A year after losing the title it held for nearly a century as America’s top car seller, General Motors is back on top.
GM (GM) reported U.S. sales of 2.3 million vehicles on Wednesday. Strong fourth quarter sales, up 41% from a year ago, helped it end the year with sales up nearly 3% from 2.2 million U.S. vehicles sold in 2021, when they suffered a 13% decline.
Meanwhile Toyota (TM), which had captured the top spot in sales in 2021, saw full-year sales fall nearly 10% to 2.1 million, despite a 13% increase in sales in the fourth quarter. .
In each of the past two years, industry-wide auto sales have been constrained by a shortage of parts, mostly computer chips, needed to build the cars and trucks consumers want. Total new vehicle sales in the United States are expected to fall to just under 14 million vehicles when final sales results are released across the industry later this week.
It would be the lowest sales total since the country was just emerging from the Great Recession more than a decade ago. Sales hit a low of 10.5 million in 2009, the year GM and Chrysler declared bankruptcy and received federal bailouts, and had only recovered to 12.7 million in 2011 last year. industry sales fell below 14 million.
Sales had been 17 million in 2019, the year before the pandemic upended both the economy and supply chains.
Most forecasts indicate that supply chain issues are improving, which should allow automakers to increase production in 2023. They indicate that the better sales that occurred in the fourth quarter compared to the beginning of the year are proof of this, even with a higher car. prices and rising interest rates, making them more expensive for buyers than in the past.
That in turn led them to forecast a modest increase in sales this year to just north of 14 million vehicles once again.
But many experts warn that their forecast for increased sales hinges on the U.S. economy not falling into recession and experiencing slowing growth instead. And the uncertainty about what will happen to the economy makes the outlook for car sales much more uncertain than in previous years, they say.
“I have been forecasting the automotive market for decades now. Next year is the toughest,” said Charlie Chesbrough, chief economist at Cox Automotive. “Normally we have an idea of the direction in which he is heading. But this year it could be up or down.
There are a number of factors supporting new car sales over the coming year, even if the economy stumbles. One is the fact that car rental companies have been unable to buy the supply of new cars they need over the past couple of years as car manufacturers have limited the supply of cars available for low-cost fleet sales, selling all or nearly all of the cars they had to consumers instead.
“Rental companies made half the purchases they’re used to,” said Ivan Drury, knowledge manager at Edmunds.
And Drury said if automakers start to see weak consumer demand, they could bring back incentives, including cut-rate financing, that they haven’t had to offer in recent years as there was more demand than supply.
“Recent incentives have been practically zero,” he said.
So far, demand is still strong, as there is pent-up demand from potential buyers who have delayed their purchases because they couldn’t find the vehicle they wanted. But Drury and Chesbrough say higher average prices and higher interest rates are already driving buyers out of the market.
A turnaround in the economy, particularly if historically low unemployment rates begin to rise, could quickly lead to a drop in new car sales.