Who got tokens and who didn’t: Hyundai-Kia sales hit an all-time high in 2022, Honda sales have collapsed.
By Wolf Richter for WOLF STREET.
The problem with new vehicle sales in the United States is that even good years are bad, and bad years are terrible.
In 2022, the total number of new vehicles delivered to retail customers and fleets (dominated by rental fleets), fell by 8% compared to the already terrible 2021, to 13.7 million vehicles, below the level of shipments in 1977, down 16.4% from the peak in 2016, and down 20.8% from the previous peak in 2000. This represents 45 years of stagnation with steep drops between the two.
The way automakers have increased their dollar revenues over the decades in this stagnant or plunging unit sales environment is to sell more expensive vehicles, moving upmarket with ever more sophisticated, more advanced, more capable vehicles. , more efficient, better equipped, and safer vehicles – I mean, even the base F-150 pickup truck now has a 10-speed automatic transmission, that sort of thing.
But years ago, the move upmarket and ever-higher prices started to contribute to the stagnation as there seems to be a shortage of high-end Americans.
But 2022 has been very special: a shortage of chips and a shift in demand towards fuel-efficient cars.
Semiconductor shortages began to be felt in late 2020, worsened significantly in 2021 and extended into 2022, and are continuing, albeit to a lesser extent.
In this environment, when automakers could get the semiconductors they needed, they could build vehicles and sell them, and their sales were strong – Toyota through September 2021, Hyundai and Kia in 2021 and 2022, nice to have excellent relations with Korean semiconductor manufacturers. And when they ran out of just one of thousands of semiconductors in a model, they couldn’t build that model, and there was nothing to sell, dealer stocks ran out and their sales plummeted – Honda and Toyota in 2022. The big US automakers have had issues all along.
Additionally, fueled by soaring gasoline prices at the start of 2022, demand for vehicles has suddenly shifted towards fuel-efficient vehicles, particularly small and medium-sized cars and compact SUVs, and towards vehicles electrics from traditional automakers that they couldn’t build enough. Supply chains and production were not at all ready to adapt to this change.
So inventory shortages shifted in 2022 from pickup trucks and SUVs, which had disappeared from dealer lots in 2021 and are now in abundant supply, to fuel-efficient vehicles, and dealers ran out of these vehicles in 2022.
Overall inventory through November reached 1.64 million vehicles, but was still down 54% from November 2019, according to data from Cox Automotive:
Shortages led to price spikes.
Typically, the MSRP is set before new model year vehicles arrive at the dealership and will not change thereafter throughout the entire model year. In normal years, automakers and dealers pile up discounts, dealer incentives, and customer rebates to drive sales (Tesla, which sells direct, is the exception; it changes prices on its website at any time. ).
But in 2021 and 2022, those discounts, dealer incentives, and customer rebates disappeared, and dealers were able to sell vehicles thousands of dollars above MSRP because Americans who could afford them were suddenly eager to pay anything, which they rarely do in normal times.
Additionally, automakers that could only build a limited number of vehicles due to chip shortages prioritized their most expensive models and hiked up their prices. And so I ended up writing this crazy article: $1,768 per month, with $10,407 down payment, 5% APR, on a Ford pickup? Third Quarter New Vehicle Financing Update.
And as a result, average transaction prices after all incentives and endorsement stickers increased 33% in three years, from $34,900 in December 2019 to $46,400 in December 2022, according to JD Power. This price spike has now stabilized.
The graph shows the average transaction prices in June and December of each year; the green line connects the december. Also note how normal seasonality – a drop in average transaction prices mid-year – has totally disappeared recently:
The Wild Ride of the Seven Biggest Automakers in the United States.
Note: The first four charts – the big four – are on the same scale to show their relative sales to each other. The other three major automakers don’t sell enough to appear on these charts, and they each have their own scale.
General Motors: Sales increased 2.5% year-on-year to 2.274 million vehicles. But that was down 26% from its recent peak in 2015, after the plunge in 2020 and 2021, and after falling sales in each of the previous four years:
Toyota: During the first half of 2021, Toyota had an abundant supply of semiconductors thanks to its special contracts with its suppliers. But then it ran out too, and in September 2021 it started running out of vehicles. Nevertheless, the strength of the first three quarters of 2021 was enough to make it number 1 in the United States for the very first time.
In 2022, after a series of production cuts, inventories disappeared and sales fell 9.6%, to 2.11 million vehicles, down 16% from the recent peak in 2015:
Ford: Sales fell another 2.2% year-over-year, the 7th consecutive year-over-year decline. Since the recent peak in 2015, sales have fallen by 28%:
Stellar (FCA US): Sales fell 13% year over year and plunged 32% from the recent peak in 2015:
The charts below of the three remaining major automakers in the United States are each on their own scale.
Hyundai-Kia: Whoever can get the tokens can build vehicles and has something to sell. It helps that other Korean companies are world powerhouses in semiconductor production. Thus, combined Hyundai-Kia sales reached an all-time high in 2021 and fell 1.5% from that record in 2022, to 1.42 million vehicles:
Honda: Similar to Toyota, it was able to get through 2021 in reasonably good shape, but was hit hard by semiconductor shortages in late 2021 and 2022, and it ran out, and sales crashed down 33% year-on-year, to less than 1 million vehicles, down 40% from the 2017 peak:
Nissan: Sales fell 25% year-over-year to 729,000 and fell 54% from the 2017 peak. The company was already in huge trouble before the pandemic, with sales falling 16% in the two years since the 2017 to 2019 peak. The pandemic and chip shortages have hammered it further:
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