concerns and uncertain consumer confidence
levels on the other, expected demand in April falls under the ‘no
news is good news’ category. Auto sales will remain subject to the
unsteadiness apparent in the overall economy, with the likelihood
of month-to-month volatility ahead.”

While sales continue to waver, the supply side of the auto
equation is beginning to show some sustained signs of improvement.
According to Joe Langley, associate director at S&P Global
Mobility, “North American production results for March 2023 (the
most recent data available) are estimated to total 1.45 million
units, translating into 15.82 million units produced on a SAAR
basis. That is the highest level in 30 months.”

S&P Global Mobility analysts do not expect sales volumes
over the next several months to dynamically change from the current
trend. However, demand-level constraints may shift from being
inventory-driven to more consumer-facing vehicle affordability
challenges, by way of continued high prices, uncertain economic
conditions, rising interest rates and tighter credit conditions.
That could lead to increasing inventories providing some sustained
downward pressure on new vehicle pricing.

Continued development of battery-electric vehicle (BEV) sales
remains a constant assumption for 2023. However, the implementation
of the US federal EV incentive eligibility, ongoing price
adjustments from Tesla, and the Department of Energy’s downward
restating of e-MPG ratings for electric vehicles could translate
into monthly BEV share becoming a bit more volatile in the upcoming
months.

The sales share of BEVs through the first quarter of 2023 is
estimated to be above 7%. On a projected level of 7% for April, BEV
share is expected to remain on trend. Beyond the pricing
developments, a sustained churn of new and refreshed BEVs will
continue to promote BEV sales as the year progresses.