US auto sales are expected to see only modest growth in the third quarter of 2023, as inflationary pressures continue to deter consumers from purchasing new vehicles. Despite past surges in orders for crossovers and pickup trucks, this growth has started to slow as buyers face increasing expenses.
Market research firm J.D. Power estimates that overall new vehicle sales will rise by just 0.2%, reaching approximately 3,882,600 units during the quarter. Consumers are increasingly opting for more affordable models, with compact pickup trucks and subcompact SUVs gaining popularity. According to Charlie Chesbrough, senior economist at Cox Automotive, these segments are thriving due to their relatively lower price points.
While industry experts initially anticipated stronger sales rebounds for automakers in Q3, factors such as promotional discounts and recent interest rate cuts by the US Federal Reserve have failed to significantly boost demand. In contrast, auto research firm Edmunds forecasts a nearly 2% decline in overall new vehicle sales for the quarter.
General Motors (GM) is expected to maintain its position as the top seller, although it will likely experience a 3% decrease in sales. Toyota and Ford are projected to follow GM in sales rankings. Additionally, Edmunds analysts have raised concerns about potential disruptions, such as an East Coast port strike, that could further complicate the market.
Shares of Ford and GM fell approximately 2% and 3%, respectively, on Monday after Stellantis, the parent company of Chrysler, announced it would reduce its profit forecast for 2024, indicating a larger-than-expected cash burn.
Chris Hopson, principal analyst at S&P Global Mobility, noted that high interest rates and persistent vehicle prices are putting pressure on consumers, resulting in elevated monthly payments. As the auto industry navigates these challenges, the outlook for new vehicle sales remains cautious.