22/03/30
Lead
The inability to buy and the inability to buy double-hit new car sales.
Author 丨 Ma Xifeng
Responsible editor 丨 Xu Jinkai
Edit 丨 Chic
There are still two days to go before the end of March, but the dismal sales of the U.S. auto market have been predicted in advance.
Recently, a new round of lockdowns in Major Asian economies and the Conflict between Russia and Ukraine have reignited supply bottlenecks that have eased in recent months. Tight supply has pushed new car prices to record highs.
And with chip supply shortages, the Ukraine crisis squeezing inventory levels, and rising prices scaring away less-than-cashed buyers, U.S. new car sales in the first quarter of this year could hit a 10-year low.
Industry research firm Cox Automotive forecasts a wave of U.S. sales in the first quarter of 2022, expecting U.S. car and light truck sales to fall more than 24 percent to around 1.22 million units in March, with an overall decline of more than 16 percent in the first quarter.
As parts shortages persist and inflation weakens consumer purchasing power, analysts are also downgrading their forecasts for U.S. sales in 2022.
LMC Automotive expects U.S. sales to reach 15.3 million units this year, down from a previous forecast of 15.9 million. Cox Motor Corp. also cut its forecast for the year from 16 million to 15.3 million on Monday, down 700,000 units from its January estimate. Cox said that even if the new targets are to be met, the current supply chain disruptions will need to be significantly improved.
Analysts believe that while employment and wage growth remain strong, higher gasoline prices and higher interest rates will also weaken earnings and consumer confidence this year.
"The momentum has stalled," Jonathan Smoak, chief economist at Cox Motors, said Monday. "The economy has gone from an unimpeded green light to a yellow light that makes people hesitate and stop early."
Cox Motor Corp. expects Toyota Motor Corp. to overtake General Motors to become the top-selling U.S. automaker in 2021, expecting to maintain its lead of about 25,000 vehicles in the first quarter.
1
Sales outlook for March
March is often one of the strongest months of the year, a bellwether for the spring sales season, and sales are often driven by a large number of promotions as manufacturers in Asia prefer to end their fiscal year on a high profile.
Even so, analysts expect U.S. new vehicle deliveries to fall 24 percent to 26 percent to about 1.2 million units in March, and seasonally adjusted annualized sales to fall to 12.7 million to 12.7 million to 13.1 million from March 2021, directly reducing the "hottest March" to the historical freezing point.
LMC Automotive, J.D. Power and Cox Automotive forecast a 16% to 18% decline in first-quarter sales.
Most automakers are scheduled to release U.S. sales results for March and the first quarter on Friday. Ford Motor Company, Daimler and Jaguar Land Rover will report results next week.
2
The 1 million mark is difficult to break
LMC Automotive and J.D.Power said new car and light truck inventories fell below 900,000 units in March due to production cuts after the chip crisis, and have been below 1 million units since last summer.
The scarcity of new cars and light trucks, combined with record-low incentives, continues to push car prices to record highs.
The average reward for new cars will hit an all-time low of $1,044 in March, down 69% from the same period last year. One of the main reasons for the sharp decline in incentives is the lack of leasing transactions due to the corresponding subsidies reduced by the factory. In 2019, the leasing business accounted for 30% of all new car retail sales, but only 18% of retail sales in March.
LMC and J.D. Power forecast that the average trading price is expected to reach a March high of $43,737, up 17% from the same period last year. The average trading price for the first quarter is expected to reach $44,129, up 18 percent from the first three months of 2021.
Some U.S. consumers are still holding a wait-and-see attitude until prices improve, otherwise some less well-off consumers will leave the new car market and switch to the used car market.
Cox Motors said the kia, Lexus and Toyota brands were supplying new cars for less than 20 days this month. At the other end of the availability range, Vehicles from Buick, Jeep, Audi, Volvo and Ram are available for 50 to 60 days, 65 days below the industry's long-term standard.
As one of the most important auto markets in the world, the double whammy of not being able to buy and not being able to afford it has put a lot of pressure on the US car market. Although the specific data has not yet come out, the dismal results are not surprising.
Ma Xi Feng
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