Yahoo Autos Halfway Into 2023 New Car Sales Are Booming Even As Prices Stay High
Good morning! It’s Wednesday, July 5, 2023 and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.
1st Gear: Supply And Price
New cars may be too expensive — more expensive than they’ve ever been — but automakers’ sales volumes still broadly climbed in the second quarter as supply chain constraints finally stopped holding vehicles back. We’re looking at a 12-to-14 percent rise in overall sales through the first half of 2023 per The Wall Street Journal, and that’s left manufacturers and dealers with no incentive to bring prices down:
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“Consumer confidence is still there, mostly because there has been that backlog of supply for so long,” said Scott Kunes, chief operating officer of Wisconsin-based Kunes Auto and RV Group, which sells most major domestic and foreign automotive brands.
The brisk demand has helped to keep the average dollar amount that buyers are paying for new wheels at near-record levels, despite predictions from Wall Street analysts that prices would come down as more vehicles arrive at dealer lots. The average price paid rose 3% over the first half of the year, and was about $46,000 in June, according to J.D. Power.
“People are continuing to buy up” to choose pricier models and features, General Motors finance chief Paul Jacobson said last month at a Deutsche Bank investor conference. [...]
Last month, Cox Automotive said it would raise its full-year U.S. vehicle-sales forecast to 15 million vehicles, from its previous estimate of 14.1 million vehicles.
The increase has been driven by surprisingly strong demand from both individual buyers as well as businesses and other commercial customers, said Cox’s Chief Economist Jonathan Smoke.
Still, persistently high sticker prices have started to take their toll on buyers’ enthusiasm. Cox Automotive predicts that demand will wane in the second half of the year, as the pool of eager buyers shrinks.
Cox’s 15 million guesstimate would still be a ways off from the pre-pandemic heights of 17 million. On the flip side, it’d also mark a million-plus improvement compared to 2022, when Americans registered 13.9 million new cars.
Some analysts say this trend is only temporary; eventually, once the people who have been waiting for a chance to buy something for a year or more are satisfied, today’s high prices will turn away anyone on the fence, leading to a fall in demand. Others believe increased production will lead to oversupply come the end of 2023, prompting a rush of incentives as dealers rush to move cars off lots as quickly as possible. Those are nice thoughts, but in this post-pandemic world, anyone setting the price of anything has pretty much been able to have their cake and eat it too.
2nd Gear: Kia
We now turn from the macro view of the market to our case study of Kia, still the industry’s darling. Kia’s second-quarter sales rose 15 percent versus 2022 on the back of increased supply of crossovers like the Seltos, along with the Carnival minivan. Courtesy Automotive News:
June sales rose 8 percent to 70,495 and marked Kia’s 11th consecutive month of gains and the seventh time Kia has posted more than 70,000 sales in a single month.
Kia also set a first-half record, with sales of 394,333, up 18 percent compared with 2022.
Eric Watson, Kia America’s sales chief, told Automotive News that compared with the first six months of 2021, a notably strong period for the industry as consumers flocked back to showrooms following the pandemic, Kia’s first-half results were up 5 percent.
Watson attributed Kia’s record first-half results to the strength of its crossover lineup, which logged an increase of 26 percent in the first six months.
The only sore spot was the brand’s electric cars, which miss out on the new Inflation Reduction Act federal tax credits unless leased. EV6 sales lagged 32 percent in the second quarter. Pretty much every other nameplate in Kia’s repertoire saw a bump, though.
