Parts shortages, high gas prices weigh on U.S. auto market
2022.04.01 13:52
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FILE PHOTO: New Ford Ranger pickup trucks are shown for sale in Carlsbad, California, U.S., September 23, 2020. REUTERS/Mike Blake/File Photo
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By Joseph White
DETROIT (Reuters) – Major automakers are expected to report on Friday that first-quarter U.S. car and light truck sales fell sharply compared to a year ago, with more uncertainty ahead because of parts shortages, high fuel prices and rising interest rates.
J.D. Power and LMC Automotive forecast that January-March U.S. car and light truck sales will decline 18% from a year ago, and predict the annualized sales pace for March will slump to 12.7 million vehicles, down from 17.8 million a year ago.
Cox Automotive said earlier this week first quarter U.S. auto sales would be the weakest in a decade.
Tesla (NASDAQ:TSLA) Inc could buck the downward trend. The world’s most valuable automaker is expected to report its first quarter deliveries as soon as Friday, and Wall Street had been expecting an improvement from the fourth quarter figure of 308,650 vehicles. However, Tesla has had to shut down production at its Shanghai factory this week to comply with COVID lockdowns.
Two years after the first wave of COVID-19 pandemic lockdowns derailed the U.S. economy, automakers are still trying to find their balance. The spike in gasoline prices, propelled by the war in Ukraine, and the worst inflation in 40 years have rattled consumer confidence. Rising rates coupled with high pump prices have often been harbingers of recessions for the auto industry in the past.
Consumer intentions to buy a new or used vehicle in the next six months have slumped in March for the second month in a row, and for used vehicles are at the lowest levels in 15 months, according to a survey released by the Conference Board this week.
Shortages of semiconductors and other supply chain bottlenecks have left U.S. dealers short of many popular vehicles.
At the same time, the job market is strong and demand for new trucks and sport utility vehicles, as well as electric vehicles, are so strong that average vehicle prices are still at near record levels around $47,000, Cox Automotive analysts said this week.
Automakers earlier this year predicted sales and production would increase as supply chain bottlenecks eased during the year. The Ukraine conflict and a surge of COVID cases in China have some analysts questioning how much improvement automakers can deliver.
