DETROIT (AP) – U.S. new vehicle sales rose only slightly in the second quarter, despite bigger discounts and slightly lower prices.
But faster sales may be on the horizon: auto industry analysts say they expect prices to drop further and there is a possibility reduction of interest rates this would make it more affordable to get a loan for a new vehicle.
Overall, U.S. sales rose just 0.1% from a year ago as still-high prices kept many potential buyers out of the market, according to preliminary data Tuesday from Motorintelligence.com.
Sales dipped in late June when cyber attacks came knocking software from CDK Global that merchants use to make sales documents. CDK said most dealers had returned by Tuesday afternoon, but companies such as General Motors said the problem delayed some shipments into the third quarter.
Analysts say inventories on dealer lots are rising, especially for higher-priced trucks and other vehicles.
Discounts vary by vehicle demand, with smaller, less expensive models and gas-electric hybrids generally in shorter supply. Many customers are delaying purchases, thinking that bigger discounts are coming.
“Waiting may be the optimal strategy here,” said Cox Automotive senior economist Charlie Chesbrough.
Toyota, which sells many popular gas-electric hybrids, posted a 9.2% increase in sales from April to June. Honda’s sales rose 2.7%, while General Motors posted just a 0.3% increase and Hyundai reported a 1.8% increase. Subaru had a 5.4% gain in sales.
Stellantis sales fell 20.7% in the second quarter, with the Ram brand down 26% and Jeep sales down 19%. Nissan sales fell 3.1%, while Kia fell 1.6%.
Collectively, automakers reported selling roughly 4.13 million new vehicles from April to June. That’s on pace to hit forecasts of nearly 16 million for the year, up slightly from last year’s 15.6 million.
Ivan Drury, director of knowledge at Edmunds.com, said interest rates on new vehicles average just over 7%, a high number for people who bought or leased vehicles years ago but now find they have to replace their trips.
Many of them, he said, are moving toward what few lower-priced vehicles remain in the mid- to high-$20,000 range.
“Things that are very affordable, that’s where they are,” Drury said. “You really have to have an attractive product at an attractive price for it to move today.”
For example, sales of the Chevrolet Trax compact SUV, which starts at $20,400 excluding shipping, rose 152.7% during the quarter.
Kevin Roberts, director of analytics for auto site CarGurus, said automakers want to keep making higher-margin SUVs and trucks when a large portion of buyers are after less expensive vehicles like compact sedans.
“You’re seeing people looking for more and more affordable vehicles. You’re seeing people asking under $30,000,” Roberts said.
The U.S. industry, he said, is at an inflection point where automakers will have to add discounts to lower prices, or will have to change what they make to “try to get more attractive price points and try to keep those inventories. easier levels.”
A move toward lower prices, however, could hurt Detroit automakers, which exited the lower-priced small and midsize car markets years ago after having trouble monetizing the vehicles.
Since the start of the coronavirus pandemic in early 2020, the cars have been in short supply as a shortage of vital computer chips hampered production. Coupled with strong demand, the car shortage drove average prices to a peak of nearly $50,000 by December 2022.
But this year, chip supplies have improved, production has increased, and supplies are on the rise. In June, dealers had about 3 million vehicles in inventory, up 55% from a year earlier, according to Cox.
As a result, average sales prices fell 1% to about $48,400 last month. That’s 3% below the peak of nearly $50,000 in December 2022, but still 20% higher than before the pandemic.
Of the vehicles that stay at many dealerships the longest, all are large pickup trucks or SUVs made by Detroit automakers. Stellantis’ Ram 1500 tops the list, staying at dealers for 141 days, CarGurus said.
There may be deals on vehicles that stay much longer, Roberts said. For example, 6% of national dealers’ new vehicle sales listings are from the 2023 model year.
Overall electric vehicle sales in the US rose 7% during the first half of the year to 599,134, Motorintelligence reported. EVs accounted for 7.6% of the US new vehicle market, about the same as for all of last year. The lease deals, which include federal tax credits, helped boost sales.
Sales of gas-electric hybrids rose 35.3% from January to June to 715,768, eclipsing sales of electric vehicles. Plug-in hybrids, which can travel a short distance on battery power before a gas-electric powertrain kicks in, also saw a big increase. Sales rose 24% to 159,399. Both are options for people who fear running out of juice with an EV.
Earlier on Tuesday, Tesla announced that its global sales in the second quarter fell by 4.8%, with a decline of 6.6% in the first half of the year. The company does not sell in the US. Ford releases sales figures on Wednesday.