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U.S. auto sales to fall in April on tight inventories, rising rates

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© Reuters. FILE PHOTO – Ford pickup trucks for sale in Carlsbad (California), U.S.A, September 23rd 2020. REUTERS/Mike Blake/File photo

(Reuters) – U.S. vehicle sales are likely to drop in April as rising interest rates and low inventories cause high prices, according to J.D. Power and LMC Automotive.

A report published Wednesday by the consultants shows that U.S. retail sales for new cars could decline 23.8% to 1 million units in April, compared with a year prior.

While demand is strong, the inventory of dealerships has less than 900,000. This means that sales volumes will fall well below last year’s levels. Thomas King, President, J.D. Data and Analytics Division, stated, “Sales volumes will still be low.” Powers.

Supply issues have been a major problem for the automotive industry. Production was hampered more than one year due to a shortage of electronic parts and bottlenecks caused by COVID-19 lockdowns in China, and war in Ukraine.

Expected to hit $45,232 the April record for transaction prices, which is 18.7% more than a year ago. This represents the second highest level of transactions since December 2013.

According to consultants, rising interest rates are also a risk to current transaction prices. The average interest rate on loans will increase by 33 basis points in April from last year to 4.61%.

Seasonally adjusted, the annualized rate for new vehicle sales in April is 14,5 million units. That’s down from last year’s 3.9 million units.

Consultants stated that light vehicle sales worldwide are expected to drop to 81.7 millions units by 2022. This is 900,000 less than last month.

For April 2022 total sales of new vehicles, both retail and not-retail, is expected to fall by 21.5% compared with last year.

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