Car shoppers still encounter bare dealership lots. It is expected the U.S. retail inventories closed under 900,000 vehicles in July, reported J.D. Power.
But now there is a new problem afoot—fewer buyers.
"Rising interest rates and low consumer sentiment are keeping many potential buyers out of the market," Charlie Chesbrough, senior economist at Cox Automotive, told Automotive News. "[Meanwhile,] higher prices for both gasoline and vehicles are making affordability an even greater challenge."
Still, near term, Chesbrough admits tight supply "continues to be the biggest obstacle ... and there is little evidence of supply returning to normal.”
Automakers blame these tightened inventories for the double-digit sales declines posted by six out of seven automakers in July. In total, these automakers reported a 15% decline in sales from 2021, according to the Automotive News Research & Data Center.
LMC Automotive reports U.S. sales fell 12% overall in July, the 12th consecutive month that volume has dropped year over year.
And retail sales dipped under 1 million for the third consecutive month in July, LMC said.
Motor Intelligence reported that July’s seasonally adjusted, annualized sales rate was 13.5 million, down from 14.81 million in 2021 but higher than June's 13.22 million SAAR.
In response, LMC lowered its 2022 U.S. light-vehicle outlook to 14 million, from 14.3 million in June, noting “uncertainty is elevated" into 2023.
Jesse Toprak, chief analyst at Autonomy, told Automotive News he doesn’t expect a "full recovery" in industry sales for at least two years.
"Geopolitical risks are here to stay, “he said, noting the situation in Taiwan is being watched closely as the country produces the bulk of the semiconductor chip supply.
Ford Motor Co. became the only reporting automaker to record a year-over-year sales increase in July with a 37% U.S. sales increase in July.
Sales of the company’s crossover and utility vehicles grew 70%, driven by newer models such as the Mustang Mach-E, Bronco and Bronco Sport. Pickup volume grew just 27%.
However, Ford reported over half of July sales came from previously placed orders.
Toyota Motor North America saw sales drop 21%, with Toyota sales down 21% and Lexus sales dipping 23%. The drop in sales marks the automaker’s 12 consecutive monthly sales decline. Still, Tacoma sales increased 1.4% to 23,917 and Tundra volume grew 66% to 10,694.
American Honda saw July sales contract 47%, with Acura sales slumping 59% and Honda division sales down 46%. Hyundai and Kia sales fell 11%. Just four Hyundai models—the Accent, Santa Cruz, Tucson and Veloster—posted higher sales in July. Subaru sales slumped 17% in July while Mazda sales tumbled 29%.
Volvo reported a 41% drop in July volume, while Genesis saw sales increase for the 20th consecutive month to 5,203 deliveries.
Vehicles on lots are often already spoken for, such as these Ford Broncos in Granger, Iowa.
LMC cites the inventory crisis as the reason for slipping sales. Inventory shortages have cost automakers 1.65 million units of potential demand in the U.S. through July.
Kia, Toyota, Subaru, Honda, Lexus, Porsche, Hyundai, Land Rover, BMW and Acura started July with the lowest stockpiles, while Ram, Volvo, Jeep, Lincoln and Audi had the highest inventory levels, according to Cox Automotive.
Toyota ended July with 104,790 vehicles in stock — 14,258 at dealerships and 90,532 in port or transit — for a 16-day supply. Hyundai ended July with 14,784 light vehicles in U.S. inventory, down from 46,113 at the end of July 2021. And Mazda closed July with just 6,868 vehicles, or a six-day supply.