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US auto sales forecast Q1 2022 looks bleak due to chips, inflation

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New Jeeps will be displayed in a New York City car dealership, October 5, 2021.

Spencer Platt | Getty Images

Automakers will likely report sharp sales declines for March and the first quarter, industry analysts say, as an ongoing shortage of new vehicles has left car-shoppers with few – and often expensive – choices.

Forecasts for U.S. Auto Sales Cox Automotive, EdmundsAnd J.D. Power/LMC AutomotiveThe first quarter of sales for cars, pickup trucks, SUVs and other vehicles was likely to have fallen below 3.3million, more than 14% lower than the previous quarter. first quarter of 2021.

Some automakers may see even more declines. Edmunds expects General Motors, Honda, NissanAnd VolkswagenTo report a year-over-year decline in sales of over 20% for the first three months. FordIt was only marginally better.

Despite falling sales, the prices continue to rise: TrueCar analysts saidAccording to the U.S., the average selling price of new vehicles increased by 15.4% between a year ago and March 2015 to almost $43,500.

Consumer concerns about inflation – including higher gas and vehicle prices – likely played a role in the quarter’s projected sales decline, which includes an expected drop of at least 24% in March. However, the main factor in the decline of sales is the low supply of new cars. global shortage of semiconductor chips.

Edmunds executive director of insight Jessica Caldwell stated that while skyrocketing gasoline prices are top of consumers’ minds in March, the shortage of inventory ultimately led to a drop in new vehicle sales for the first quarter.

Edmunds projects a decline of 15.2% in the number of auto sales during the first quarter. According to the company, inventories are still very low with only 20 days of supply for gas-powered cars and 21 days of stock of electric vehicles. Automakers aim to keep enough inventory for 60-70 days.

Caldwell observed that not only are automakers struggling to cope with Covid-related supply disruptions but they might also face additional challenges following Russia’s invasion.

Charlie Chesborough (Cox Automotive senior economist) noted that U.S. automobile sales typically rise during March due to warmer weather in the U.S. He thinks that consumer demand would probably be strong right now – if only automakers had more vehicles to sell.

“Low unemployment, relatively low interest rates — the conditions are right for higher sales,” Chesborough said. However, Chesborough said that sales won’t improve unless automakers can increase the amount of vehicles available on dealer lots.

“Make no mistake,” said he, “this is a market stuck in low gear.”

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