Cars are parked in the parking lot of a Chevrolet dealership in Chicago, Illinois, on June 20, 2024. A cyberattack on CDK Global, a software provider that helps dealers manage sales and service, disrupted operations at approximately 15,000 dealerships in the United States and Canada.
DETROIT – U.S. auto sales are expected to rise 2.9% in the first half of this year from a year earlier. However, there are concerns that the auto industry may struggle to maintain its momentum in the final six months of the year.
Cox Automotive reports that vehicle inventory levels are rising, incentives are increasing, and uncertainties regarding the economy, interest rates and the U.S. presidential election are growing in the second half of the year.
The automotive data and research firm expects sales growth to slow in the second half of the year, with an estimated total of 15.7 million units sold by the end of 2024, representing a 1.3% increase from 2023. Unlike previous years, growth is expected to come from commercial sales rather than more profitable consumer sales.
“Overall, we expect some weakness in the coming months,” Jonathan Smoke, chief economist at Cox, said during a mid-year review briefing on Tuesday. “We are assuming that we won’t be able to sustain the pace that we’ve seen, but we don’t expect a collapse either.”
These circumstances present favorable conditions for consumers, some of whom have waited to purchase new vehicles due to unprecedented supply and record prices amid the COVID-19 pandemic.
However, they pose challenges for automakers, many of which have posted record profits due to high demand and limited availability of new vehicles during the global health crisis. Wall Street analysts had predicted pricing and profit challenges for most automakers, given the record or near-record levels seen in previous years.
“There’s a lot of uncertainty ahead, and that could make it difficult to build on the recent sales successes,” Charlie Chesbrough, senior economist at Cox, said at the briefing. “We’re concerned that the second half of the year may not sustain the growth we’ve seen so far.”
Cox expects the rental, trade and leasing segments to experience double-digit growth, while the retail sector’s share of the overall market is expected to decline by 9 percentage points from 2021 to approximately 79%.
According to Cox, the “winners” in terms of sales in the first half of this year are expected to be General Motors, Toyota and Honda. Chesbrough said that if Toyota continues its growth, it could once again challenge GM as the best-selling automaker in the United States. Toyota outperformed all other automakers in 2021 for the first time.
On the other hand, Tesla is estimated to see a sales decline of 14.3%, while Stellantis is expected to decline by 16.5% through June. Honda outperformed Stellantis in U.S. sales during the first half of the year, pushing parent company Chrysler and Jeep to sixth place in sales from the previous quarter.
Stellantis CEO Carlos Tavares recently acknowledged “arrogant” mistakes he and the company made in their U.S. operations, which led to sales declines, inflated inventories and investor concerns.
“Higher incentives mean we are officially saying goodbye to the sellers’ market that has characterized the last four years… which also means further deterioration in new vehicle profits and dealer profitability,” Smoke noted.