Atlanta, December 19, 2022 – With the start of the new year just weeks away, the Cox Automotive Industry Insights team has laid out their expectations for the US automotive market in 2023. In almost every respect, 2022 has been a difficult year for both the industry and consumers. Low new car inventory, high prices, and stubborn inflation are squeezing your monthly budget. A relatively strong job market was a tailwind, but all the while the hawkish Federal Reserve pushed up interest rates, essentially putting the brakes on the auto industry as it struggled to gain momentum.
“This past year has been challenging not only for forecasting, but for managing the industry,” said Jonathan Smoke, chief economist at Cox Automotive. The coming year will be one of transition as both consumers and the industry weather the remnants of the global pandemic and set a new course for mid-decade growth. I anticipate.”
Cox Automotive will shape the automotive business of 2023 based on recent research, intelligence capabilities powered by DRiVEQ, the largest first-party data in the automotive ecosystem, and an unrivaled team of analysts and experts Assume 10 trends.
#1: Low-growth economy puts pressure on auto market.
Although the risk of a 2023 recession remains, Cox Automotive expects the economy to at least slow or grow very weakly as the Federal Reserve tightens monetary terms and consumers continue to struggle with high interest rates. doing. A job-destroying recession is the worst-case scenario for the auto industry, but hope remains for a soft-landing of the economy. Either way, the turbulent economy will weigh on the auto market over the next year.
#2 New car inventory levels will continue to rise.
New car production challenges are starting to decrease and inventory levels have improved significantly. Lingering supply chain and workforce challenges remain, and although capacity will not fully return to pre-pandemic levels in the foreseeable future, higher production levels and softening demand will increase the number of days of supply in 2023. , which will eventually increase vehicle options for shoppers. .
#3: Total retail sales will decline in 2023 as new car sales grow and used car sales decline.
With new car inventory levels improving as demand slows, Cox Automotive expects new car sales to grow 3% year-on-year in 2023, reaching 14.1 million units. Increased fleet sales help absolute numbers. Shortages in near-new supply, falling affordability, and shrinking buyers will challenge the used car market. Overall retail sales will decline in 2023, adding competitive pressure to the market, especially in second-hand goods.
#4: Electric vehicle sales in the US surpass 1 million units for the first time.
The battery electric vehicle market continues to outpace the overall market, with another milestone of 1 million EVs sold in the US in 2023 just around the corner. The Cox Automotive team expects continued good news in the electric vehicle market.
#5: Used car values are seeing more than normal depreciation for the second year in a row.
What the Market Gives, What the Market Takes: After a historic rally in 2020 and 2021 followed by above-average declines for much of 2022, used car The price trend in 2023, which is likely to continue to decline more than is.
#6: Vehicle affordability will be the biggest challenge facing vehicle buyers.
Rising retail prices combined with high interest rates on auto loans to generate record monthly payments in 2022, levels that increasingly pushed low-income, low-credit consumers out of the market. In 2023, as automakers cater to the new car market with more expensive products for high-income consumers, less affluent subprime buyers will find affordable vehicle payments to meet their monthly budgets. I would expect the same even more because I’m struggling with .
#7: All-cash transactions will increase to levels not seen in decades.
All-cash transactions will continue to grow as interest rates on auto loans hit a 20-year high. In 2023, wealthier consumers will buy with cash rather than finance, putting downward pressure on the dealer’s F&I profits. This change will be felt more acutely in the new car market, and could have a lasting impact on the industry’s profit pools and future buying behavior.
#8: Increased dealer service volume and revenue.
2023 should continue to see strong dynamics in service lanes, recession or not, as affordability issues encourage more owners to keep their current vehicles. Fixed operations saw strong revenue growth in 2019 as average ticket sizes increased significantly due to pricing power and strong demand, even though total service volumes have not recovered to 2019 levels. Fixed operations as profit centers will be more important than ever in 2023 as retail sales are expected to remain flat or decline.
#9: Half of car buyers will use digital retail tools.
The pandemic has accelerated the shift to e-commerce and shows no sign of slowing down. Cox Automotive predicts that over the next year, half of car buyers will use at least one of his digital tools during the buying process. Importantly, fully digital vehicle purchases will continue to be a small part of the business as most buyers pursue an omnichannel vehicle buying experience.
#10: Federal incentives will encourage more fleet buyers to consider electrification solutions.
A key component of the Reducing Inflation Act of 2022 was the reshaping of the EV tax credit in the United States. The new law has incentives designed to induce fleet operators to consider electrified vehicles in the next year. Fleet has historically shown a slow adoption of EVs, but a recent survey found that 66% of his fleet buyers are considering EVs, up from 43% of him in 2021. doing. New incentives and investments in charging infrastructure could amplify this trend.
About Cox Automotive
Cox Automotive Inc. makes it easy for everyone to buy, sell, own and use cars.Over 27,000 team members in global companies and a family of brands including Autotrader®Dealer.com®Dealer Truck®Kelly Blue Book®Mannheim®Next Gear Capital®Vin Solutions®vAuto® and Xtime®is passionate about helping millions of car shoppers, 40,000 auto dealer clients on five continents, and many others across the automotive industry thrive for generations to come. increase. Cox Automotive is a subsidiary of Cox Enterprises Inc. Cox Enterprises Inc. is a privately held company based in Atlanta with annual sales of approximately $20 billion. www.coxautoinc.com