Analysts project new vehicle sales will rise in the first quarter despite a demand cooldown observed in March, as echoes from the post-pandemic boom continue to be felt throughout the car industry.
While improvements were only marginal on a quarterly basis, the year-over-year gain is expected to reach 5.6%, with new vehicle sales hitting roughly 3.8 million units by the end of March. Higher inventory levels compared to early 2023 resulted in better availability, stabilizing demand as automakers leveraged incentives and discounts to attract deal-starved buyers.
March’s annual new vehicle sales rate of 15.5 million units was slightly ahead of last year’s 14.9 million but slowed down from February’s faster-than-normal pace. New vehicle values continued to weaken throughout the month, with the average transaction price forecast to fall 3.6% from the prior-year period to just over $44,000.
General Motors is likely to lead other automakers in new vehicle sales once again, although data from Edmunds suggests the brand will report a slight reduction in volume from last year. Meanwhile, analysts project Toyota and Ford will take second and third place, respectively. Toyota saw a sharp increase in demand over the first quarter, with sales expected to jump approximately 20% year-over-year, marking one of the fastest recoveries in the industry. Ford saw similar, but less substantial, improvements, eking out a modest annual increase of 6.5%.
The increase in new vehicle sales over the first quarter suggests that the car market still benefits from a post-pandemic surge in demand, although the gains have slowed since last summer. Automakers have also managed to push volumes higher by gradually improving affordability over the course of the last six months, attracting more buyers to the market. Whether that gradual pace is sustainable, however, is unclear. There will likely be a point where companies must decide between a sharp decline in sales or a sharp decline in prices. Carefully balancing inventory and affordability with demand will be increasingly necessary to keep sales and profits stable in the coming months.
