#MarketAnalysis

After a tough couple of years, consumers went into 2022 hopeful that unhinged automotive pricing and lean dealer lots would be a thing of the past. However, analysts and industry groups have gone from being cautiously optimistic just a few weeks ago to fairly sullen about the prospects of North American shoppers locating anything that could be considered a square deal.

Goldman Sachs recently issued a report that attempted to encapsulate the whole picture, citing sustained congestion at the ports, pandemic-related factory closures, market inflation, millions of people just dropping out of the workforce, and continued complications stemming from the semiconductor shortage. It estimated that vehicle pricing would fail to go down — and may even pitch up in the first half of 2022 — until all of the above issues have been addressed. But it was hardly the only group chiming in or suggesting that the hard times could last through 2023, as the goalpost for what should be deemed acceptable is moved yet again.

Every industry analyst is beginning to sing the same tune. Despite things looking good now, the worm is about to turn. Global sales look poised to remain strong this year but the market has peaked and sales should persist on a graph as a flat line. Next year could be a different story, however, and there’s much apprehension surrounding lengthening loan terms and the upsurge of subprime lessees.

Rising incentives are also causing alarm; J.D. Power and Associates expects the average incentive per new unit to top $4,000 in 2017. While that tactic may get people into dealerships now, it might also harm long-term profitability as the automotive industry swings toward leaner times.