Auto sales likely tumble in 2022 due to supply chain chaos
Sales of new cars and trucks likely fell to a decade low last year as a global shortage of computer chips and rising interest rates drove up the cost of purchase of vehicles.
Analysts expect the auto industry to have sold less than 14 million light trucks and cars in the United States in 2022. That would equate to a drop of more than 1 million vehicles from 2021. L he 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 grim forecasts hold true, last year’s sales total would be the lowest since 2011, when the industry was just getting started. to recover from the financial crisis and sold 12.7 million new cars. and trucks
“It seems likely that rising interest rates are now limiting demand in the automotive retail market,” Charles Chesbrough, senior economist at Cox Automotive, said in a statement. “With record prices and high loan rates, the pool of potential new vehicle buyers is shrinking.”
Toyota Motor, the world’s largest automaker by number of vehicles sold, said Wednesday its U.S. sales fell about 10% to 2.1 million vehicles. But in an indication that the supply of chips and other parts improved towards the end of the year, the company said sales jumped 13% in the fourth quarter compared to the same period in 2021. .
What is Inflation? Inflation is a loss of purchasing power over time, which means your dollar won’t go as far tomorrow as it did today. It is usually expressed as the annual change in prices of common 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% increase in U.S. sales last year to 2.3 million vehicles. The company said fourth-quarter sales increased 41%.
Sales of GM’s electric car, the Chevrolet Bolt, rose more than 50% to 38,120 vehicles for the year. The company also said sales of the GMC Hummer, an electric pickup truck that sells for more than $100,000, rose to 854. GM, which said it aimed to eliminate internal combustion engine vehicles from by 2035, counts on several new electric models. to increase sales this year.
Hyundai, the Korean automaker that sells cars under the Hyundai and Kia brands, reported a 2% drop in U.S. sales for the year but said deliveries jumped 29% in the fourth quarter .
Tesla on Monday announced a 40% increase in global sales for 2022, but its deliveries in the last three months of the year fell short of analysts’ expectations. Shares of the company, which ended down 65% last year, fell about 12% on Tuesday.
And Rivian, a small electric vehicle company, said Tuesday it had missed its goal of producing 25,000 trucks, SUVs and vans by 2022 by several hundred vehicles.
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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 crippled for three years: first by the coronavirus pandemic, which forced manufacturers to shut down factories for two months in 2020, then by a shortage of computer chips which disrupted car production around the world since early 2021.
The chip shortage eased, but still caused some automakers to slow down or temporarily halt production at times last year. In the case of electric cars and trucks – the fastest growing segment of the industry – many automakers have also struggled to acquire enough batteries. That means some buyers have been waiting months for certain models like Ford’s F-150 Lightning and GM’s Hummer pickup trucks.
Many consumers are eager to buy new vehicles but have avoided showrooms because prices have been pushed up by chip shortages 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 also increased the cost of buying a vehicle, 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’s a record and over $45,872 in November 2021.
“Rising interest rates are increasingly a priority for consumers in all aspects of life, including auto loans,” said Ivan Drury, chief insight officer at Edmunds. “Even rates close to or slightly below average can rack up thousands more in interest than in previous years.”