Joseph White

DETROIT, (Reuters) – Major U.S. automakers expect to announce Friday that U.S. light and heavy truck sales declined sharply in the first quarter compared to a previous year. This is due to rising interest rates, parts shortages, and higher fuel prices.

J.D. LMC Automotive and Power forecasted that U.S. light-truck and car sales would fall 18% in January and March from last year. They also predict that the monthly sales rate for March will drop to 12.7 millions vehicles from 17.8million a year earlier.

Cox Automotive stated earlier this week that the first quarter of U.S. automobile sales would be weakest for a decade.

Tesla Inc (NASDAQ:) Inc may reverse the trend of downwards. Wall Street was expecting a rise in sales from the world’s largest automaker, with deliveries expected as early as Friday. Tesla had to stop production from its Shanghai plant this week in order to meet COVID restrictions.

Automakers still struggle to balance their books two years after the initial wave of COVID-19-related lockdowns ravaged the U.S. economic system. Consumer confidence was shaken by the surge in gasoline prices caused by war in Ukraine and high inflation. In the past, rising rates and high prices for gasoline have been indicators of recessions in the automotive industry.

According to the Conference Board’s survey, consumer intentions to purchase a used or new vehicle within the next six-months have dropped for the second consecutive month. Used vehicles were also at their lowest level in fifteen months.

U.S. dealers are currently short many vehicles because of shortages in semiconductors and other supply chain issues.

However, there is a strong job market and strong demand for trucks, sport utility vehicles and electric cars. This week, Cox Automotive analysts stated that vehicle averages are at record lows of $47,000.

In early 2011, automakers predicted that sales would rise and production would grow as the supply chain tightened during the year. Some analysts are questioning whether automakers have the ability to deliver significant improvements due to the conflict in Ukraine, and the influx of COVID case cases in China.