2022 US Auto sales fall to a decade low.
Due to tight inventories and severe supply chain problems, light vehicle sales in the United States fell to their lowest level since 2012. According to Automotive News, 13.4 million light-vehicle units were sold in the United States in 2022.
This data includes all automakers that have reported their sales data to date, except for a few such as Mercedes-Benz, Porsche, and Jaguar Land Rover, which are expected to report later this week. The U.S. light vehicle sales were 14.9 million units in 2021.
The seasonally adjusted annual rates (SAARs) for December 2022 were 13.59 million. This was the lowest level since August. It is worth noting that the SAAR was above 17 million vehicles five years ago, from 2015 to 2019, prior to COVID.
The supply shortage in 2021 was the biggest challenge, despite the global pandemic that ravaged the auto industry in 2020. Industry watchdogs and giants in the auto industry were expecting the chip shortage to start to decrease from mid-2022.
But then, the geopolitical conflict between Russia & Ukraine caused the second round. This war had ripple effects on the automotive supply chain, and worsened the chip shortage as it made it more difficult to find raw materials.
Automakers couldn’t produce enough cars, despite strong demand. Low inventories and parts shortages caused a reduction in sales. Although inventories have shown some improvement in the second half of the year they still remain far below pre-pandemic levels.
Before we talk about whether the road will be smoother this year. Here’s a breakdown of the U.S. 2022 sales report by auto giants including General Motors
A Look at the Sales Numbers
In 2022, General Motors took back the U.S. car sales crown from Toyota. This American legacy automaker sold 2.5% more units than it did last year. Full-year sales for Cadillac, Chevrolet, and GMC brands increased 13.9%, 5.6%, and 7.3% respectively. However, Buick’s annual sales dropped 42.4%.
General Motors was actually the only auto giant that reported an increase in sales year over year, with the exception of Tesla, the electric car [EV] king.
Toyota, the Japanese auto giant, came in second place with more than 2.1million units sold last year. The United States saw a 9.6% drop in sales after TM overtook GM as the top-selling American automaker. The Lexus division saw a 15% drop in sales year-over-year, despite Toyota’s 8.8% decline in sales. RAV4 was the U.S.’s best-selling SUV in 2022 for seven consecutive years.
Ford, GM’s closest competitor, sold over 1.86 million units in 2022. This was 2.2% less than the previous year. While truck and car sales declined by 29.4% and 5.5% respectively, SUV sales saw 4.1% growth. F-Series has remained America’s top-selling truck for 46 years.
Honda, TM’s closest competitor, saw U.S. sales drop 32.9% to 983.507 units in 2022 (with truck sales accounting for 66.6%). Acura and the name brand saw sales drop by 39.2% and 28%, respectively. The firm’s best-selling vehicle for the 10th consecutive year was the CR-V in 2022.
Stellantis 2022 sales fell 13% to 1.54 Million units. Jeep, RAM and Chrysler, Dodge, Fiat, and Alpha Romeo brands recorded 12%, 16% and 2% respectively. Two of its major brands, Jeep and RAM, saw sales decline for the sixth consecutive quarter ending December 31, 2022.
EV Sales Still the Bright Spot
Although overall vehicle sales in the United States fell year-over-year in 2022, EVs sales have maintained their momentum. In the United States, more than 807,000 EVs have been sold in 2018. This accounted for 5.8%, an increase from 3.2% in 2021.
The clear winner was Tesla, while Ford came in second place as the largest manufacturer of green vehicles. Full-year sales reached a record 61 575 units, a jump of 126% year-over year. Hyundai Motor came in third with 58,028 electric vehicles sold by 2022.
As many new models will be introduced, the EV race is expected to intensify in 2023. Cox Automotive anticipates that EV sales will surpass one million units in the United States this year for the first-ever time.
Inventory is improving
According to J.D., December inventory levels exceeded one million units for the third month in a row. Power and LMC Automotive. TrueCar reports that the new light-vehicle inventory (including commercial and fleet vehicles) reached 1.8 million in January, an increase of 1.1 million from December 2021.
Cox Automotive reported that Buick, RAM and Ford were among the most stockpiled brands last month. Brands like Toyota, Lexus and Honda, Subaru, Land Rover. Kia, BMW. Porsche, Hyundai, Volkswagen, Acura, and Lexus had the lowest inventory levels.
The pressing concern for 2023 is affordability
Even though new cars seem to be more readily available, it remains to be seen if Americans will continue to spend on high-priced items in the face rising interest rates and recession fears.
Fed went ultra-aggressive in order to rein in stubborn inflation. They increased borrowing rates several times in 2022. Subprime and less-affluent consumers are finding monthly payments more difficult to afford due to rising vehicle financing costs. Consumers are becoming more cautious about buying cars as the cost of borrowing is increasing and there are concerns about a recession.
As a result, automakers are seeing their sales forecasts drop and now the concern for them is not inventory problems but rising interest rates. This could lead to a decrease in demand due to economic downturns. If customers are unwilling to spend more on discretionary items, it will be interesting to see if automakers offer better incentives, sweeter financing offers and discounts to keep up demand.
For 2023, projections for U.S. light car sales range from 14.1 to 15 million units. This is a lot more than the previous year, but it’s still a lot less than in pre-pandemic years. Edmunds predicts that 14.8 million trucks and cars will be sold in the United States by 2023. This is a significant drop from the 10 years ago.
According to a Cox Automotive senior economist, much of the unmet demand due to the limited supply is slowly disappearing as high interest rate eat away at vehicle buyers’ willingness and ability. Will the supply crunch lead to a slowdown in demand in 2023? Quite likely.