In a remarkable display of resilience, the US automotive market witnessed a 12% surge in new vehicle sales in the past year, defying challenges such as high prices, rising interest rates, autoworker strikes, and the lingering impact of the global computer-chip shortage. The latest data reveals that American consumers purchased 15.6 million new vehicles in 2023, marking the most significant increase in over a decade.
However, the market is yet to fully recover to the pre-pandemic rate of 17 million, and signs of a cooling market are emerging. Buyers appear less inclined to pay the elevated prices that were prevalent just months ago, signaling a shift in consumer behavior.
Jonathan Chariff, CEO of South Automotive Group in the Miami area, notes that consumers are actively seeking the best possible prices, indicating a strategic approach to making purchases. Average auto sales prices, which peaked in December 2022 at just over $47,300 due to the global chip shortage, have started to decline. Dealers and manufacturers, grappling with the chip shortage and autoworker strikes, are now offering discounts as vehicle supplies on dealer lots strengthen.
Data from J.D. Power shows a 2.7% decline in average prices in mid-December, down to approximately $46,000. Although prices have eased, they remain significantly higher than pre-pandemic levels, with a 26% increase from 2020 to 2022, outpacing the inflation rate.
Despite this, there is optimism for the market in 2024. Jonathan Smoke, chief economist for Cox Automotive, anticipates a widening gap between sticker prices and transaction prices as manufacturers focus on discounting. In November, discounts more than doubled year over year, signaling a shift in the market dynamics.
The market may be experiencing a shift toward more affordable options, with an uptick in sales observed at the lower end of the market. Electric vehicle sales also showed promise, growing 47% to a record 1.19 million for the full year. The EV market share increased from 5.8% in 2022 to 7.6% in 2023.
Gas-electric hybrid sales saw a robust 54% growth, reaching 1.2 million last year, with market share jumping from 5.6% to 7.7%. Notable sales performances include General Motors’ 14% increase, Toyota’s 7% growth, Honda’s 33% rise, and Nissan’s 23% increase.
Amid these trends, Ford’s F-Series pickup trucks continue to dominate as the likely top-selling vehicle in the US, while Toyota’s RAV4 small SUV secured the top-selling non-pickup spot, with sales rising 9% to almost 435,000 units in 2023.
