Recent reports reveal that surging interest rates, high inflation, high gas prices, and some other economic factors devastated the U.S. auto industry in 2022.
Automakers in the world’s largest economy were faced with weak demand for new vehicles as household income declined amid a high cost of living.
This surge in consumer prices created uncertainty among players in the automobile industry as they struggle to project the market outlook for 2023, especially after the International Monetary Fund (IMF) predicted that one-third of the world’s economies would be in recession this year.
Speaking in an interview, Senior Director of Industry Insights and Cox’s senior economist Charlie Chesbrough said, “This is one of those rare times where we really have no idea which direction the market could go. It could easily go up or down from where we’re at right now. The pace over the last couple of months has been definitely pointing to a weakening market.”
Investors King understands that in 2022, about 13.9 million new vehicles were sold in the U.S, an 8% decline compared with 2021 and the lowest since 2011 when the industry was recovering from the Great Recession.
Sales of vehicles had topped the 17 million mark for five straight years before the Covid-19 pandemic struck in 2020, unleashing supply-chain problems that have affected deliveries ever since.
Many analysts at Wall Street predict that profitable days for automakers may be nowhere near, as there is still surging higher interest rate and other economic challenges.
Meanwhile, a few car executives disclosed that they are optimistic that sales will improve in 2023, as vehicle inventories improved towards the end of 2022.
Some executives disclose that sales have been at or near recessionary levels due to parts and supply chain issues, plus demand has piled up from consumers and businesses after years of tight vehicle inventories during the pandemic.
Also, Toyota and GM disclosed that they expect U.S. auto sales to increase to about 15 million vehicles this year, which would be a roughly 9% increase over 2022.
