New car sales expected to rise next year

New Kia vehicles are shown on the Kia sales lot in San Leandro, California on May 30, 2023.

Justin Sullivan | Getty Images

DETROIT — U.S. new car sales are expected to grow slightly next year as the auto industry continues to normalize from the effects of the coronavirus pandemic and other supply chain issues in 2020.

Leading automotive data companies predict that vehicle sales will increase by 1% to 4% annually, to approximately 15.6 million to 16.1 million units. That sales would be the highest since 2019, when more than 17 million new cars and trucks were sold domestically.

Since then, the auto industry has been grappling with production and supply chain issues caused by the global coronavirus pandemic, with fewer than 14 million vehicles sold in 2022, the lowest level in more than a decade.

Even a small increase in U.S. sales could be good for consumers and the economy. That means more cars will be produced, potentially alleviating recent affordability concerns caused by inflation, high interest rates and record new car prices.

“While the year ahead promises to further build inventory and attract attractive deals that consumers are eagerly anticipating, high interest rates are expected to persist in 2023, creating conflicting market dynamics.” Jessica, Head of Insights at Edmunds Caldwell said.

Pricing power gives way to incentives

Edmunds believes automakers’ ability to price new vehicles has peaked as improved inventory drives incentives back into the market.

Higher sales are good for investors, but falling prices and increased incentives are expected to be a headwind for many automakers and dealers. Record profits have been generated in recent years.

“Automakers will weigh another key consideration specifically in 2024: Are they satisfied with this newly established balance of supply and demand, or will they be willing and able to push sales toward pre-pandemic standards?” Caldwell said. .

Compared with expected growth in the United States, S&P Global Action forecasts global auto sales to increase by 2.8% annually.

Colin Couchman, executive director of global light vehicle forecasts at S&P Global Liquidity, said: “2024 is expected to be another year of cautious recovery, with the auto industry moving beyond obvious supply-side risks into a more ambiguous macro-led demand environment.”

Any growth in U.S. sales next year would mark the auto industry’s first consecutive sales growth since 2015-16.

Standard & Poor’s U.S. sales forecast is the highest. Sales are expected to reach 15.9 million units in 2024, an increase of approximately 2% from the estimated sales of 15.5 million units in 2023.

GlobalData, which acquired LMC Automotive, expects U.S. new car sales to grow nearly 4% to 16.1 million units.

Edmunds estimates 15.7 million new cars and trucks To be sold in 2024. That would be about a 1% increase from the 15.5 million cars and trucks expected to be sold in 2023.

Cox Automotive expects that in the lower segment 15.6 million vehicles sold, driven primarily by growth in fleet or commercial sales. Cox said he expected retail sales to be “largely flat.”

“Overall, we expect sales growth to be limited and weak in 2024 – more normal than the chaos of the past three years,” said Jonathan Smoak, chief economist at Cox Automotive. in a blog post. “As an economist, headline fluctuations in economic trends are always worth watching and analyzing, but such fluctuations are rarely good news for businesses in the long run.”