After a tumultuous year, dealers are speculating over what the New Year has in store for the retail automotive sector. Will the industry continue to see pre-pandemic conditions return, or are there still surprises in store for the car market?
On this episode of Inside Automotive, host Jim Fitzpatrick is joined by Kevin Tynan, senior automotive analyst at Bloomberg Intelligence. Tynan has long maintained a birds-eye view over the car market, giving him the ability to place auto industry trends in the broader context of the economy and politics. Now, he shares his insights into the New Year and what dealers can expect to see in 2024.
Key Takeaways
1. Tynan believes 2023 was the “watershed” year, while the New Year will focus on decision-making. Manufacturers will need to determine whether they wish to continue building new vehicle supply at the expense of pricing or if they will draw a line in the sand and keep inventories constrained so that prices remain inflated.
2. Tynan believes that OEMs are currently signaling they will hold prices steady into the New Year, noting that Stellantis and General Motors have both expressed reticence to return to pre-pandemic conditions.
3. In recent weeks, Ford, General Motors, and Stellantis have made moves to dial back their expectations on the electric vehicle market. Tynan was surprised to see automakers back off their goals so early, assuming they would first continue to ramp up production in 2024 to see if demand would accelerate accordingly.
4. Dealers will likely continue to see profitability decline in the New Year as inventories and demand normalize. That being said, Tynan notes the current market is still favorable to sellers, leaving it up to automakers to set the tone on pricing next year.
5. Tynan does not expect car manufacturers to focus on sales as much as on profitability, noting that it would be more costly to attract new buyers than it would be to maximize the utility of customers still in the market.
"I don't think our government has the appetite to stick to some really aggressive EV plan just because of climate issues or whatever else; there comes an economic component that they just can't stomach." — Kevin Tynan
