Report: U.S. Automotive Market in Rough Shape

Matt Posky
by Matt Posky

The U.S. light-vehicle market doesn’t appear to be in the best health. While many automakers now opt against issuing monthly sales reports, those that still do are posting some pretty brutal numbers.

This does not bode well for an industry that seemed pretty certain that 2022 would be its recovery year. However, it is on-brand with the slew of announcements made by manufacturers warning about supply constraints and an inability to manufacture at scale. There has also been a growing sense that some consumers may be shunning vehicles that have spent the last several months trading well above what seems rational. Wholesale pricing actually declined by roughly 6 percent since the January record. Though you may not see that represented on dealer lots or even have noticed if it was because last month still saw transactions averaging 14 percent higher than they were last year.

As for sales volume, most automakers were posting double-digit declines for the month of May. Overall, the seasonally adjusted, annualized rate of sales (SAAR) for May fell dropped to a crippling low of 12.81 million, according to Motor Intelligence. That’s to be contrasted against April’s 14.6 million units and over 17 million average from May of 2021.

Automotive News issued a breakdown between the individual brands, noting that the problem appeared to be worse among Asian brands. It also said it didn’t expect the coming months to be much better, as the industry is now staring down the barrel of commodity shortages, sustained inflation, and supply chain problems. On Thursday, LMC Automotive lowered its outlook for U.S. sales this year, knocking off 300,000 would-be vehicles for an even 15 million units.

“The market faces a real risk of turning negative from 2021,” Jeff Schuster, head of global vehicle forecasts at LMC Automotive, stated. “We still have a lift in sales in the second half but it is plausible that an increase will not materialize this year and we could continue to track in the 14 million to 15 million unit selling rate for the remainder of the year.”

From AN:

May volume fell 4.4 percent to 153,434 at Ford Motor Co. and by double digits again at Toyota Motor Corp., Hyundai and Kia as choked supply chains continue to batter automakers, leaving showrooms and lots nearly bare of new cars and light trucks.

Deliveries in May declined 4.3 percent at the Ford brand, the fourth straight monthly decline, with mixed results for the division’s biggest sellers: F-series, up 6.9 percent; Ranger, down 58 percent; Explorer, up 19 percent; Escape, down 55 percent, and Bronco Sport, down 36 percent. Lincoln volume dropped 6.8 percent in May, its 12th consecutive decline.

Ford said nearly 50 percent of its retail sales last month came from previously placed orders.

Toyota, with one of the industry’s leanest stockpiles of new cars and light trucks, said volume skidded 27 percent to 175,990 last month, with deliveries off 27 percent at the Toyota division and Lexus. It was the tenth straight monthly decline for the Toyota brand and fourth consecutive drop at Lexus.

Honda fared even worse as deliveries slumped 57 percent to 75,491 cars in May. This was attributed to the brand’s best sellers ironically not selling all that well. Accord was down 58 percent, the CR-V was off by 59 percent, and the Civic was short a massive 77 percent against last year’s metrics. The reason is now all-too-familiar. The company said it couldn’t get enough parts and had to pause production, leading to extremely lean inventories in the United States.

“We are experiencing record turn rates of more than 80 percent for the Honda brand, with nearly every unit a dealer touches in a month already sold,” a Honda spokesperson. “More than half of our Civics and CR-Vs are sold before they ever even reach a dealer’s lot. Our sales numbers do not reflect the true demand for our products.”

It was a similar story for Mazda, Hyundai, Kia, and Volvo. They all endured similar sales declines in May and faulted the poor state of the industry as the primary cause. Though that’s little comfort considering this is usually the time you see a serious uptick in vehicle sales.

“Historically, the daily sales pace is higher in May than in most other months, with spring optimism in the air, thoughts of summer road trips on the horizon and the buzz of Memorial Day sales,” Charlie Chesbrough, senior economist at Cox Automotive, told Automotive News. “But many of the industry’s normal patterns have been overturned by tight inventory and the lingering effect of the global pandemic.”

The global semiconductor shortage is assumed to continue stifling automotive production for the foreseeable future. Meanwhile, China’s stringent “zero-COVID policy” has effectively crippled the supply lines of many companies that would like to sell things to people living in North America. No matter how you parse through the data, it doesn’t inspire much confidence that the next few months will be any better than the last batch.

[Image: Gretchen Gunda Enger/Shutterstock]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Akear Akear on Jun 03, 2022

    At that price the Camry is a steal. However, my fusion was fixed at a reasonable price so I will stick with it. The dealer even asked if I want to trade in my Fusion with 134,000+ miles on it. This illustrates how desperate dealerships are for used cars. Last year the local Ford dealer called my brother asking him to trade in his Ecosport. Even a rather ordinary vehicle like the Ecosport is a valuable commodity on the used car lot.

  • Tree Trunk Tree Trunk on Jun 06, 2022

    Can't wait for the car dealers to go the way of the travel agency, the current situation shows they do nothing but get in the way. I have been considering buying a new car since with the inflated used car prices the difference between used and MRSP is as small as it will ever be. Unfortunately my local dealer has huge markup and out of state dealers have not been willing to work with me at all. If I could order directly from the manufacturer and pickup at a service center I would be counting the days to drive away in a new car that better fits our needs.

  • Kosmo Love it. Can I get one with something other than Subaru's flat four?
  • M B When the NorthStar happened, it was a part of GM's "rebuilding" of the Cadillac brand. Money to finance it was shuffled from Oldsmobile, which resulted in Olds having to only facelift its products, which BEGAN its slide down the mountain. Olds stagnated in product and appearances.First time I looked at the GM Parts illustration of a NorthStar V-8, I was impressed AND immediately saw the many things that were expensive, costly to produce, and could have been done less expensively. I saw it as an expensive disaster getting ready to happen. Way too much over-kill for the typical Cadillac owner of the time.Even so, there were a few areas where cost-cutting seemed to exist. The production gasket/seal between the main bearing plate and the block was not substantial enough to prevent seeps. At the time, about $1500.00 to fix.In many ways, the NS engine was designed to make far more power than it did. I ran across an article on a man who was building kits to put the NS in Chevy S-10 pickups. With his home-built 4bbl intake and a 600cfm Holley 4bbl, suddenly . . . 400 horsepower resulted. Seems the low hood line resulted in manifolding compromises which decreased the production power levels.GM was seeking to out-do its foreign competitors with the NS design and execution. In many ways they did, just that FEW people noticed.
  • Redapple2 Do Hybrids and be done with it.
  • Redapple2 Panamera = road porn.
  • Akear What an absurd strategy. They are basically giving up after all these years. When a company drinks the EV hemlock failure is just around the corner.
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