U.S. auto sales slump as less affluent buyers leave

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Unsold cars due to the downturn in the auto market caused by the coronavirus disease (COVID-19) are stored in the Wells Fargo Center parking lot in Philadelphia, Pennsylvania, U.S. April 28, 2020. REUTERS/Mark Makela

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March 28 (Reuters) – New vehicle sales in the United States could fall to the lowest volume in the first quarter of a decade, as chip shortages and the Ukraine crisis squeeze inventories and higher prices push less affluent buyers out of the market, research firm Cox Automotive said Monday. .

Sales of cars and light trucks in the United States are expected to fall more than 24% to about 1.22 million units in March and to fall more than 16% in the first quarter.

“Make no mistake, this market is stuck in low gear,” said Charlie Chesbrough, senior economist at Cox Automotive, adding that sales will remain at current levels until supply improves.

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Cox forecasters said the US economy is unlikely to experience a recession. But Cox cut its forecast for U.S. car and light truck sales for all of 2022 to 15.3 million vehicles, down 700,000 vehicles from its January outlook. And even hitting the new target will require a significant improvement in supply chain disruptions, Cox said.

Further lockdowns in China as well as Russia’s invasion of Ukraine have reignited supply bottlenecks that have eased in recent months. Tighter supply pushed new vehicle prices to record highs. Read more

Detroit’s mainstream brands and NissanMotor Corp (7201.T) are hurting as less affluent consumers leave the new-vehicle market, Cox analysts said on a call.

Households with annual incomes below $75,000 now represent almost two percentage points less of the U.S. light-vehicle market than they did a year ago, Chesbrough said. The average income of a new vehicle buyer is now $124,000.

Detroit’s mainstream brands such as Chevrolet are losing market share, while Cox predicted Japan’s Toyota (7203.T) could be the top-selling automaker in the US market in the first quarter.

“In the long run, you’re narrowing the pool of people who are likely to buy” a new vehicle, Cox chief economist Jonathan Smoke said.

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Reporting by Kannaki Deka in Bengaluru and Joseph White in Detroit; Editing by Devika Syamnath and Tomasz Janowski

Our standards: The Thomson Reuters Trust Principles.

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