General Motors Co. and several other automakers reported that their U.S. sales growth slowed at the end of 2023, while rival Toyota’s sales continued to grow strongly, mainly due to the close to a record high. Record sticker prices and high interest rates have impacted the entire auto market, causing uneven sales.
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General Motors Co said on Wednesday its vehicle deliveries rose less than 1% in the fourth quarter as it recovers from a UAW strike at four assembly plants. Nissan and Honda reported more modest growth late last year, while South Korean automaker Kia America’s sales fell in December.
The pent-up demand that underpinned sales in the wake of the pandemic has been met, with some consumers now balking at 10% auto loan rates and average prices around $48,000. Total seasonally adjusted sales likely fell to about 15.4 million vehicles in the final month of 2023, down from about 15.5 million in the previous two quarters, data compiled by Bloomberg showed.
“We’ve seen a significant reduction in the number of low- and middle-income households buying new cars, and now it’s almost all in the top 20% of income earners,” said Jonathan Smoke, chief economist at Cox Automotive. of households are buying new cars.”
Still, some companies are bucking the trend. Toyota’s deliveries rose more than 15% in the final three months of 2023, driven by hybrid vehicles. South Korea’s Hyundai brand posted a record sales growth of 5% during the same period.
Toyota’s big sales gains came from its compact Corolla hybrid sedan, which more than doubled in sales, and the RAV4 small SUV, which saw sales rise 37% in the fourth quarter. The company attributed the strong sales performance to the easing of supply chain and logistics issues in the second half, increased product availability and the launch of products such as the Grand Highlander midsize SUV.
“We hit our own pace in the fourth quarter and were able to deliver more new products to our dealers,” David Christ, head of Toyota’s U.S. brand, said in an interview.
For Hyundai Motor Co.’s namesake brand, the fastest-growing sales were a gas-guzzling car and an electric vehicle, with deliveries of the large Palisade SUV and IONIQ 5 EV nearly doubling in the fourth quarter.
General Motors Co’s sales rose just 0.3% in the fourth quarter as strikes at four plants cut production of its best-selling Chevrolet Tahoe and GMC Yukon SUVs, as well as production versions of its Chevrolet Colorado pickup truck. A spokesman for the company said sales were strong in December as inventory was replenished. Despite the strike, GM’s sales rose 14% for the year.
The Detroit automaker still faces challenges in producing electric vehicles. GM aimed to deliver 150,000 electric vehicles last year but actually sold fewer than 76,000, with most of those sales coming from the Chevrolet Bolt compact plug-in car. However, General Motors has stopped producing this model. Production problems have plagued the rollout of cars using the company’s Ultium batteries.
Financing costs
Judy Wheeler, Nissan’s vice president of U.S. brand sales, said in an interview that Nissan’s sales slowed at the beginning of the fourth quarter but picked up in December. Lower interest rates will help lower financing costs and keep dealer lot inventories steady for many manufacturers.
“Interest rates are starting to come down now, and that’s going to have a big impact on consumers because they now have a little more money in their pockets,” Wheeler added.
Nissan’s fourth-quarter sales rose 5.6%, a sharp slowdown from 23% growth for the full year. Kia America said sales fell slightly to 60,275 vehicles in December, despite reaching a record 782,451 vehicles for the year.
Honda’s U.S. vehicle deliveries surged 31.5% in December, but that was slower than the company’s full-year growth of 33%. While sales of CR-V models rose 88.2 percent, sales of its signature model, the Accord, fell 11.5 percent, making it the best-selling crossover SUV on the market.
Ford Motor Co. is scheduled to release its latest U.S. sales figures on Thursday local time.
Continuous challenge
While auto sales are already much improved in 2023 compared to inventory-constrained 2022, challenges emerging at the end of the year are expected to persist. Cox Automotive predicts U.S. auto sales will grow less than 2% through 2024. This means annual vehicle sales are unlikely to exceed 17 million units anytime soon, as they did for five consecutive years before the pandemic.
“The industry’s new sales norm is closer to 16 million due to declining affordability. We’ve lost about 10 percent of our buyers,” said Jonathan Smock, chief economist at Cox Automotive.
Automakers have no incentive to cut prices because they make more money selling fewer cars. Consumer spending on new vehicles will reach a record $578 billion in 2023, marking the third consecutive year it has topped $500 billion, according to research firm J.D. Power. Consumers’ average monthly car payment was estimated at $739 in December, up $9 from a year earlier, according to J.D. Power.
Toyota executives say the price shock is forcing more car buyers to cut back on their budgets when trading in vehicles, with some consumers choosing to buy used cars of newer models instead of new ones. Even so, they expect annualized sales to reach 16 million units by 2024 as vehicle supply improves and other brands increase incentive spending to spur demand.
“The market sentiment this year is significantly more optimistic,” Jack Hollis, executive vice president of Toyota Motor North America, said in an interview.
