The auto industry is celebrating the arrival of 2023, mostly because it couldn't wait to get rid of 2022. Last year saw an eight-percent decline in U.S. auto sales, finishing the year at 13.7 million, the lowest total since 2011. The year began with dealers struggling with low inventory due to microchip shortages and supply chain backups, then as those issues began improving later in the year the market was hit with a double-whammy of inflation and rising interest rates. In short, 2022 saw the auto industry go from a low supply problem to a low demand problem.
But there is reason for optimism besides the arbitrary turn of the calendar. "We can look at December taken alone, and look at the progress that was made there," says KTRH Car Pro Jerry Reynolds. "Sales were up almost eight percent from the previous December, which was a real positive for many of the automakers."
The biggest factor in that mini end-of-year rebound is the easing of those supply chain issues. "Inventory is finally improving for most dealers," says Reynolds. "With the exception of Toyota and Honda---they're still struggling---but everybody else had a lot more inventory in December, and as soon as that inventory came in it was sold."
While there is more product on the market, prices and interest rates will likely remain high for the foreseeable future. "We've seen prices raised pretty much across the board, and we're talking about the window sticker price," Reynolds tells KTRH. "But the positive is as we get more inventory, the business gets more competitive, and then we'll see even more factory incentives to lower those prices."
There is also a silver lining to those higher prices. "For people with a trade-in, the used car values are still really high," says Reynolds. "Just in this first week of January, we've seen them jump up again...so that's something to keep an eye on."