In a continuing trend, the United States is experiencing a surge in new vehicle sales, marking the sixth consecutive month of growth. This optimistic projection is rooted in robust demand, as indicated by an industry report. According to a joint study conducted by J.D. Power and GlobalData, U.S. new vehicle sales, encompassing both retail and non-retail transactions, are estimated to reach approximately 1,309,900 units in September. This figure reflects a substantial 13.8% increase compared to the same period the previous year.
However, despite this encouraging upswing, there’s a looming shadow cast by the ongoing strike orchestrated by the United Auto Workers’ (UAW) union. The strike, which commenced on September 15th, has involved disputes with major automakers such as Ford, General Motors, and Chrysler’s parent company, Stellantis. These clashes have disrupted operations at various U.S. facilities owned by these automakers, posing a significant threat to the supply of new vehicle models.
Remarkably, the UAW strike’s immediate impact on September sales seems to have been minimal, according to the report. Nevertheless, Thomas King, the president of J.D. Power’s data and analytics division, emphasizes the uncertainty that lies ahead. He cautions that depending on the strike’s duration and scope, there is the potential for disruptions in sales results, particularly in October and beyond.
On another front, retail inventories are expected to witness a substantial 36.5% increase in September compared to the previous year. This growth is certainly promising but still falls short of pre-pandemic levels. At the same time, dealer profits have taken a hit due to elevated interest rates, exacerbated by the increased vehicle supply. While more vehicles are available, they are often being sold for prices higher than their official sticker values, squeezing the margins of dealerships.
Looking beyond the borders of the United States, global vehicle sales for 2023 are anticipated to reach 87.9 million units, surpassing the previous estimate of 86.8 million units. Jeff Schuster of GlobalData notes that two variables, in particular, could influence the industry’s trajectory for the rest of the year. The ongoing UAW strike in the U.S. remains a wildcard, with its potential to disrupt the market, while in China, a price war has been attracting more consumers to the new-vehicle market but is simultaneously impacting the profit margins of original equipment manufacturers (OEMs).
Source: Reuters
