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The days of empty car dealer lots and high sticker prices may be in the US auto industry’s rearview mirror.
Following a 2023 sales rebound, industry analysts predict a “return to normalcy” in the US car market, according to a new report from Cox Automotive.
The momentum of 2023 ended in a Q4 milestone in the EV race: Chinese EV maker BYD unseated Tesla as the world’s top all-electric vehicle seller. Tesla had a strong quarter, notching a record 484,500 deliveries globally. But BYD clinched the top spot with some 526,000 all-electric vehicle sales in Q4.
In the US, analysts expect EV sales to grow in 2024, though likely at a slower pace than they did in 2023.
“We’re right back to where we were as an industry” before the pandemic, Charlie Chesbrough, Cox Automotive’s senior economist, told Tech Brew. “Inventories are starting to build again. Dealer lots are starting to get full again. And discounting and incentives are back in full force.”
Cox expects new-vehicle inventories to return to pre-pandemic levels of nearly 3 million units, and predicts 15.6 million new vehicle sales this year.
That’s a modest increase from the 15.5 million vehicle sales in 2023, per industry results released this week.
It’s still well below the roughly 17 million annual vehicle sales the industry averaged in the years leading up to the pandemic, but it marked an 11.6% jump from 2022. Backing the rebound were a boost in inventory levels and continued demand from consumers despite higher interest rates.
“What’s even more noteworthy is that consumer expenditure on new vehicles in 2023 set a record of $578 billion,” Thomas King, president of data and analytics at JD Power, said in a statement. “This is the third consecutive year in which US consumers spent more than half a trillion dollars buying new vehicles.”
Lower prices would be welcome news to car buyers, who faced price hikes and rising interest rates in the last few years. The monthly payment on a new vehicle rose to a record $739 in Q4, according to Edmunds, and the average down payment surpassed $7,000 for the first time.
In Q4 and 2023 as a whole, new-vehicle sales largely rose. GM retained its status as the leading US automaker, delivering 2.6 million vehicles for the year (up 14% from 2022).
Toyota sold more than 2.2 million vehicles, up 6.6% from 2022. Strong sales of EVs bolstered its results, with electric and hybrid vehicles making up 29% of US sales volume. Ford’s sales rose 7.1% YoY.
Honda reported a 33% sales gain in 2023, pointing to robust sales of electrified models as a factor. And Hyundai said it hit new sales records in Q4 and 2023.
“When we look forward, it does seem like we’ve had a nice recovery so far,” Chesbrough said. “But the question is, can the pace of recovery continue?…We see the market getting better, but just a little bit better.”