DETROIT (AP) — Shortages of computer chips and other parts continued to plague the U.S. auto industry last year, with auto sales dropping 8% from 2021 to the lowest level in more than a decade.
But there is good news for consumers amid the gloomy numbers. Dealer lot vehicle supply is increasing, albeit slowly, and the automaker expects prices to drop at least a bit this year as inventories build up.
Automakers said Wednesday they sold 13.9 million cars, trucks, SUVs and vans last year as parts shortages limited factory output amid high demand for new vehicles. It was the lowest sales since 2011, when the economy recovered from the Great Recession.
However, sales were up slightly in the fourth quarter and inventories rose as part availability improved and production increased slightly. Sales are expected to increase by about 1 million units to about 14.8 million units. But it would still fall far short of the normal pre-pandemic figure of 17 million per year.
But with many models still in short supply, average new car prices rose 2.5% in December, just above the all-time high of $46,000, according to JD Power.
However, there are indications that prices may start to come down a bit as inventories grow.
For example, Toyota finished the year with just under 24,000 vehicles in Toyota and Lexus branded dealer lots nationwide. That’s up from around 19,000 at the end of 2021, but still far short of his 300,000 in a normal pre-pandemic year.
This improvement will allow consumers to bargain a bit on slow-selling cars such as sedans and even some luxury vehicles. But, according to Toyota division general manager David Christ, they’re still fetching the highest dollar for gas-electric hybrids and other more popular cars sold before they hit the lot.
For most of the last year, people who wanted a new car had to pay more than the sticker price for whatever model or color dealers could get their hands on. I told Christ that things have changed a little in the last few months. He added that more people are interested in low-cost cars as budgets are squeezed by inflation and rising interest rates.
“They come in and say, ‘Hey, can we trade here?'” said Christ. “I think there is a little more buyers market for some vehicles, not just for our brand, but for the industry as a whole, where customers can bargain.”
I don’t know yet if it will last all year. If demand is strong and people are willing to pay the asking price, dealers will get it, Christ said. But if demand dwindles or supply increases dramatically, Christ said. , the discount rate may increase and the price may decrease slightly.
Jessica Caldwell, executive director of insights at Edmunds.com, said Toyota’s experience is likely to be replicated across the industry, with modest price cuts on some models.
“I don’t have a lot of disposable income that I can put into cars,” she said. “We’ve seen prices go up before, but we’ve never really seen prices go up with (higher) interest rates.”
But electric cars and other hot-selling products are still expensive because people want to buy them now, she added.
Caldwell doesn’t expect car supply or prices to return to pre-pandemic levels this year, and it’s unclear if they will return to 2019 levels.
The shortage of computer chips dates back to the spring of 2020, when automakers were forced to close factories due to a rapid rise in COVID-19 cases. Chip makers have shifted production to consumer electronics to meet the boom in computer and gaming sales while people are stuck at home. When car factories reopened earlier than expected, chip makers weren’t making much of the semiconductors for cars that had to be made to withstand vibration and extreme temperatures.
Automotive chip production has improved, but is not yet back to pre-pandemic levels, and auto factories are yet to return to full production.
As a result, the 13.9 million vehicles sold by automakers last year are about 1.2 million less than in 2021, according to Motorintelligence.com.
General Motors regained its traditional position as America’s best-selling automaker with full-year sales growth of 2.5%. Toyota, which will reign supreme in 2021, suffered a 9.6% drop in sales last year. Ford will report sales on Thursday.
Stellantis (formerly Fiat Chrysler) sales fell 13%, while Honda sales plummeted 32.9%. Hyundai recorded his just under 1% increase in unit sales, outpacing Nissan, where he fell 25.4%. Kia’s annual sales fell by 1.1%, while Subaru’s by 4.7%.
Last year, electric vehicle sales surpassed 807,000 units, an increase of almost 65% from 2021.
Pickups and SUVs accounted for 77.3% of sales, while passenger cars declined to 22.7%.