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Will US Auto Sales Sustain Momentum in 2024 After a Solid 2023?
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New vehicle sales in the United States saw a substantial rebound last year after experiencing a decade-low in 2022. Sales reached their highest levels since 2019. This surge was fueled by factors such as pent-up demand, improved inventories, attractive incentives and a rise in fleet sales. According to Automotive News, U.S. light-vehicle sales in 2023 were up 13% year over year, totaling 15.6 million units. This data considers the sales figures released by most automakers, with a few exceptions like Mercedes-Benz, Porsche and Jaguar Land Rover, which are expected to report later this week.
A remarkably strong December in both fleet and retail sales channels resulted in the annual sales volume reaching its highest point since the onset of the COVID-19 pandemic.Fourth-quarter U.S. auto sales witnessed a 9.2% increase compared with the previous year, reaching an estimated 3.92 million units, including a substantial 16% jump in December to 1.49 million units, as reported by GlobalData. The figures do not include sales from certain brands like Mercedes-Benz, Jaguar, Land Rover and Porsche.
In December, the seasonally adjusted annualized rate of sales hit 16.4 million, marking the highest since May 2021 and exceeding the forecast range of 15.1 million to 15.4 million, according to GlobalData.
New car and light-truck inventories at the start of December were 2.56 million vehicles, marking an increase of 900,000 from the previous year, per Cox Automotive. J.D. Power and GlobalData estimated end-of-December retail inventory at about 1.7 million vehicles, a 7.6% increase from November and a 55% jump from December 2022.
As for average new vehicle discounts, these are expected to be around $2,458 last month, up $145 from November and 91% from December 2022, according to J.D. Power and GlobalData.
Sales of electric vehicles (EV) in the United States topped one million vehicles for the first time in 2023.
Fleet shipments in December were projected to reach 227,660, reflecting a 14% increase from December 2022 when adjusted for selling days, according to GlobalData and J.D. Power.
Before delving into the outlook for this year, here’s a rundown of the 2023 U.S. sales report of auto bigwigs, including General Motors (GM - Free Report) , Ford (F - Free Report) , Stellantis (STLA - Free Report) , Toyota (TM - Free Report) , Honda (HMC - Free Report) and others.
A Glance Through the Sales Numbers
General Motors retained the U.S. auto sales crown, with full-year sales of 2.6 million units, up 14%. Sales across its Cadillac, Chevrolet, Buick and GMC brands rose 9%, 13%, 61% and 9%, respectively. Cadillac and GMC brands recorded the best total sales since 2019.
Japan’s auto giant Toyota came in second, delivering more than 2.24 million units last year, up 6.6% year over year. While sales of the namesake brand Toyota were up 4.2%, the Lexus division witnessed a surge of 23.8% year over year. Importantly, RAV4 was the best-selling U.S. SUV for the eighth straight year in 2023.
GM’s close peer, Ford, sold roughly 2 million units in 2023, up 7.1% year over year. While sales of cars and SUVs moved up 2% and 0.5%, respectively, truck sales registered 13.2% growth. Importantly, F-Series maintained its position as America’s best-selling truck for 47 straight years.
Hyundai-Kia surpassed Italian-American automaker Stellantis to come in fourth, with full-year volumes of 1.65 million units, up 12.1%.
Among the automakers that have reported, Stellantis was the only one that saw its full-year sales contract. Its 2023 U.S. sales slid 1% year over year to around 1.53 million units. While sales across its Chrysler and Dodge brands increased 19% and 5%, respectively, Jeep, RAM, Fiat and Alpha Romeo brands recorded 6%, 1%, 34% and 15% fall in volumes, respectively.
TM’s close peer Honda saw 2023 U.S. sales growth of 33% year over year to 1.3 units (with truck sales comprising 65.8% of the total volumes). Sales of the namesake brand and Acura increased 32% and 42.4%, respectively. CR-V remained the best-selling vehicle of the firm.
