U.S. Auto Sales Forecast Gets Another Haircut, Mostly Due To Low Supplies

Cox Automotive cut its 2022 U.S. auto sales forecast, since it’s clear the available inventory of new cars and trucks isn’t substantially going to improve any time soon.

“The supply situation hasn’t improved much, and continues to hold back sales,” said Charlie Chesbrough, Cox Automotive senior economist.

The available supply of new cars and trucks is just above 1 million. That’s down 21% vs. a year ago, and down more than 70%, vs. more than 3.5 million as of June 2019, Cox Automotive said.

As a result of low supplies, the company cut its U.S. auto sales forecast for 2022 to 14.4 million, from a previous forecast of 15.3 million.

Cox Automotive began 2022 with a forecast of 16 million, but cut that to 15.3 million in March, when it “saw little progress” in improving new-vehicle supplies, Chesbrough said in a webinar June 28.

To provide some context, U.S. auto sales in 2021 were just over 15 million, up 3.3% vs. 2020. In 2019, before the COVID-19 pandemic, U.S. auto sales were 17.1 million. Sales fell in 2020 due to production shutdowns related to the pandemic, followed by a slow recovery.

Then in early 2021, sales looked to be rebounding to pre-pandemic levels. However, an ongoing shortage of computer chips lowered auto production again.

Since consumer demand for new vehicles has remained strong, the shelves are relatively bare at U.S. auto dealerships. Low supply and high demand are driving record-high new-vehicle prices. Prices per vehicle retailed are so high, so far they’ve offset the loss in volume, in terms of dealer profits.

“It is a sellers’ market,” Chesbrough said.

Cox Automotive is keeping an eye on consumer demand, due to rising interest rates, high gas prices, and high transaction prices for new vehicles, he said. Atlanta-based Cox Automotive is a service provider for wholesale and retail auto sales.

Jonathan Smoke, chief economist for Cox Automotive, said U.S. households on average are in good shape financially. Smoke said, “The consumer is 70% of the economy, and we have seen no evidence of a dramatic pullback.”