General Motors is back on top one year after losing the title of America’s top car seller, which it held for nearly a century.
On Wednesday, GM (GM) reported 2.3 million vehicle sales in the United States. It was able to finish the year with sales that were up nearly 3% from the 2.2 million US vehicles it sold in 2021, when it experienced a 13% decline, thanks to strong fourth-quarter sales that were up 41% from the previous year.
Even though sales in the fourth quarter increased by 13%, Toyota (TM), which had risen to the top spot in 2021, saw its full-year sales decrease by nearly 10% to 2.1 million.
A lack of components, primarily computer chips, required to construct the automobiles and trucks consumers desired hampered industry-wide auto sales in each of the previous two years. When the industry’s final sales results are released later this week, it is anticipated that the total number of new vehicles sold in the United States will be just under 14 million.
That would be the lowest total of sales since the nation emerged from the Great Recession more than ten years ago. In 2009, when GM and Chrysler filed for bankruptcy and received federal bailouts, sales peaked at 10.5 million. By 2011, the industry’s last year of sales below 14 million, sales had only risen to 12.7 million.
In the year prior to the pandemic’s disruption of the economy and supply chains, sales had reached 17 million.
The supply chain issues are improving, according to the majority of forecasts, and automakers should be able to increase production in 2023. Even though higher automobile prices and rising interest rates have made it more expensive for buyers than in the past, they point to the better sales that occurred in the fourth quarter as evidence of this.
As a result, they now anticipate a slight increase in sales this year to just over 14 million vehicles.
However, a number of experts point out that their prediction of increased sales is contingent on the US economy not entering a recession but simply experiencing slower growth. They also assert that the outlook for automobile sales is significantly less certain than it was in previous years due to uncertainty regarding the state of the economy.
“I’ve been forecasting the car market for decades now. This next year is the most challenging,” said Charlie Chesbrough, chief economist for Cox Automotive. “Normally we an idea which way it is headed. But this year it could be up or down.”
Even if the economy falters, new car sales will still be supported by a number of factors in the coming year. One reason is that rental car companies haven’t been able to buy the new cars they need in the last two years because automakers stopped making cars for cheaper fleet sales and instead sold all or nearly all of the cars they had to consumers.
Edmunds director of insights Ivan Drury stated, “Rental companies have been running at half of the purchases that they’re accustomed to.”
Additionally, Drury asserted that if automakers begin to observe a decline in consumer demand, they would be able to reinstate incentives, such as financing at lower interest rates, that they had previously been unable to provide during times of excess supply and demand.
He stated, “The incentives recently have been virtually nothing.”
As of now, there is still a lot of demand due to potential buyers who have put off buying a vehicle because they couldn’t find it. However, Drury and Chesbrough agree that rising interest rates and average prices are already driving buyers away from the market.
A downturn in the economy, particularly if historically low unemployment rates begin to rise, may prompt a decrease in new car sales quickly.