First-quarter 2022 was difficult for the U.S. auto market. U.S. new vehicle sales declined more than 12% year over year for the January-March period due to escalating supply chain issues despite robust consumer demand. Sales plunged even more drastically in March as limited vehicle supply and tight inventories kept a lid on volumes amid rising COVID-19 cases and compounded chip concerns over the Russia-Ukraine crisis. Per Cox Automotive, the seasonally adjusted annual rate for March declined to 13.09 million units from 14.1 million in February and 17.6 million in March 2021.
Total Sales Stuck in Low Gear, Electric Sales Continue Momentum
Most of the major auto biggies posted a double-digit decline in U.S. sales volumes for first-quarter 2022. General Motors (GM - Free Report) delivered 512,846 vehicles, down 20% from the comparable year-ago period. Meanwhile, Toyota (TM - Free Report) sold 514,592 vehicles for the three months ended March 2022. While Toyota’s first-quarter sales fell roughly 15% on a year-over-year basis, Japan’s #1 automaker yet again outsold General Motors, albeit by a narrow margin. Markedly, Toyota had dethroned GM as the top-selling automaker of the nation in 2021 amid the chip crisis. That was the first time that a foreign automaker outsold a Detroit counterpart in U.S. auto sales for an entire calendar year in the industry’s 120-year history.
Toyota’s close peer Honda (HMC - Free Report) sold 177,045 vehicles in Q1, deteriorating 21% from the year-ago quarter. While sales of the namesake brand declined 23%, that of the Acura brand tailed off 25.5%. Another Japan-based auto giant Nissan (NSANY - Free Report) reported a sales decline of 29.6% year over year for first-quarter 2022. Sales of the namesake division and Infiniti brand plummeted 28.8% and 41%, respectively. Europe’s Stellantis (STLA - Free Report) — born out of a mega merger between Fiat Chrysler and PSA Group — sold 405,221 vehicles in the quarter under discussion, down 14% year over year.
General Motors, Toyota, Honda, Stellantis and Nissan carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While automakers witnessed an overall sales drop, the increasing adoption of green cars continued, with electrified sales jumping year over year. Honda set a new monthly record for electrified vehicles in March on strong sales of CR-V Hybrid and Accord Hybrid. Toyota’s first-quarter 2022 EV sales totaled 132,938, up 23% year over year. Electrified sales accounted for 25.8% of the total sales volume of the auto biggie. While Nissan’s overall sales plunged around 30% for the quarter under review, the all-electric Leaf model witnessed a 49.4% jump in volumes on a year-over-year basis.
South Korea-based Hyundai’s electrified sales jumped a whopping 241% year over year for the first quarter of 2022. In fact, Hyundai was an outlier, with retail sales increasing 1.4% year over year for the first quarter. Nonetheless, amid zero fleet sales, overall sales were down 4%. The company’s senior vice president for U.S. sales, Randy Parker, said, "If gas prices remain high, that's going to continue to push consumers toward green technology.”
Little Respite Ahead
The mounting shortage of semiconductors has left the industry in disarray since mid-2021. Just when industry watchdogs and auto giants were predicting the chip deficit to gradually start easing out from mid-2022, the geopolitical conflict between Russia and Ukraine triggered a second round of global microchip shortage. A shortfall of semiconductors and other vital components is yet again prompting automakers to temporarily suspend operations. For instance, GM has planned a two-week production hiatus at an assembly plant in Fort Wayne, IND, a site that builds the Chevrolet Silverado 1500 and GMC Sierra 1500 pickup trucks, beginning Apr 4 due to the long-drawn semiconductor chip shortage.
Supply chain disruptions are likely to linger throughout the year, gradually improving in the latter half of the year. Rising COVID-19 infections are only making matters worse. Consequently, automakers are likely to battle not just coronavirus-related manufacturing disruptions but also additional supply chain snafus in the wake of the Russia-Ukraine war.
The bright spot for automakers is the rising average prices of vehicles. Per TrueCar estimates, the average selling price (ASP) of a new vehicle in the United States rose around 15.4% year over year in March to roughly $43,500. While the rising ASP of vehicles may aid automakers’ margins, demand might take a slight hit amid inflationary concerns and higher fuel prices. But most importantly, the key factor constraining sales volumes would be the lean stockpiles amid the prolonged chip famine and shortage of other key components owing to the war. While the demand for vehicles remains high, consumers might just be waiting on the sidelines amid limited choice and high prices owing to supply-demand mismatch.
Cox Automotive has lowered 2022 new car sales projections by 4% lately. In addition to chip woes, the firm believes that new COVID-19 variants and the Ukraine-Russia war will make the supply chain more vulnerable and act as a major spoiler to the recovery of auto sales volumes. Rising natural gas prices and higher interest rates would also make cars less affordable. In view of such headwinds, Cox Automotive now forecasts new car sales of 15.3 million units this year, down from the prior projection of 16 million units.
In the absence of a quick solution to this chip problem, consumers are likely to have a hard time finding new vehicles and specific models at dealerships. Hence, automakers have to brace for testing times ahead.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
First-quarter 2022 was difficult for the U.S. auto market. U.S. new vehicle sales declined more than 12% year over year for the January-March period due to escalating supply chain issues despite robust consumer demand. Sales plunged even more drastically in March as limited vehicle supply and tight inventories kept a lid on volumes amid rising COVID-19 cases and compounded chip concerns over the Russia-Ukraine crisis. Per Cox Automotive, the seasonally adjusted annual rate for March declined to 13.09 million units from 14.1 million in February and 17.6 million in March 2021.
