Rosalind Evans
As the automotive industry gradually recovers from the tumultuous impact of the COVID-19 pandemic and ensuing supply chain disruptions, the U.S. new car market is showing signs of a modest revival. Industry analysts are projecting a slight increase in vehicle sales for 2024, signalling a return to stability after several years of market volatility. While modest, this anticipated growth could have significant implications for consumers, the economy, and the automotive sector.
Analysis and Projections
Leading automotive data firms forecast a year-over-year increase in new vehicle sales of between 1% and 4%, potentially reaching 15.6 million to 16.1 million vehicles. This growth would mark the highest sales figures since 2019, a pre-pandemic year when over 17 million new cars and trucks were sold in the U.S. The industry has been grappling with production and supply chain issues since the onset of the global COVID-19 crisis, culminating in a low of fewer than 14 million vehicles sold in 2022, the lowest in over a decade.
Jessica Caldwell, Edmunds’ head of insights, noted, “While the year ahead holds the promise of further increased inventory and enticing deals that consumers have eagerly awaited, 2023’s high-interest rates are expected to linger, provoking conflicting market dynamics.” This statement underscores the complex interplay of factors affecting the automotive market, including inventory levels, consumer demand, and the broader economic environment.
Market Dynamics and Forecasts
Edmunds predicts that the pricing power of automakers, which peaked recently, will give way to increased incentives due to improved inventory. However, for investors and industry stakeholders, the scenario is mixed. Increased sales are positive, but lower prices and rising incentives could challenge automakers and dealers accustomed to recent record profits.
Caldwell added, “Automakers will weigh one other key consideration in 2024: Are they satisfied with this newly established supply-demand equilibrium, or are they willing and able to push sales volumes closer to prepandemic norms?” This question highlights the strategic decisions facing automakers in balancing sales volumes with market conditions.
Globally, the auto industry is expected to see a 2.8% year-over-year increase, according to S&P Global Mobility. Colin Couchman, executive director of global light vehicle forecasting at S&P Global Mobility, remarked, “2024 is expected to be another year of cagey recovery, with the auto industry moving beyond clear supply-side risks into a murkier macro-led demand environment.”
Though modest, the anticipated increase in U.S. car sales in 2024 would represent the first sequential sales growth in the automotive industry since 2015-16. While forecasts vary, with estimates ranging from 15.6 million to 16.1 million units, the trend indicates a cautious yet hopeful outlook for the industry. As Jonathan Smoke, Cox Automotive’s chief economist, stated, “Overall, we expect sales growth to be constrained and weak in 2024 – a bit more normal compared to the chaos of the past three years.” This cautious optimism suggests that the industry is on a path to stabilization, though challenges remain.
