A new Jeep model is parked in the parking lot of a Dodge Chrysler-Jeep Ram dealership on October 3, 2023 in Miami, Florida.
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DETROIT — U.S. new car sales are expected to struggle in the third quarter amid economic and political uncertainty and rising interest rates and prices, industry forecasters say.
Sales in the third quarter are expected to fall about 2% from the same period in 2023 to about 3.9 million vehicles. Go to Cox Automotive and Edmonds website. This will be a decrease of approximately 5% compared to the second quarter of this year.
Analysts pointed out that the Federal Reserve’s decision to cut interest rates last week is a step in the right direction, but it does not necessarily guarantee a significant increase in auto sales for the rest of the year.
“2024 is a volatile year for the new car market, with more volatility expected in the fourth quarter,” said Charlie Chesbrough, senior economist at Cox Automotive. “Affordability Still a major impediment to market strength, but it is improving, so we remain optimistic about the industry sales outlook.”
Both Cox and Edmunds expect U.S. light vehicle sales to total about 15.7 million units in 2024.
Jessica Caldwell, Edmunds’ director of insights, said the current market is too expensive for many consumers, limiting the number of Americans who can buy new cars.
“Who can afford a new car seems to be a big issue. People spend an average of $40,000 on a new car,” she told CNBC. “The new market is quite limited for many buyers.”
The average transaction price for a new vehicle is down from a year ago but remains high compared with historical levels at $47,870, Cox said.
honda cars and Ford Motor Company It is expected to be one of the only major automakers to post annual growth in the third quarter, according to forecasts. The largest losses are expected to include Strantis, Toyota Motor and BMW.
Cox predicts Stellantis sales will be down 21% in the third quarter from the same period last year, and the company’s sales have been in freefall for more than a year. Chief Executive Carlos Tavares has prioritized pricing and profits over market share, especially the Jeep and Ram brands that are crucial to the automaker.
Sales of electric vehicles are growing but are still lower than many had previously expected. Cox said electric vehicle sales in the third quarter are expected to grow by about 8% compared with the same period last year.
EV sales are still expected to grow, although U.S. EV leaders are expected to see sales decline 2.4% this quarter TeslaCox reports. Cox said Tesla, which has dominated the electric vehicle market for years, expects its share to fall below 50% for the second consecutive quarter.
Sales of electric vehicles are heavily supported by incentives. While the average transaction price of new electric vehicles is expected to be flat year-on-year, incentives for vehicles are expected to increase, accounting for 13.3% of the average transaction price of vehicles. This is the highest ratio so far this year and is more than 80% higher than incentives for traditional internal combustion engine vehicles.
Electric vehicle incentives include the U.S. government providing federal credits of up to $7,500 for consumers to purchase or lease an electric vehicle. Not all new electric vehicles are eligible for incentives unless they are leased.
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