S&P Global Mobility: January 2024 US auto sales feel the chill

Rhea-AI Summary

S&P Global Mobility projects a deceleration in auto sales for January 2024, with estimated sales pace of 15.2 million units. The year-on-year improvement reflects potential volatility in the market, influenced by the solid closeout to sales in December 2023 and inclement weather effects. However, the outlook for 2024 projects sustained, moderate growth levels for light vehicle sales, with a 3% increase from 2023. The environment for auto consumers remains uncertain, with high interest rates and economic headwinds. Dealer advertised vehicle inventories continue to climb, with growing inventory levels and an increase in the average advertised discount of vehicle listings. The immediate term anticipates continued development of battery-electric vehicle sales, with an expected 8.0% share for January and advancements in the following periods.

Positive

• None.

Negative

• High interest rates and economic headwinds continue to impact the auto consumer purchase environment

Insights

Market Research Analyst

From a market research perspective, the projected deceleration in auto sales from December to January indicates a potential cooling of consumer demand, which is a critical factor for automakers and investors alike. The SAAR of 15.2 million units, while above the previous year's level, signifies a return to a more normalized growth pattern following a strong sales period. This normalization can impact automaker strategies, particularly around production planning and inventory management.

The slight increase in inventory and incentives is a response to the current market environment characterized by high interest rates and economic uncertainty. Automakers must balance the need to clear inventory with the risk of margin compression due to increased incentives. The rise in advertised discounts suggests a competitive market where dealers are actively trying to attract buyers, which could pressure profit margins but may also stabilize sales volumes.

Financial Analyst

From a financial standpoint, the reported figures and projections have implications for the auto industry's revenue streams and profitability. The 3% year-over-year increase in projected sales volume for 2024 suggests modest growth, which could reassure investors about the industry's resilience amid economic headwinds. However, the month-to-month volatility and the potential 'hangover' from December sales imply that companies might face uneven cash flows, affecting quarterly financial results.

Additionally, the anticipated growth in light vehicle sales, particularly the development of battery-electric vehicles (BEVs), may signal a shift in capital allocation towards more sustainable product lines. Investors should monitor the adoption rates of BEVs and the effectiveness of automakers' strategies to capitalize on federal tax credits, as these will be crucial for long-term growth in the sector.

Automotive Industry Analyst

Considering the automotive industry, the stabilization of production levels and the alignment with consumer demand are key for maintaining operational efficiency. The mention of production shutdowns in late 2023 and the subsequent restocking efforts highlight the industry's ongoing challenges with supply chain management. The fact that BEV sales are expected to maintain their market share indicates a steady consumer interest in electric vehicles, which is essential for the industry's transition towards electrification.

Automakers' strategies to manage the rollout of new models such as the Chevrolet Equinox EV, Honda Prologue and Fiat 500e will be critical in capturing market share in the growing BEV segment. The ability of these new models to meet consumer expectations and benefit from IRA tax credits will likely influence the competitive landscape within the automotive sector.

January 2024 auto sales are expected to decelerate from the quickening realized in December, with the pace of demand falling back to a SAAR of 15.2 million units

SOUTHFIELD, Mich., Jan. 24, 2024 /PRNewswire/ -- With volume for the month projected at 1.09 million units, January 2024 U.S. auto sales are estimated to translate to a sales pace of 15.2 million units (seasonally adjusted annual rate: SAAR). While this would be an improvement from the year-ago level, the result reflects a potential preview to the upcoming calendar year whereby month-to-month volatility is expected to remain in the market. Contributors to the chill in the January sales pace include an expected hangover from the solid closeout to sales in December 2023, combined with some inclement weather effects.

The S&P Global Mobility US auto outlook for 2024 projects sustained, but more moderate growth levels for light vehicle sales.  We expect production levels to continue to develop, especially early in the year as some automakers look to continue to restock in wake of production shutdowns late in 2023 and decent December 2023 sales volume. The advancing production levels set the stage for incentives and inventory to continue to develop, potentially enticing new vehicle buyers who remained on the sidelines due to higher interest rates. S&P Global Mobility projects calendar-year 2024 volume of 15.94 million units, a 3% increase from the 2023 tally.

"Auto consumers continue to be impacted by an uncertain purchase environment.  While positive developments regarding mildly retreating vehicle prices, rising inventory and incentive levels bode well, interest rates remain high and economic headwinds remain," said Chris Hopson, principal analyst at S&P Global Mobility. "A volatile purchase environment for auto consumers will continue to dictate monthly sales levels."

Dealer advertised vehicle inventories continue to climb. Available new vehicle dealer inventory listings for the US market increased to 2.45 million units at the end of December, said Matt Trommer, associate director of Market Reporting at S&P Global Mobility. This is a slight 0.6% increase from November and a 53% year-over-year increase.  

"With growing inventory levels, the average advertised discount of vehicle listings has continued to rise and by the end of December stood at $3,030, an increase of 10.5% vs. the previous month," Trommer said. 

U.S. Light Vehicle Sales
		Jan 24 (Est)	Dec 23	Jan 23
Total Light Vehicle	Units, NSA	1,092,474	1,433,266	1,046,837
	In millions, SAAR	15.2	15.8	15.1
Light Truck	In millions, SAAR	12.4	12.7	12.1
Passenger Car	In millions, SAAR	2.8	3.1	3.0
Source: S&P Global Mobility (Est), U.S. Bureau of Economic Analysis

Continued development of battery-electric vehicle (BEV) sales remains an assumption in the longer term S&P Global Mobility light vehicle sales forecast.  In the immediate term, some month-to-month volatility is anticipated. January BEV share is expected to reach 8.0%, similar to the month prior reading as automakers, dealers and consumers digest the changes to IRA Federal tax credits to begin the new year. BEV share is expected to advance over the next several periods, pending the roll outs of vehicles such as the Chevrolet Equinox EV, Honda Prologue and Fiat 500e, all scheduled for market introductions over the first half of 2024.

About S&P Global Mobility

At S&P Global Mobility, we provide invaluable insights derived from unmatched automotive data, enabling our customers to anticipate change and make decisions with conviction. Our expertise helps them to optimize their businesses, reach the right consumers, and shape the future of mobility. We open the door to automotive innovation, revealing the buying patterns of today and helping customers plan for the emerging technologies of tomorrow.

S&P Global Mobility is a division of S&P Global (NYSE: SPGI). S&P Global is the world's foremost provider of credit ratings, benchmarks, analytics and workflow solutions in the global capital, commodity and automotive markets. With every one of our offerings, we help many of the world's leading organizations navigate the economic landscape so they can plan for tomorrow, today. For more information, visit www.spglobal.com/mobility.

Media Contact:

Michelle Culver
S&P Global Mobility
248.728.7496 or 248.342.6211
Michelle.culver@spglobal.com

 

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SOURCE S&P Global Mobility

FAQ

What is the estimated sales pace for January 2024?

The estimated sales pace for January 2024 is 15.2 million units.

What is the projected growth level for light vehicle sales in 2024?

The projected growth level for light vehicle sales in 2024 is 3% increase from 2023.

What are the factors contributing to the potential volatility in the auto sales market?

The factors contributing to the potential volatility in the auto sales market include the solid closeout to sales in December 2023 and inclement weather effects.

What is the expected share of battery-electric vehicle sales for January 2024?

The expected share of battery-electric vehicle sales for January 2024 is 8.0%.

What is the impact of high interest rates and economic headwinds on the auto consumer purchase environment?

High interest rates and economic headwinds continue to impact the auto consumer purchase environment.