Kinda Sorta: New Car Market Shows Signs of Improvement

Matt Posky
by Matt Posky

Despite ongoing dealer markups, rising interest rates, and evidence suggesting that new vehicles are suffering from a lapse in quality control, the automotive market is allegedly improving – at least in terms of sales volume. U.S. light-vehicle deliveries increased last month from the abysmal levels witnessed in October 2021. But the entire issue basically comes down to the industry managing to produce more cars than it had been.

Automakers have been in a sorry state ever since pandemic-related restrictions were introduced. Factory stalls have been common since 2020 and the lingering effects have left supply chains and economies in shambles. Meanwhile, companies have been shifting around their assets to prioritize low-volume EVs and whatever combustion models they feel will yield the highest returns. It’s a pretty jaded way to tackle the market and has helped push the average transaction price for new vehicles beyond anything you might have thought possible a few years ago.

That’s the necessary disclaimer. Sales are up. But they’re up against a ridiculously low benchmark while the market remains a fairly hostile environment for everyone. Factory price increases, dealer markups, loan terms, and even fuel prices will still be causing problems for shoppers. But the lots will be better stocked, translating into more business overall.

Toyota was one of several automakers having a particularly difficult time avoiding factory stalls this year. However, sales were up 28 percent last month (year-over-year). According to Automotive News, the same was true for Hyundai (which was up 7 percent) and Kia (up 12 percent). Industry-wide, those improvements are assumed to represent a 10-percent increase (vs last October) in overall sales.

That sounds wonderful. But it’s actually more like our earlier piece on wholesale auction pricing – a potentially good sign surrounded by a churning sea of bad ones.

Another problem is that, due to so many automakers having given up issuing monthly reports, we are sort of in the dark about where individual nameplates are currently standing. Based on the data we have, the industry actually looks to be posting fewer sales throughout the first three quarters of 2022 than it did during the same time period in 2021. But when you zoom in on October, things start looking a little better.

Analysts at Baird reported that the seasonally adjusted annualized rate of sales in October came in somewhere around 14.9 million vehicles. However, just about everyone else who bothers tracking the industry pegged those numbers as being too high. Still, it’s substantially better than the 13.21 million vehicles delivered last October and even the analysis issuing the bleakest of estimates assume the industry at least broke even.

As stated earlier, it’s still a mixed bag and not everyone who reported October volumes could feel as good as Toyota.

Ford Motor Co (which includes Lincoln) endured a 10.1-percent drop in volume for the month. The company cited ongoing parts shortages while some of its mainstays (e.g. F-Series, Explorer, Escape) witnessed double-digit declines in volume. But it was propped up by some of its newer models (e.g. Bronco, Maverick). Though demand was said to be healthy, with Ford citing that more than half of its gross vehicle stockpiles remain in transit. Blue Oval is getting orders, it’s just having a hard time getting the relevant vehicles to customers.

Honda likewise referenced supply problems as the primary reason for its having a less-than-optimal October. With volume trending in the wrong direction for 15 consecutive months, the company said October volumes were down 16.8 percent vs the previous year. Like most Japanese or Korean luxury brands, Acura also suffered but had a shorter distance to fall than its volume-focused counterpart. It was down by 9.1 percent last month, though that only equated to 9,136 vehicles on our market vs the 72,409 units Honda moved.

By contrast, Mazda and Subaru saw October volumes rise by roughly 30 percent each. While an important turnaround for both brands, they’re still both down when you take the entire year (thus far) into account. That’s more-or-less what’s going on with Toyota and kind of underlines just how far the industry has fallen these last few years. Ultimately, we’re at least seeing some signs that things are beginning to stabilize. But it would be nice if that coincided with price reductions or more favorable financing.

[Image: PQK/Shutterstock]

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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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2 of 13 comments
  • William Piper William Piper on Nov 03, 2022

    Doing everything to avoid the “stealerships” and their ridiculous mark-ups. Was told 7 large over sticker right through the door at the local Toyota dealership….supposedly non-negotiable.

    I get times are tough, but it just smacks of greed. If you can wait to buy a new car, wait.

  • THX1136 THX1136 on Nov 04, 2022

    This confirms what I mentioned in an earlier article. 2 lots I had driven by at the time were comfortably full of new vehicles (I know where they position the used & new on the lot). One in particular - a larger Ford dealer - hadn't had much more than approx. 15 new vehicles on their lot a several months back. Now as far as pricing goes . . .

  • 3-On-The-Tree Lou_BCsame here I grew up on 2-stroke dirt bikes had a 1985 Yamaha IT200 2-strokes then a 1977 Suzuki GT750 2-stroke 750 streetike fast forward to 2002 as a young flight school Lieutenant I bought a 2002 suzuki Hayabusa 1300 up in Huntsville Alabama. Still have that bike.
  • Milton Rented one for about a month. Very solid EV. Not as fun as my Polestar, but for a go to family car, solid. Practical EV ownership is only made possible with a home charger.
  • J Love mine, but the steering wheel blocks dashboard a bit, can't see turn signals nor headlights icons. They could use the upper corners of the screen for the turn signals. Mileage is much lower than shown too, disappointing
  • Aja8888 NO!
  • OrpheusSail I once did. My first four cars were American made, and through an odd set of circumstances surrounding a divorce, I wound up with a '95 Nissan Maxima which was fourteen years old and had about 150,000 miles on it.It was drove better, had an amazing engine, and was more reliable than any of my American cars. This included a new '95 GMC pickup that went through five alternators in under two years while the dealership insisted that there was no underlying electrical problem while they tried to run the clock on the warranty.That was the end of 'buy American'. I've bought from Honda and VW since, and I'll consider just about anything except American now.