In its February forecast, Cox Automotive revealed expectations for new light vehicle sales to grow 3.9% from January and 4% from the same time last year.
January’s performance was unseasonably strong, connected to a sudden increase in retail activity, but, citing high auto loan rates and affordability, Cox Automotive expects overall vehicle sales to fall roughly 8% in February. This would bring the seasonally adjusted annual rate for the month to 14.4 million, which would still be a 5% increase from the same period last year. However, new light vehicle sales expected to climb both year-over-year and month-over-month to 1.105 million, 4% more than February 2022, and 3.9% more than January 2023. Sales in the mid-size, compact, compact SUV/crossover, full-size pickup and mid-size SUV/crossover segments are each expected to increase from January.
Despite the positive forecast for light vehicle sales, the report notes that limitations to consumer demand and vehicle values are still preventing a full-scale recovery. Record-high new vehicle prices, high monthly auto loan payments and other financial headwinds have prevented buyers from returning to the market. The lack of customers has especially impacted used car dealers, who have restricted their day supply to maintain profit margins. However, this mix of low inventory and deal-hungry consumers may work to the benefit of both buyers and the preowned market. Charlie Chesbrough, senior economist at Cox Automotive, believes the situation could change. “With many affordability-seeking vehicle buyers leaving the new market for the used, dealers may find they have too little used inventory, and price declines may reverse.” He adds that if customers do abandon the new vehicle market in search of better prices, OEMs may offer more incentives to move inventory. Both situations could be advantageous to dealers, provided they adapt their day supply as needed.
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