Forecasters expect modest growth in 2023 as economic headwinds like rising interest rates and sky-high transaction prices freeze some buyers out of the market.


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Lingering supply chain woes dragged 2022 U.S. light-vehicle sales to their lowest level since 2011, but many dealers are entering 2023 with fuller lots as production begins to bounce back — at least for some automakers.

Still, experts warn the industry will grapple with numerous challenges this year that could slow its recovery, including rising interest rates and sky-high transaction prices that may turn away some buyers.

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“We’re not seeing demand collapse; there’s still strong demand, but it’s certainly weaker than it was,” Michelle Krebs, executive analyst at Cox Automotive, told Automotive News. “Interest rates on top of high prices are just freezing some people out of the market.”


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Among the companies that reported, U.S. light-vehicle sales fell roughly 8 percent to 13.4 million in 2022, according to the Automotive News Research & Data Center. Mercedes, Porsche and Jaguar Land Rover are set to report this week.

The seasonally adjusted annualized rate of sales in December came in at 13.59 million, the lowest since August, but higher than December 2021’s figure of 12.9 million.


The myriad supply chain disruptions that suppressed inventories and curtailed production for most of the year started to ease in the fourth quarter, leading some automakers to post solid gains.

General Motors, for example, reported a 42 percent increase in fourth-quarter light-vehicle volume, an end-of-year sprint that helped it reclaim the U.S. sales crown from Toyota Motor Corp. by nearly 150,000 vehicles. GM said U.S. dealership inventories have more than doubled over the last year.

Toyota sales rose 13 percent in the quarter, while deliveries at Hyundai-Kia jumped 23 percent.

At Ford Motor Co., sales in December rose 3.3 percent, driven by its profitable pickups and newest electric vehicles. The automaker reported a 2.2 percent loss for the year, although it finished with about 151,000 more vehicles in gross inventory than at the end of 2021.

Other automakers such as Stellantis, Nissan Group and American Honda, however, continued to struggle, pinning their troubles on supply challenges.

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Jeff Kommor, head of U.S. sales for Stellantis’ FCA US unit, cited “production constraints and a disruption of parts and materials in general,” as well as “market conditions that carried across 2021 into 2022,” for negatively impacting the company’s results.


Not ‘out of the woods yet’

American Honda struggled throughout the year, posting the steepest decline for 2022 among major automakers, at 33 percent. The company has posted 17 straight months of declines.

The automaker said it is starting 2023 with about 40,000 new vehicles in inventory and has advised dealers that stockpiles won’t return to normal levels until the fall at the earliest.

Mamadou Diallo, vice president of auto sales for American Honda Motor Co., said the company isn’t “out of the woods yet with supply issues” but that “we begin 2023 with roughly double the on-hand inventory of 2022.”

One area that saw steady growth in 2022? Electric vehicle sales.

Tesla continued to dominate, delivering more than 1.31 million vehicles globally for the year, although it does not break out sales by region.

Ford finished the year at No. 2 in the U.S. after more than doubling EV sales to 61,575. Ford trailed Hyundai Motor Group for much of the year but pulled ahead in the final months thanks to a ramp-up in production of the F-150 Lightning, which went on sale in May. Hyundai finished 2022 selling 58,028 EVs, according to Motor Intelligence.

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The race is expected to ratchet up in 2023, with Ford projected to produce 600,000 EVs globally by the end of the year, Hyundai Motor introducing EVs such as the Kia EV9 and Hyundai Ioniq 6 and GM starting production of multiple models including the Silverado EV.

Cox Automotive expects EV sales to top 1 million in the U.S. for the first time this year, Krebs said.


Forecasts for 2023 light-vehicle sales range from 14.1 million to 15 million, with many forecasters predicting small gains because of a number of headwinds, including the threat of a potential economic downturn.

They say some people are delaying buying or considering a used car, even as job growth remains healthy and consumer confidence rebounds.

Even wealthy buyers are increasingly paying in cash to avoid interest payments, Krebs said.

Analysts say that as inventory continues to improve, automakers are likely to boost incentives, which have fallen significantly in recent years. TrueCar estimates incentives averaged $1,121 per new vehicle last month, down 41 percent from December 2021 but up 4.5 percent from November.

“The industry shows signs of reverting to old customs,” TrueCar analyst Zack Krelle said in a statement. “Markups are being reduced, incentives are inching up and a larger proportion of sales are allocated to rental fleets — all normal indicators after what has been an abnormal few years.”

David Phillips contributed to this report.

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