This year is shaping up as a rebound for the automotive industry, following a drop-off in sales in 2022. Even as supply chain problems begin to ease, though, new challenges are emerging—a possible recession, still-high inflation, the impact of the war in Ukraine on the financial markets—that could give buyers pause about spending money on new and used models.
What won't slow down, experts say: the industry's development of fresh products as design, testing, powertrain and sales evolutions that started pre-pandemic take firm hold in the vehicles that can be found on dealer lots.
Newsweek asked its go-to group of automotive industry analysts what they see happening in the coming year. Here are their top predictions.
Auto sales will slowly bounce back. "Expect about a million more light vehicle sales in the U.S. over 2022, totaling around 14.8 million in 2023. Attributing to the healthy rise are consistent signs of improvement in supply chains helping to normalize inventory levels and an increasing electric vehicle (EV) market share," AutoPacific's manager of industry analysis Paul Waatti tells Newsweek. Even with that increase, though, sales are still likely to remain slightly below 2021 levels, according to AutoPacific's estimates.
Momentum will continue to build for EVs. J.D. Power's vice president of automotive consulting, Tyson Jominy, predicts electric vehicle sales will break 1 million units in 2023. "Demand has materialized along with a broader offering of EVs across manufacturers and segments," he says. "But charging availability and uptime need to catch up fast to demand or else risk losing momentum and consumer trust."
Online interactions will get more personal. Scheduling a test drive and financing and purchasing a vehicle online rose in popularity during the pandemic. Now, "lenders and dealers are looking to expand their relationships with car buyers and go beyond the physical boundaries of auto retail to meet consumers where they are, online," says Jessica Stafford, senior vice president of consumer solutions at Cox Automotive. "Additionally, the lines are being blurred with traditional channels for auto financing with data science and predictive behavior coming into play. All of this innovation is giving consumers more personalized financing experiences and dealers, lenders and original equipment manufacturers more effective processes."
Business owners will be forced to get creative. Business owners in the market for new vehicles that can be modified to their needs will be in for a long wait, causing them to look for alternative ways to acquire them. "Supply chain restraints have resulted in extended order-to-delivery times that now average over 52 weeks for an upfit vehicle," says Brad Jacobs, vice president of fleet consulting and product development at Merchants Fleet. "This trend has led companies to procure vehicles from never-before-seen channels including vehicle inventory pools, rentals and rent-to-lease conversion offerings."
A new law will have automakers scrambling. Although final details are still being worked out, the Inflation Reduction Act modified the rules for which electric vehicles qualify for tax credits, requiring some components to be manufactured and assembly to happen in the U.S. to get the maximum credit. "We should continue to see an influx of domestic infrastructure announcements as automakers work feverishly to localize supply chains and EV assembly to adhere to new IRA rules," Waatti says. "Time is of the essence to get these in order, as vehicles qualifying for tax breaks will have a substantial market advantage."
DowntimeEntertainment
Request Reprint & Licensing or Submit Correction or view Editorial Guidelines
