I follow industry trends and that includes quarterly sales. But it’s been a real struggle lately to make sense of the numbers. Industry cheerleaders say that the manufacturers are endlessly struggling to meet pent up demand due to chip shortages, but then why are inventories steadily marching upwards? Ford reported a 51 day inventory at the end of June, almost in line with an ideal inventory of 60 days. The Silverado 1500 has a 50 day supply, F150 has a 55 day supply, and the Ram 1500 has a 75 day supply.
Of course the cars that are hot in demand, mainly Asian brand sedans and compact CUVs are still hard to find, topped by the Honda HR-v with a 13 day supply and the Corolla with a 14 day supply.
Sales overall fell 18.5% for the first half of 2022 but average transaction prices (“ATP”) rose to a record $44,670. That’s a bit hard to explain. The model trim mix must be higher than ever, among other things.
One thing is for certain: lower income buyers are being priced out of the market.
Here’s the sales number for Q2 and the six months of 2022 to date. I prefer to focus on the 6 months 2022 to 20221 comparison, and there’s a few interesting trends. GM is the laggard of the Big 3, down 17.8% YOY; Stellantis is down 14.7%, and Ford 8.1%. But then Toyota is down 19.1% and Honda a whopping 39.3%. I assumed that the chip shortages were either getting a bit better or certainly no worse. What’s really going on?
Of the big volume brands, only Ford (-7.9%) and Hyundai-Kia (-12.7%) beat the market overall. The fact that the luxury brands did significantly better makes me wonder how much it really is the chip shortage holding back volumes. BMW was down 10.3%, and Mercedes hadn’t reported yet. But Audi was down 31.4%, Hmm. Of course Tesla beat the trend, up 47.4%, beating BMW overall, and quite likely Mercedes to take the premium brand crown.
So why were sales so consistently better in 2021 than so far in 2022?
Well, GM did say that they’re sitting on 95k vehicles that are missing certain components, and expects them to be released in the second half.
The pandemic has created a sea change in the industry, and it’s hard to get a read on what’s really driving things. But when it comes to profits, thanks to drastically lower incentives, higher trim mixes and other factors have been resulting in stellar results, so far. But then the Big Three’s labor contracts were written several years ago, locking in low rates, but there’s signs that the next contract negotiations are going to be challenging.
Analysts have had to reduce their full-year 2022 sales forecasts repeatedly. They started the year predicting sales of some 16.5 million, and now are calling for as little as 14.3 million (True Car).
Supply varies widely by brand and model and region. Kia, Honda, Subaru, Toyota, Lexus, Land Rover, BMW and Porsche had the leanest supplies last month, according to Cox Automotive, while Ram, Volvo, Dodge, Jeep, Audi, Buick, Cadillac and Infiniti had the highest days-supply. Here’s a chart of the top 30 nameplates and their respective days’ of supply.
Asian brands dominate the list of those in greatest demand, including a number of sedans.
Not surprisingly, incentives are very low, and 25% lower than last year. That suggest that no one is yet feeling a reduction in demand, and that the inventory buildup is still seen as a good thing.
We’ll leave the best for last: Average Transaction Prices. They’re up 15% YOY for Q2, and averaged $44,670. Seems like only yesterday it was a big deal when they hit $35k. Some 13% of new car buyers in June committed to monthly payments in excess of $1000.
Autonews’ coverage of Q2 sales ended with these quotes by two key industry analysts:
I’m not sure I can add much. Like so much during this pandemic, what used to be taken for granted cannot be any longer. It’s a changed world and auto market.