DETROIT (AP) — New car sales in the United States rose slightly in the second quarter, despite bigger discounts and slightly lower prices.
But more robust sales could be on the horizon: Auto industry analysts say they expect prices to fall further and there is a possibility interest rate cuts Which would make it more expensive to get a loan to buy a new car.
Overall, U.S. sales were up just 0.1 percent compared to last year, with high prices keeping many potential buyers out of the market, according to preliminary statistics compiled by Motorintelligence.com on Tuesday.
Sales dropped in late June, when cyber attacks hit. Program from CDK Global CDK said most dealerships were back up and running by Tuesday afternoon, but companies like General Motors said the problem pushed some deliveries into the third quarter.
Analysts say dealer inventories are building, especially for pickup trucks and other high-priced vehicles.
Discounts vary depending on demand for vehicles, with smaller, less expensive models and gas-electric hybrids generally in short supply. Many customers are putting off purchases, believing that bigger discounts are on the way.
“Waiting may be the best strategy here,” said Charlie Chesbrough, senior economist at Cox Automotive.
Toyota, which sells a number of gasoline-electric hybrids, posted a 9.2% sales increase from April to June. Honda’s sales rose 2.7%, while General Motors’ sales rose just 0.3% and Hyundai reported a 1.8% increase. Subaru’s sales rose 5.4%.
Stellantis sales fell 20.7% in the second quarter, with Ram brand sales down 26% and Jeep sales down 19%. Nissan sales fell 3.1%, while Kia sales fell 1.6%.
Automakers collectively reported sales of nearly 4.13 million new vehicles between April and June. That’s close to expectations for sales of nearly 16 million vehicles for the year, and slightly higher than the 15.6 million vehicles sold last year.
Interest rates on new vehicles average just over 7%, which is a high number for people who bought or leased vehicles years ago but now find they need to replace their cars, said Evan Drew, director of insights at Edmunds.com.
He said many people are turning to buying a few low-priced vehicles that range from $20,000 to more.
“The products that are very affordable are what differentiate them,” Drury said. “You have to have an attractive product at an attractive price to be able to sell well today.”
For example, sales of the Chevrolet Trax compact SUV, which starts at $20,400 excluding shipping, rose 152.7% during the quarter.
Automakers want to continue making higher-profit SUVs and trucks when a large portion of buyers are looking for less expensive vehicles like compact sedans, said Kevin Roberts, director of analytics at CarGurus.
“We’re seeing more and more people looking for affordable vehicles,” Roberts said. “We’re seeing people looking for cars under $30,000.”
He said the U.S. industry has reached a tipping point where automakers will have to add discounts to lower prices, or they will have to change what they produce “to try to get more attractive price points and try to keep those inventory levels lighter.”
However, the move toward lower prices could hurt Detroit automakers, which exited the low-priced small and midsize sedan markets years ago after struggling to make money on those vehicles.
Since the coronavirus pandemic began in early 2020, supply of cars has been limited due to a shortage of vital computer chips, which has hampered production. Combined with strong demand, the shortage of cars has pushed average prices to a peak of nearly $50,000 by December 2022.
But this year, chip supplies have improved, production has increased, and supply has risen. In June, dealers had about 3 million vehicles in stock, 55% more than a year ago, according to Cox.
As a result, median sales prices fell 1% to about $48,400 last month. That’s 3% below the peak of about $50,000 in December 2022, but still 20% higher than before the pandemic.
Among the vehicles that stayed in dealerships the longest, all were large trucks or SUVs made by Detroit automakers. Topping the list was the Stellantis Ram 1500, which stayed in dealerships for 141 days, according to CarGurus.
Deals can be made on vehicles that sit on the lot longer, Roberts said. For example, 6% of new-vehicle sales listings at national dealerships are for the 2023 model year.
Electric vehicle sales in the U.S. rose 7% in the first half of the year to 599,134, according to Motor Intelligence. Electric vehicles accounted for 7.6% of the U.S. new-car market, roughly the same level as all of last year. Leasing deals, which include federal tax credits, helped boost sales.
Sales of gas-electric hybrids rose 35.3% from January to June to 715,768, outpacing sales of electric vehicles. Plug-in hybrids, which can drive short distances on battery power before the gas-electric powertrain kicks in, also saw a big increase. Sales rose 24% to 159,399. Both are an alternative for people who fear running out of juice with electric vehicles.
Earlier on Tuesday, Tesla announced Ford Motor Co. said its global sales in the second quarter fell 4.8 percent, following a 6.6 percent decline in the first half of the year. The company did not disclose U.S. sales. Ford will release its sales figures on Wednesday.
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