December 5, 2022

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US auto sales forecast for the first quarter of 2022 looks bleak due to chips and inflation

US auto sales forecast for the first quarter of 2022 looks bleak due to chips and inflation

New Jeeps are on display at an auto dealership showroom on October 5, 2021 in New York City.

Spencer Platt | Getty Images

Automakers are likely to report sharp sales declines for March and the first quarter, industry analysts say, as the ongoing shortage of new vehicles leaves auto shoppers with few — and often very expensive — options.

US car sales forecast from Cox AutomotiveAnd the EdmundsAnd the JD Power / LMC Automotive Say first-quarter sales of cars, vans and SUVs were likely below 3.3 million, down more than 14% from First quarter of 2021.

For some automakers, the declines may be even worse. Edmunds expects General motorsAnd the HondaAnd the AprilAnd the Volkswagen To report year-over-year sales down more than 20% for the first quarter, with stronghold It just goes a little better.

But as sales go down, prices go up: TrueCar analysts said The average selling price of a new car in the United States increased 15.4% in March from a year ago, to nearly $43,500.

Consumer concerns about inflation — including higher gas and auto prices — likely played a role in the expected sales decline for the quarter, which includes an expected drop of at least 24% in March. But the biggest factor is the lack of supply of new cars amid The global shortage of semiconductor chips.

“High gas prices were high on consumer concerns in March, but it was the inventory shortage that ultimately drove down new car sales in the first quarter,” said Jessica Caldwell, Edmunds executive director of statistics.

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Edmunds forecasts first-quarter auto sales fell 15.2% year-over-year. The company stated that inventories are still very thin, with only 20 days of supply for gas-powered vehicles and 21 days for electric vehicles. Automakers typically aim to have enough vehicles in stock to last 60 to 70 days.

Caldwell noted that automakers are still grappling with supply chain disruptions related to Covid, and may now face additional supply challenges in the wake of the Russian invasion of Ukraine.

Charlie Chesborough, chief economist at Cox Automotive, noted that US auto sales traditionally rose in March as spring weather arrived in most parts of the US. He thinks consumer demand is likely to be strong right now — if only automakers had more cars to sell.

“Low unemployment, relatively low interest rates — conditions are ripe for higher sales,” Chesborough said. But, he said, until automakers can increase the number of vehicles at many dealerships, sales will remain weak.

“Make no mistake, this market is stuck on low alert,” he said.