In 2023, amid the automotive industry's recovery from the pandemic and chip shortages, Audi, BMW, Hyundai and Kia achieved record U.S. sales despite challenges like high interest rates. Enhanced electric vehicle lineups played a key role. Audi saw a 22% sales increase to 228,550 units, surpassing the 2017 peak. Hyundai sold 801,195 units, an 11% increase from 2022 and exceeding its previous high of 768,057 units recorded in 2016. Kia delivered 782,451 units, up 13% and surpassing the brand's previous record of 701,416 set in 2021. BMW recorded a 9% sales rise to 362,244 units, surpassing its 2015 peak of 346,023.
Following a robust sales rebound in 2023, it seems that the auto industry is poised for a moderate pace of growth in the coming year.While the Fed projected three rate cuts totaling 75 basis points for 2024, fostering optimism for potential economic stimulation, the cost of vehicle financing still remains reasonably high. The average monthly loan payment on new cars in the fourth quarter of 2023 was $739, up from $717 in the same period a year ago.
Additionally, with elevated vehicle prices and pent-up demand largely absorbed in 2023, there is a possibility that the sales growth rate might decelerate this year. Edmunds anticipates U.S. auto sales of 15.7 million vehicles in 2024. This represents a nominal year-over-year uptick of 1.3%, compared with year-over-year growth of 13% in 2023.
Cox Automotive adopts a more cautious outlook, projecting a more modest increase in industry sales to 15.6 million units. Quoting Charlie Chesbrough, senior economist at Cox Automotive, “High vehicle prices and high interest rates remain the industry's Grinch right now, and that trend will continue into 2024.”
Zero-percent loans, once a common incentive for vehicle purchases, have nearly vanished following the Federal Reserve's rate hikes. In the fourth quarter of 2023, new vehicle sales with zero-percent financing constituted just 2.3% of total sales, according to Edmunds.
Expectations of rapid growth in EV sales driving industry gains are facing challenges. High prices of many new EV models and consumer reluctance to switch to battery power due to concerns about refueling infrastructure have slowed the adoption. Automakers, including GM and Ford, have adjusted production targets and delayed some electric models in response to these market dynamics.
Overall, there are signs of slowing U.S. vehicle sales growth this year.
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Will US Auto Sales Sustain Momentum in 2024 After a Solid 2023?
New vehicle sales in the United States saw a substantial rebound last year after experiencing a decade-low in 2022. Sales reached their highest levels since 2019. This surge was fueled by factors such as pent-up demand, improved inventories, attractive incentives and a rise in fleet sales. According to Automotive News, U.S. light-vehicle sales in 2023 were up 13% year over year, totaling 15.6 million units. This data considers the sales figures released by most automakers, with a few exceptions like Mercedes-Benz, Porsche and Jaguar Land Rover, which are expected to report later this week.
A remarkably strong December in both fleet and retail sales channels resulted in the annual sales volume reaching its highest point since the onset of the COVID-19 pandemic.Fourth-quarter U.S. auto sales witnessed a 9.2% increase compared with the previous year, reaching an estimated 3.92 million units, including a substantial 16% jump in December to 1.49 million units, as reported by GlobalData. The figures do not include sales from certain brands like Mercedes-Benz, Jaguar, Land Rover and Porsche.
In December, the seasonally adjusted annualized rate of sales hit 16.4 million, marking the highest since May 2021 and exceeding the forecast range of 15.1 million to 15.4 million, according to GlobalData.
New car and light-truck inventories at the start of December were 2.56 million vehicles, marking an increase of 900,000 from the previous year, per Cox Automotive. J.D. Power and GlobalData estimated end-of-December retail inventory at about 1.7 million vehicles, a 7.6% increase from November and a 55% jump from December 2022.
As for average new vehicle discounts, these are expected to be around $2,458 last month, up $145 from November and 91% from December 2022, according to J.D. Power and GlobalData.
Sales of electric vehicles (EV) in the United States topped one million vehicles for the first time in 2023.
Fleet shipments in December were projected to reach 227,660, reflecting a 14% increase from December 2022 when adjusted for selling days, according to GlobalData and J.D. Power.
Before delving into the outlook for this year, here’s a rundown of the 2023 U.S. sales report of auto bigwigs, including General Motors (GM - Free Report) , Ford (F - Free Report) , Stellantis (STLA - Free Report) , Toyota (TM - Free Report) , Honda (HMC - Free Report) and others.
