The drama unfolding in the U.S. auto market is like an old-school Italian Western, with the various forces staring at each other motionlessly on the dusty streets. "The market is in a stalemate," said Tyson Jominy, vice president of data and analytics at JD Power. "Consumers, dealers, automakers and lenders are in a stalemate to see who will back down."
August was expected to be a strong month for sales, but reality was rather lackluster, with total vehicle sales estimated at an annualized rate of 15.1 million.
Market research firm Motor Intelligence said it was the second-lowest month for sales in 2024, after the worst month of sales, January, at 14.9 million. It didn't help that August had the most selling days of the year, at 28, due to various public holidays in other months.
Seven major brands including Ford, Honda and Hyundai announced their August sales on September 4 and 5. Except for Volvo, all other automakers achieved year-on-year growth, but the sales volume was not satisfactory. For example, Toyota North America barely increased by 1.9%, while Volvo fell by 2.1%.
Pessimism permeates the U.S. market amid sluggish sales. Stellantis CEO Carlos Tavares said some time ago that he was correcting the "arrogant" mistakes he and the company made in their U.S. business, which led to declining sales, bloated inventories and investor concerns. "Increased supply means we are officially saying goodbye to the seller's market that has dominated the past four years... New car sales and dealer profitability will deteriorate further," Tavares said.
The U.S. automotive industry is also under pressure. A new poll by research firm Cox Automotive shows that dealers are generally lacking confidence. The company surveyed 536 franchise dealers between July 23 and August 7, asking them what they think the market will look like in their area in three months.
Ultimately, these franchised dealers rated the future market at 49 points, down from 52 points in the previous quarter and 58 points in the third quarter of 2023. This is the third time in the seven years since the survey was established that the number has fallen below 50 points. Independent dealers expressed more negative expectations, with a score of 37 points, the second lowest in the history of the survey, second only to 17 points during the global economic shutdown in the second quarter of 2020. Most of them expect the US auto market to weaken rather than strengthen in the next three months.
What’s holding back the U.S. market? Analysts cited a variety of possible reasons, from uncertainty over the November U.S. election to consumers waiting for a rate cut from the Federal Reserve and questions about the health of the economy. But everyone agreed that something had to give before the market moved in a certain direction.
In the United States, the average annual interest rate on new car loans has risen to 10%, up 1 percentage point from the past year. Automakers have begun to offer discounts to attract buyers, but despite this, Erin Keating, executive analyst at Cox Automotive, pointed out that overall prices are still higher than 2020 levels. She said that coupled with consumers' expectations of further price drops, this is "completely consistent with the lack of urgency in the market and the current lack of purchasing power." "The US auto market is losing momentum." Jeff Schuster, vice president of automotive research and analysis at GlobalData, predicted in an industry report on September 5 that sales in the US auto market will not see any significant increase in the coming months. "Consumers who were forced to leave the new car market during the epidemic still face challenges in monthly payments." In view of this, Schuster said that GlobalData lowered its US annual sales forecast for 2024 by 200,000 vehicles to 16.4 million vehicles. At a time when the market is unstable, the hybrid market is a standout. In the second quarter of 2024, hybrid electric vehicles (HEVs) in the United States increased by 30.7% year-on-year.
In August, Ford's sales increased by 13.4% year-on-year. Among them, the sales of hybrid vehicles and electric vehicles increased by 50% and 29% respectively, while the sales of traditional fuel vehicles only increased by 9.9%. Hyundai's hybrid vehicle sales increased by 81% year-on-year. Toyota's electric and hybrid products increased by 49% year-on-year, accounting for 48% of total sales, of which electric vehicle sales can be ignored. Hybrid products are becoming the sales code of the US market. Japanese cars with advantages in hybrid technology are already gearing up. Toyota plans to provide hybrid options for all major models by 2030.