Rental companies and other companies provided a much-needed but unexpected source of extra sales to a barely recovering car industry. With 15.3 million vehicles sold, the pace is easily far surpassing the numbers from last year. While Cox Automotive says the seasonally adjusted rate for March of 14.8 million vehicles is below the 16 million in January and 15 million in February, it is still significant growth.
Ford and GM both reported extensive sales of pickup and SUV sales, while Tesla’s recently slashed prices increased their total sales as well. It also marks the best SAAR since the second quarter of 2021, with higher inventory levels and fleet sales as the driving factor, and GM & Ford supporting these claims.
Edmunds.com analyst Jessica Caldwell explained in a new study released on April 5th, “Affordability is a growing issue for everyday Americans trying to buy new vehicles… Over the last decade, low-interest rates combined with longer loan terms allowed Americans to embrace the ‘bigger is better’ mentality and buy larger, more richly equipped trucks and SUVs that dominate the roads and driveways across the country today as small vehicles are going extinct.”
The report also marked the end of the $20k vehicle, with just 0.3% of new vehicle sales being reported in that bracket, marking a massive decline from the 8% just five years ago. Just a small increase to $25k ballooned that number up to 24% just five years ago, but now only accounts for 5%. 44% of vehicles were under $30,000 back then, but that only accounts for 17% now.
Putting many people out of the new market for large vehicles has paved the way for a robust used vehicle market, but given the propensity for many manufacturers to make “throwaway” vehicles, many are finding that once they reach 100,000 miles, it’s less costly to get a different car than to keep driving their current car.
The push to get people to go green has also been a tremendous driving force behind the SAAR pace. With Tesla did cut prices, many tax incentives kicked in, and gas prices have left the cost to fill an electric vehicle far more justifiable to the average consumer. For those who cannot afford or don’t want to make the green transition, the older used cars are still on the road, and still going strong for many Americans.
Having options and dealerships across the nation has made it ultimately easier for people to continue the decision to buy more and more used vehicles as opposed to buying new ones. Much like during the start of the pandemic when a chip shortage made new cars harder to buy, a rush on used cars is making it easier for companies and fleet vehicles to buy up bulk orders of vehicles that the average consumer isn’t ordering.
Many did not expect to see car sales like this in 2023 at all, especially in the first quarter. If the industry can maintain sales figures like this, we could see a return to pre-COVID numbers shortly. While not likely with Biden in office and consistently trying to fight big oil, the possibility still exists, and the American people would be encouraged to spend more should that happen.
Then again, if Biden leaves office people would have the same encouragement, and it would be from a much more authentic, exciting, and profitable place. Sales based on fear of Biden only making things worse is not sustainable, especially as oil prices and therefore gas prices continue to skyrocket. With fuel costs being the cornerstone of inflation in 2023, his actions have had a deeper impact on vehicle sales than any other president in history, so to see increased sales while he is fighting is shocking. America should be proud. Surprised, but proud.