Automakers are expecting a better 2023 after several finished last year on a strong note, but fast-rising interest rates are flashing a warning sign on affordability that could keep more buyers on the sidelines.
(Bloomberg) — Automakers are expecting a better 2023 after several finished last year on a strong note, but fast-rising interest rates are flashing a warning sign on affordability that could keep more buyers on the sidelines.
General Motors Co. and Toyota Motor Corp. posted double-digit gains in the fourth quarter. Many major automakers, including Stellantis NV and Hyundai Motor Co., report US sales for 2022 on Wednesday. Ford Motor Co. is expected to provide its US sales data Thursday and Tesla Inc., which provides global numbers, reported its results on Monday.
Read more: Tesla Deliveries Miss Estimates Despite Year-End Discounting
For the year, GM’s sales rose 3% to 2.3 million, which the automaker said is enough to make it the overall US sales leader.
Total sales for 2022 likely fell below 14 million units, the lowest since 2011, when the US was still recovering from the 2008-2009 financial crisis. That number is expected to grow in 2023 as increased semiconductor supplies ease persistent production bottlenecks and boost the inventory of cars available on dealers’ lots.
In a sign of that improvement, carmakers likely sold new cars at an annual pace of 13.3 million in December, up 7.3% from a year earlier, according to the average forecast of six market researchers.
Retail sales of new cars last month likely rose 4% from a year ago to 1.27 million as inventories continued to improve and prices moderated, according to researcher Cox Automotive. Still, that’s short of the typical pre-pandemic sales of 1.5 million units in December, a time when carmakers historically have pushed year-end sales campaigns to hit annual targets.
“It’s not all doom and gloom,” Jack Hollis, Toyota’s North American sales chief, said in a call with reporters. “We think 2023 will be an uptick, not as high as we’d like it to be, but moving in the right direction.”
Cost remains a big issue for car buyers and sellers. While sticker price increases have peaked, financing charges are surging as a result of interest rate hikes. Financing is more expensive than ever for both new and used cars.
The average annual percentage rate for new vehicles rose to 6.5% in the last quarter of 2022 compared to 5.7% in the third quarter and 4.1% this time a year ago, according to Edmunds.com. The number of buyers with monthly payments exceeding $1,000 a month is at an all-time high.
“Just as new and used car prices finally started to cool off in Q4, rapidly rising interest rates created an even greater barrier to entry for consumers who rely on financing — which is the vast majority of car shoppers,” Ivan Drury, Edmunds’ director of insights, said in a statement.
GM Goes Big
General Motors said its fourth-quarter deliveries climbed 41% to 623,261 vehicles thanks to the improved access to semiconductors. That contrasts with the carmaker’s difficult period a year ago when it faced a meager supply of chips and production shutdowns.
Almost half of GM’s sales were pickup trucks and large SUVs as the company prioritized output of bigger, high-margin vehicles in a year when semiconductor supplies were still running short of full capacity. Cadillac brand sales soared 75% in the quarter. Chevrolet Bolt and larger Bolt EUV electric models sold a record 38,000 units for the year.
GM said it will resume production of its Hummer electric pickup and expand production of Cadillac Lyriq EV this month.
Toyota’s Mixed Bag
Toyota’s US deliveries rose 3.5% last month, as strong sales of the Tacoma pickup, Corolla and Camry sedans offset a 16.4% decline in the automaker’s Lexus luxury line. In the fourth quarter, sales increased 13% to 536,740 vehicles and for all of 2022, deliveries fell 9.6% — led by a 15% dropoff in Lexus deliveries.
Toyota’s RAV4 compact SUV remained its top seller, with full year deliveries of 399,941, a 1.9% decline from a year earlier. Sales of Toyota’s Prius gas-electric hybrid fell 37% in 2022.
“What we’re seeing is improved supply chain resulting in improved inventories,” Hollis said. “It’s slow, but it’s steady.”
Hyundai’s Hot December
Hyundai saw sales jump 40% in last month to 72,058 vehicles — its best December ever, powered by growth in deliveries of models like its Tucson compact SUV and Kona subcompact crossover and Elantra compact sedan. For the last quarter of the year, sales climbed 29% to 195,967 units — thanks in part to strong demand for its hybrids and EVs — while full year sales dipped 2% to 724,265 vehicles.
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