Sales of new cars and trucks probably fell to a decade’s lowest level last year due to a global shortage of computer chips and rising interest rates that drove up the cost of buying vehicles.
Analysts expect the auto industry to have sold fewer than 14 million light trucks and cars in the United States by 2022. That would equate to a drop of more than a million vehicles from 2021. The industry sold more than 17 million new vehicles in 2019 before the coronavirus pandemic.
Automakers began reporting their year-end sales totals on Wednesday, and if the gloomy forecasts are confirmed, last year’s sales total would be the lowest since 2011, when the industry was just beginning to recover from the financial slump. crisis and 12.7 million new cars sold. and trucks
“It seems likely that rising interest rates are now limiting demand in the auto market,” Charles Chesbrough, senior economist at market researcher Cox Automotive, said in a statement. “With record high prices and increased borrowing rates, the pool of potential new vehicle buyers is shrinking.”
Toyota Motor, the world’s largest automaker by number of vehicles sold, said on Wednesday that US sales fell about 10 percent to 2.1 million vehicles. But indicative that shipments of chips and other parts were improving towards the end of the year, the company said fourth-quarter sales were up 13 percent from a year earlier.
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What is Inflation? Inflation is a loss of purchasing power over time, meaning your dollar won’t go as far tomorrow as it did today. It is usually expressed as the annual change in prices for everyday goods and services such as food, furniture, clothing, transport and toys.
General Motors was one of the few automakers to buck the industry trend, reporting a 2.5 percent increase in U.S. sales to 2.3 million vehicles last year. The company said sales were up 41 percent in the fourth quarter.
Sales of GM’s electric car, the Chevrolet Bolt, rose more than 50 percent this year to 38,120 vehicles. The company also said sales of the GMC Hummer, an electric pickup truck that retails for more than $100,000, rose to 854. GM, which has said it aims to phase out internal combustion engine vehicles by 2035, said: is counting on several new electric models to increase sales this year.
Hyundai, the South Korean automaker that sells cars under the Hyundai and Kia brands, reported a 2 percent drop in US sales for the year, but said deliveries were up 29 percent in the fourth quarter.
Tesla on Monday reported a 40 percent increase in its global sales for 2022, but deliveries in the final three months of the year fell short of analyst expectations. The company’s stock, which finished up 65 percent last year, fell about 12 percent on Tuesday.
And Rivian, a smaller electric vehicle company, said Tuesday it fell several hundred vehicles short of its goal of producing 25,000 trucks, SUVs and vans by 2022.
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Other established automakers are expected to report significant declines for 2022 when they release their totals later Wednesday and Thursday in the case of Ford Motor.
The auto industry has been hampered for the past three years: first by the pandemic, which forced manufacturers to shut down their plants for two months in 2020, and then by a shortage of computer chips that has disrupted car production worldwide since early 2021.
The shortage of chips has eased, but last year still caused some automakers to sometimes slow down or temporarily stop production. In the case of electric cars and trucks – the fastest growing segment of the industry – many automakers also struggled to get enough batteries. That has led some buyers to wait months for certain models, such as Ford’s F-150 Lightning and GM’s Hummer pickup trucks.
Many consumers are eager to buy new cars, but have shied away from showrooms because prices have been driven up by the shortage of chips or because the cars they want aren’t available. The Federal Reserve’s campaign to raise interest rates in an effort to curb inflation has actually increased the cost of buying a vehicle as well, as many people have to borrow money to buy a new car.
According to Edmunds, another market researcher, US consumers paid an average of $47,681 for new vehicles in November, the most recent month for which data is available. That was an all-time high and higher than $45,872 in November 2021.
“Rising interest rates are increasingly important to consumers in all aspects of life, including car loans,” said Ivan Drury, director of insights at Edmunds. “Even rates that are close to or slightly below average can bring in thousands more in interest paid compared to years past.”