Total Sales Stuck in Low Gear, Electric Sales Continue Momentum
Most of the major auto biggies posted a double-digit decline in U.S. sales volumes for first-quarter 2022. General Motors (GM - Free Report) delivered 512,846 vehicles, down 20% from the comparable year-ago period. Meanwhile, Toyota (TM - Free Report) sold 514,592 vehicles for the three months ended March 2022. While Toyota’s first-quarter sales fell roughly 15% on a year-over-year basis, Japan’s #1 automaker yet again outsold General Motors, albeit by a narrow margin. Markedly, Toyota had dethroned GM as the top-selling automaker of the nation in 2021 amid the chip crisis. That was the first time that a foreign automaker outsold a Detroit counterpart in U.S. auto sales for an entire calendar year in the industry’s 120-year history.
Toyota’s close peer Honda (HMC - Free Report) sold 177,045 vehicles in Q1, deteriorating 21% from the year-ago quarter. While sales of the namesake brand declined 23%, that of the Acura brand tailed off 25.5%. Another Japan-based auto giant Nissan (NSANY - Free Report) reported a sales decline of 29.6% year over year for first-quarter 2022. Sales of the namesake division and Infiniti brand plummeted 28.8% and 41%, respectively. Europe’s Stellantis (STLA - Free Report) — born out of a mega merger between Fiat Chrysler and PSA Group — sold 405,221 vehicles in the quarter under discussion, down 14% year over year.
General Motors, Toyota, Honda, Stellantis and Nissan carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
While automakers witnessed an overall sales drop, the increasing adoption of green cars continued, with electrified sales jumping year over year. Honda set a new monthly record for electrified vehicles in March on strong sales of CR-V Hybrid and Accord Hybrid. Toyota’s first-quarter 2022 EV sales totaled 132,938, up 23% year over year. Electrified sales accounted for 25.8% of the total sales volume of the auto biggie. While Nissan’s overall sales plunged around 30% for the quarter under review, the all-electric Leaf model witnessed a 49.4% jump in volumes on a year-over-year basis.
South Korea-based Hyundai’s electrified sales jumped a whopping 241% year over year for the first quarter of 2022. In fact, Hyundai was an outlier, with retail sales increasing 1.4% year over year for the first quarter. Nonetheless, amid zero fleet sales, overall sales were down 4%. The company’s senior vice president for U.S. sales, Randy Parker, said, "If gas prices remain high, that's going to continue to push consumers toward green technology.”
Little Respite Ahead
The mounting shortage of semiconductors has left the industry in disarray since mid-2021. Just when industry watchdogs and auto giants were predicting the chip deficit to gradually start easing out from mid-2022, the geopolitical conflict between Russia and Ukraine triggered a second round of global microchip shortage. A shortfall of semiconductors and other vital components is yet again prompting automakers to temporarily suspend operations. For instance, GM has planned a two-week production hiatus at an assembly plant in Fort Wayne, IND, a site that builds the Chevrolet Silverado 1500 and GMC Sierra 1500 pickup trucks, beginning Apr 4 due to the long-drawn semiconductor chip shortage.
Supply chain disruptions are likely to linger throughout the year, gradually improving in the latter half of the year. Rising COVID-19 infections are only making matters worse. Consequently, automakers are likely to battle not just coronavirus-related manufacturing disruptions but also additional supply chain snafus in the wake of the Russia-Ukraine war.
The bright spot for automakers is the rising average prices of vehicles. Per TrueCar estimates, the average selling price (ASP) of a new vehicle in the United States rose around 15.4% year over year in March to roughly $43,500. While the rising ASP of vehicles may aid automakers’ margins, demand might take a slight hit amid inflationary concerns and higher fuel prices. But most importantly, the key factor constraining sales volumes would be the lean stockpiles amid the prolonged chip famine and shortage of other key components owing to the war. While the demand for vehicles remains high, consumers might just be waiting on the sidelines amid limited choice and high prices owing to supply-demand mismatch.
Cox Automotive has lowered 2022 new car sales projections by 4% lately. In addition to chip woes, the firm believes that new COVID-19 variants and the Ukraine-Russia war will make the supply chain more vulnerable and act as a major spoiler to the recovery of auto sales volumes. Rising natural gas prices and higher interest rates would also make cars less affordable. In view of such headwinds, Cox Automotive now forecasts new car sales of 15.3 million units this year, down from the prior projection of 16 million units.
In the absence of a quick solution to this chip problem, consumers are likely to have a hard time finding new vehicles and specific models at dealerships. Hence, automakers have to brace for testing times ahead.
Zacks Naming Top 10 Stocks for 2024
Want to be tipped off early to our 10 top picks for the entirety of 2024?
History suggests their performance could be sensational.
From 2012 (when our Director of Research, Sheraz Mian assumed responsibility for the portfolio) through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2024. Don’t miss your chance to get in on these stocks when they’re released on January 2.
Be First to New Top 10 Stocks >>
Get the latest research report on TM - FREE
Get the latest research report on HMC - FREE
Get the latest research report on NSANY - FREE
Get the latest research report on GM - FREE
Get the latest research report on STLA - FREE