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Will the U.S. Auto Market Momentum Continue in 2H23?
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Last year, U.S. auto sales plummeted to their lowest point in a decade due to significant supply chain disruptions and limited inventories. However, with supply chain issues easing this year, the U.S. auto market has regained momentum. Most automakers experienced year-over-year sales growth in the second quarter of 2023, thanks to improving inventory levels. Additionally, the demand for automobiles remains strong, indicating that the rise in interest rates has not yet significantly affected purchasing decisions.
The seasonally adjusted annualized sales rate for June 2023 was 15.7-15.8 million vehicles, up from 15.1 million vehicles in May 2023 and 12.9 million units in June 2022. Per Cox Automotive, new vehicle sales in the second quarter of 2023 topped 4 million units, implying year-over-year and sequential growth of roughly 15% and 13%, respectively. Industry sources suggest that over the first six months, the market achieved sales of approximately 7.69 million units, slightly above Cox Automotive’s forecast of 7.65 million units, and reflecting a 12.3% increase from the same period in 2022.
GM’s Dominance Continues
During the first half of the year, General Motors (GM - Free Report) reported a 15% increase in retail sales and a 30% surge in its fleet business. GM successfully retained its position as the largest automaker in the country during the January-June period, with total U.S. sales rising 18.3% year over year to roughly 1.3 million vehicles. After being overtaken by Japan’s auto giant Toyota (TM - Free Report) in 2021, GM reclaimed its longstanding title as the bestselling car company in the United States last year. GM’s EV sales surpassed 36,300 units in the first half of 2023, including 15,652 units in the second quarter.
For the first half of 2023, Toyota reported U.S. sales of 1.03 million vehicles, down 0.7% year over year. Over the same timeframe, 270,476 electrified vehicles were sold, up 1.4% year over year.
Ford (F - Free Report) continued its hot streak as America’s #1 brand for six consecutive months this year. It sold 1,007,568 vehicles in the first half of 2023, up 10% year over year. Ford’s EV sales were aided by soaring demand for F-150 Lightning and Mach-E. During the January-June period, Ford’s EV sales rose 11.9% year over year.
Italian American automaker Stellantis (STLA - Free Report) sold more than 803,000 vehicles in the United States in the first half of 2023.
TM’s close peer Honda (HMC - Free Report) witnessed a 24.8% sales growth in the first half of 2023 with 631,532 deliveries. Electrified vehicle sales of the company rocketed 157% to 137,443 units.
At the outset of 2023, industry experts anticipated a potential deceleration in the U.S. car market amid inflationary pressure and increased borrowing expenses. However, consumer demand demonstrated greater resilience than anticipated. Quoting Cox Automotive's chief economist Jonathan Smoke, "Consumers have found a way to buy new wheels."
Supply constraints have been considerably alleviated. Limited new-vehicle inventory over the past two years that had handcuffed sales is no longer a pressing concern. According to Cox Automotive, new vehicle inventory levels in the United States saw a significant increase of more than 70% in June compared to the same period last year. This increase in inventory availability bodes well for the industry, signaling a potential shift toward a more balanced state between supply and demand. Despite concerns over inflation and higher borrowing costs, Americans' unwavering love for cars and pent-up demand are boosting the outlook of the US auto market.
Cox Automotive has updated its full-year vehicle sales forecast to 15 million units, up from 13.9 million in 2022. Additionally, 2023 is poised to be a landmark year for U.S. EV sales, with projections indicating that they will surpass 1 million units for the first time.
Overall, the U.S. auto market is expected to maintain its momentum in the second half of 2023, benefiting from strong consumer demand and improved inventory levels, despite the challenges posed by inflation and high financing costs for vehicles.
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Will the U.S. Auto Market Momentum Continue in 2H23?
Last year, U.S. auto sales plummeted to their lowest point in a decade due to significant supply chain disruptions and limited inventories. However, with supply chain issues easing this year, the U.S. auto market has regained momentum. Most automakers experienced year-over-year sales growth in the second quarter of 2023, thanks to improving inventory levels. Additionally, the demand for automobiles remains strong, indicating that the rise in interest rates has not yet significantly affected purchasing decisions.
The seasonally adjusted annualized sales rate for June 2023 was 15.7-15.8 million vehicles, up from 15.1 million vehicles in May 2023 and 12.9 million units in June 2022. Per Cox Automotive, new vehicle sales in the second quarter of 2023 topped 4 million units, implying year-over-year and sequential growth of roughly 15% and 13%, respectively. Industry sources suggest that over the first six months, the market achieved sales of approximately 7.69 million units, slightly above Cox Automotive’s forecast of 7.65 million units, and reflecting a 12.3% increase from the same period in 2022.
GM’s Dominance Continues
During the first half of the year, General Motors (GM - Free Report) reported a 15% increase in retail sales and a 30% surge in its fleet business. GM successfully retained its position as the largest automaker in the country during the January-June period, with total U.S. sales rising 18.3% year over year to roughly 1.3 million vehicles. After being overtaken by Japan’s auto giant Toyota (TM - Free Report) in 2021, GM reclaimed its longstanding title as the bestselling car company in the United States last year. GM’s EV sales surpassed 36,300 units in the first half of 2023, including 15,652 units in the second quarter.
For the first half of 2023, Toyota reported U.S. sales of 1.03 million vehicles, down 0.7% year over year. Over the same timeframe, 270,476 electrified vehicles were sold, up 1.4% year over year.
Ford (F - Free Report) continued its hot streak as America’s #1 brand for six consecutive months this year. It sold 1,007,568 vehicles in the first half of 2023, up 10% year over year. Ford’s EV sales were aided by soaring demand for F-150 Lightning and Mach-E. During the January-June period, Ford’s EV sales rose 11.9% year over year.
Italian American automaker Stellantis (STLA - Free Report) sold more than 803,000 vehicles in the United States in the first half of 2023.
TM’s close peer Honda (HMC - Free Report) witnessed a 24.8% sales growth in the first half of 2023 with 631,532 deliveries. Electrified vehicle sales of the company rocketed 157% to 137,443 units.
While F and HMC sport a Zacks Rank #1 (Strong Buy), GM, TM and STLA carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Auto Sales to Remain in High Gear
At the outset of 2023, industry experts anticipated a potential deceleration in the U.S. car market amid inflationary pressure and increased borrowing expenses. However, consumer demand demonstrated greater resilience than anticipated. Quoting Cox Automotive's chief economist Jonathan Smoke, "Consumers have found a way to buy new wheels."
Supply constraints have been considerably alleviated. Limited new-vehicle inventory over the past two years that had handcuffed sales is no longer a pressing concern. According to Cox Automotive, new vehicle inventory levels in the United States saw a significant increase of more than 70% in June compared to the same period last year. This increase in inventory availability bodes well for the industry, signaling a potential shift toward a more balanced state between supply and demand. Despite concerns over inflation and higher borrowing costs, Americans' unwavering love for cars and pent-up demand are boosting the outlook of the US auto market.
Cox Automotive has updated its full-year vehicle sales forecast to 15 million units, up from 13.9 million in 2022. Additionally, 2023 is poised to be a landmark year for U.S. EV sales, with projections indicating that they will surpass 1 million units for the first time.
Overall, the U.S. auto market is expected to maintain its momentum in the second half of 2023, benefiting from strong consumer demand and improved inventory levels, despite the challenges posed by inflation and high financing costs for vehicles.