Cars are parked in the parking lot of a Chevrolet dealership in Chicago, Illinois, on June 20, 2024. A cyberattack on CDK Global, a software provider that helps dealers manage sales and service, disrupted operations at approximately 15,000 dealerships in the United States and Canada.
DETROIT – U.S. auto sales are expected to increase 2.9% in the first half of this year compared to the previous year. However, there are concerns that the auto industry may struggle to maintain its momentum in the final six months of the year.
Cox Automotive reports that vehicle inventory levels are rising, incentives are increasing, and uncertainties regarding the economy, interest rates and the U.S. presidential election are growing in the second half of the year.
The automotive data and research firm expects sales growth to slow in the second half of the year, with an estimated total of 15.7 million units sold by the end of 2024, up 1.3% from 2023. Unlike previous years, growth is expected to come from commercial sales rather than more profitable consumer sales.
“Overall, we expect some weakness in the coming months,” Jonathan Smoke, Cox’s chief economist, said at a midyear review briefing Tuesday. “We’re assuming we won’t be able to sustain the pace we’ve seen, but we don’t expect a collapse either.”
These circumstances present favorable conditions for consumers, some of whom have waited to purchase new vehicles due to the unprecedented supply and record prices caused by the COVID-19 pandemic.
However, they pose challenges to automakers, many of which have posted record profits due to high demand and limited availability of new vehicles during the global health crisis. Wall Street analysts had anticipated pricing and profit challenges for most automakers, given the record or near-record levels seen in previous years.
“We have a lot of uncertainty ahead, and that could make it difficult to build on recent sales successes,” said Charlie Chesbrough, Senior Economist at Cox, during the briefing. “We are concerned that the second half of the year may not support the growth we have seen so far.”
Cox expects the rental, trade and leasing segments to experience double-digit growth, while the retail sector’s share of the overall market is expected to decline by 9 percentage points from 2021 to approximately 79%.
Cox said the “winners” in terms of sales in the first half of this year are expected to be General Motors, Toyota and Honda. Chesbrough said that if Toyota continues to grow, it could again challenge GM as the top-selling automaker in the United States. Toyota has outsold all other automakers for the first time in 2021.
On the other hand, Tesla is estimated to see a sales decline of 14.3%, while Stellantis is expected to decline by 16.5% through June. Honda outperformed Stellantis in U.S. sales during the first half of the year, pushing parent company Chrysler and Jeep to sixth place in sales from the previous quarter.
Stellantis CEO Carlos Tavares recently acknowledged “arrogant” mistakes he and the company made in their U.S. operations, which resulted in sales declines, inflated inventories and investor concerns.
“Higher incentives mean we are officially saying goodbye to the sellers’ market that has characterized the last four years… which also means further deterioration in new vehicle profits and dealer profitability,” Smoke noted.