Light-vehicle production rose last year and is projected to continue that trend this year and throughout the decade. Meanwhile, January new light-vehicle sales continued a five-month streak of year-over-year gains as a gradual easing of supply-chain issues decreases downward pressure on production.
Light-vehicle sales increases are projected to continue in February and March as inventory rises, according to a National Automobile Dealers Association report that puts the seasonally adjusted annualized sales total at 15.7 million in January.
NADA’s forecast for 2023 new light-vehicle sales is 14.6 million.
Global auto production grew 5.3% last year and this year will exceed the annual output of the previous three years, continuing the upward trajectory throughout the decade, according to Auto Forecast Solutions.
Its report says North America and European Union production recovered slightly last year after several years of declines brought on by pandemic-caused market pressures and should continue gains this year. Production in China is projected to grow by 3.6%, about half the increase it saw in 2022.
A transition to electric vehicles will limit worldwide production growth to less than 95 million units through 2027 due to the additional costs associated with their manufacture, Auto Forecast Solutions reported.
This year, the world’s top two carmakers, No. 1, Toyota, and No. 2, Volkswagen, are projected to have different production pictures. Auto Forecast said Toyota’s fiscal year production will be 10.6 million units, up from an estimated 9.2 million year-over-year. It said VW, on the other hand, appears to be positioning itself for slower production.
Meanwhile, on the sales front, retail inventory continued to be weighted toward higher-priced models during the first month of this year. NADA said J.D. Power indicates an estimated average new-vehicle transaction price of $46,437, up 4% year-over-year and a record for January.
Average transaction price increases are projected to moderate slightly throughout the year, said NADA’s chief economist, Patrick Manzi, as inventory builds and automakers produce more affordable models for retail buyers.
Average incentive spending per vehicle was down an estimated 7% year-over-year to $1,260, Mazi wrote, quoting J.D. Power, but up $4 over December.
Average monthly payments for new vehicles continued to eclipse $700 for the seventh month in a row, totaling an estimated $723, up $59 year-over-year.
Rising interest rates are forecast to continue for the first six months of the year, Manzi said, the average rate for a new vehicle having reached an estimated 6.8% in January.
