Several automakers will release sales figures for April next week and the expectations are rising they will be better than expected, as inventories of new vehicles climb to their highest level in two years.
“Amazingly, the new-vehicle market is healthier now than at the start of the year,” according to analysts at Cox Automotive, adding new-vehicle sales in April are likely to reveal the market has caught spring fever when announced next week.
Sales remain brisk
The sales pace, also known as the seasonally adjusted annual rate, or SAAR, in April is expected to finish near 15.1 million, a large gain over last year’s supply-constrained level of 14.3 million. April’s sales pace is also forecast to show improvement over last month’s 14.8 million pace, the updated Cox analysis released this week noted.
“Relatively strong sales in the wake of rising interest rates and worsening economic headwinds suggests there remains some pent-up demand,” said Charlie Chesbrough, senior economist at Cox Automotive.
“Product availability has improved substantially over this time last year. Dealer lots are no longer empty, so there is far more selection for vehicle shoppers that may have been waiting to buy a particular model or configuration.”
The greater availability has been a key driver of new vehicle sales so far this spring, Cox analysts noted.
At the start of April, available new-vehicle supply volume was 70% above last year, according to a Cox Automotive analysis of initial Auto inventory data. Days’ supply has hovered at the mid-50-day level through the spring, which is nearly 60% higher than this time last year.
As published earlier this month as new vehicle inventories closed March at their highest level in two years despite surprisingly brisk sales, the Cox analysis said.
April sales volume to rise
Sales volume in April is expected to rise 2.3% from one year ago, and that is with one less selling day than last year’s 27 days. However, sales volume in April is expected to decline 6.5% from March. April has 26 selling days, and March had 27. Still, despite a month-over-month decline, overall healthy April sales suggest that growing economic headwinds haven’t hit new-vehicle sales just yet.
Paul Jacobson, General Motors chief financial officer, noted during a call with analysts Tuesday discussing the company’s first quarter earnings, consumer demand for new vehicle remains healthy. GM does not report monthly sales totals, but Jacobson said GM’s sales have been strong throughout the month of April.
“Encouragingly, April-to-date performance is also trending well as demand remains healthy, inventory levels are essentially flat, pricing has been consistent, and we’re seeing a steady increase in industry volume,” Jacobson told analysts.
Jacobson added, “While we continue to experience parts availability and logistics challenges as we did in Q1, we expect these issues to gradually improve over the next few quarters and are, therefore, still expecting 2023 year-over-year wholesale volume to increase 5% to 10%.
GM also raised its guidance for the full year and now expects EBIT-adjusted in the $11 billion to $13 billion range.
Cox, in its analysis, cautions while sales have shown resilience thus far in 2023, some slowdown in the second half of this year is expected. As reported at the end of Q1, economic headwinds are expected to slow the new-vehicle sales recovery, although more incentives and additional units sold into fleet will continue to provide support during the months ahead.