(Bloomberg) — Toyota Motor Co. and Korea's Hyundai Motor Co. both reported strong new-vehicle sales in the U.S. in the fourth quarter despite near-record sticker prices and high interest rates that made monthly payments a headache for buyers.
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Deliveries rose more than 15% in the last three months of 2023, helped by growth from hybrid electric vehicles, the Japanese automaker said on Wednesday. She added that Hyundai sales increased by 5% during this period, which is a record number.
Automotive demand proved resilient late in the year for the two Asian brands, even as financing rates rose to 10% and the pandemic-era pent-up demand that had boosted sales earlier in the year eased. Car buyers continue to show a willingness to pay an average of $48,000 for new cars, a trend that reflects the purchasing power of wealthier Americans.
“We have seen a significant decline in the number of middle- and low-income households” buying new cars, which “now goes almost exclusively to the top 20% of households,” said Jonathan Smock, chief economist at Cox Automotive Research. interview.
Total new vehicle sales will likely decline to a seasonally adjusted annual rate of about 15.4 million vehicles in the final month of 2023, down from about 15.5 million in the previous two quarters, according to estimates compiled by Bloomberg.
Toyota's big gains came from the Corolla compact hybrid sedan, which more than doubled, and the RAV4 small SUV, which rose 37% in the fourth quarter.
For Hyundai Motor's eponymous brand, the fuel-efficient and electric vehicle were the biggest growth in sales, with deliveries of the large Palisade SUV and Ioniq 5 EV nearly doubling in the quarter.
While 2023 was a significant improvement over 2022, which was plagued by inventory constraints, the challenges we saw at the end of the year are expected to continue. Cox Automotive expects U.S. auto sales to rise less than 2% in 2024. That means the number is unlikely to exceed 17 million anytime soon, as it did for five straight years before the pandemic.
“The new benchmark for the industry due to lower affordability is closer to 16 million,” Smoke said. “We lost about 10% of total purchases.”
Automakers have no incentive to lower prices because they make more money from selling fewer cars. Consumer spending on new cars reached a record $578 billion in 2023, the third year in a row topping half a trillion dollars, according to researcher J.D. Power. J.D. Power said consumers' average monthly auto payment in December was estimated at $739, up $9 from a year earlier.
“Unless the industry finds a way to return to more affordable price points, we will see products that cater to higher-income consumers with higher credit quality,” Smock said. “This ultimately limits sales volume.”
(Updates from first paragraph with Toyota and Hyundai sales.)
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