Slump In US Auto Sales In Q1 As Less Affluent Purchasers Leave Market Due To Increased Prices 

Slump In US Auto Sales In Q1 As Less Affluent Purchasers Leave Market Due To Increased Prices
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According to research firm Cox Automotive, the first quarter sale of new vehicles in the United States could drop to its lowest in terms of volume for the first quarter of any year in the past decade because of shortage of inventories due to the global semiconductor shortage and the Ukraine-Russia war, which has had a consequent impact of rising prices. The increased price of new vehicles has forced the less affluent customers out of the market. 

It is expected that there would be a drop of more than 24% in the sale of cars and light trucks in the US for the first quarter, amounting to about 1.22 million units. This sale volume would be 16% lower when compared to the same quarter a year ago. 

“Make no mistake, this market is stuck in low gear,” said Charlie Chesbrough, senior economist at Cox Automotive. He added that till such time that there is an improvement in supplies, the sale volume is expected to remain at this level. 

According to Cox forecasts, the US economy will not enter a recession for now. However, Cox lowered its 2022 car and light truck sales prediction to 15.3 million cars, which is lower by 700,000 units compared to its forecast made in January. Even meeting the revised goal will necessitate considerable reductions in supply chain disruptions, according to Cox.

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Supply bottlenecks that had been lessening in recent months have resurfaced as a result of new lockdowns imposed in China because of the resurgence of Covid-19 infections as well as Russia’s invasion of Ukraine. Due to a scarcity of new vehicles, prices have reached new highs. 

During a conference call, Cox analysts claimed that less affluent consumers are leaving the new vehicle market, hurting Detroit’s mainstream brands and Nissan Motor Corp.

Chesbrough said that households that have an annual income of less than $75,000 now make up for a market share of the US light vehicle market that is 2% lower than for the same period a year ago. The average annual income of a new vehicle purchaser currently is about $124,000.

Chevrolet and other Detroit mainstream brands are losing market share, while Cox predicts that Japan’s Toyota will be the top-selling carmaker in the United States for the first quarter.

“Long-term, you are shrinking the pool of people who are likely to buy” a new vehicle, said Cox Chief Economist Jonathan Smoke.

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