A Glance Through the Sales Numbers
General Motors retained the U.S. auto sales crown, with full-year sales of 2.6 million units, up 14%. Sales across its Cadillac, Chevrolet, Buick and GMC brands rose 9%, 13%, 61% and 9%, respectively. Cadillac and GMC brands recorded the best total sales since 2019.
Japan’s auto giant Toyota came in second, delivering more than 2.24 million units last year, up 6.6% year over year. While sales of the namesake brand Toyota were up 4.2%, the Lexus division witnessed a surge of 23.8% year over year. Importantly, RAV4 was the best-selling U.S. SUV for the eighth straight year in 2023.
GM’s close peer, Ford, sold roughly 2 million units in 2023, up 7.1% year over year. While sales of cars and SUVs moved up 2% and 0.5%, respectively, truck sales registered 13.2% growth. Importantly, F-Series maintained its position as America’s best-selling truck for 47 straight years.
Hyundai-Kia surpassed Italian-American automaker Stellantis to come in fourth, with full-year volumes of 1.65 million units, up 12.1%.
Among the automakers that have reported, Stellantis was the only one that saw its full-year sales contract. Its 2023 U.S. sales slid 1% year over year to around 1.53 million units. While sales across its Chrysler and Dodge brands increased 19% and 5%, respectively, Jeep, RAM, Fiat and Alpha Romeo brands recorded 6%, 1%, 34% and 15% fall in volumes, respectively.
TM’s close peer Honda saw 2023 U.S. sales growth of 33% year over year to 1.3 units (with truck sales comprising 65.8% of the total volumes). Sales of the namesake brand and Acura increased 32% and 42.4%, respectively. CR-V remained the best-selling vehicle of the firm.
In 2023, amid the automotive industry's recovery from the pandemic and chip shortages, Audi, BMW, Hyundai and Kia achieved record U.S. sales despite challenges like high interest rates. Enhanced electric vehicle lineups played a key role. Audi saw a 22% sales increase to 228,550 units, surpassing the 2017 peak. Hyundai sold 801,195 units, an 11% increase from 2022 and exceeding its previous high of 768,057 units recorded in 2016. Kia delivered 782,451 units, up 13% and surpassing the brand's previous record of 701,416 set in 2021. BMW recorded a 9% sales rise to 362,244 units, surpassing its 2015 peak of 346,023.
While GM and TM carry a Zacks Rank #2 (Buy) each, F, STLA and HMC are Zacks #3 Ranked (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
What Lies Ahead?
Following a robust sales rebound in 2023, it seems that the auto industry is poised for a moderate pace of growth in the coming year.While the Fed projected three rate cuts totaling 75 basis points for 2024, fostering optimism for potential economic stimulation, the cost of vehicle financing still remains reasonably high. The average monthly loan payment on new cars in the fourth quarter of 2023 was $739, up from $717 in the same period a year ago.
Additionally, with elevated vehicle prices and pent-up demand largely absorbed in 2023, there is a possibility that the sales growth rate might decelerate this year. Edmunds anticipates U.S. auto sales of 15.7 million vehicles in 2024. This represents a nominal year-over-year uptick of 1.3%, compared with year-over-year growth of 13% in 2023.
Cox Automotive adopts a more cautious outlook, projecting a more modest increase in industry sales to 15.6 million units. Quoting Charlie Chesbrough, senior economist at Cox Automotive, “High vehicle prices and high interest rates remain the industry's Grinch right now, and that trend will continue into 2024.”
Zero-percent loans, once a common incentive for vehicle purchases, have nearly vanished following the Federal Reserve's rate hikes. In the fourth quarter of 2023, new vehicle sales with zero-percent financing constituted just 2.3% of total sales, according to Edmunds.
Expectations of rapid growth in EV sales driving industry gains are facing challenges. High prices of many new EV models and consumer reluctance to switch to battery power due to concerns about refueling infrastructure have slowed the adoption. Automakers, including GM and Ford, have adjusted production targets and delayed some electric models in response to these market dynamics.
Overall, there are signs of slowing U.S. vehicle sales growth this year.