Demand For Autos Strong In November, Considering High Interest Rates

Forecasters expect November auto sales to be up as much as 10% vs. the same month a year ago.

The increase in auto sales reflects better supplies of new cars and trucks, and it comes despite worries that the recent UAW strike could hurt supply, and despite high interest rates and continued high prices.

That’s according to a forecast from research and consulting firms J.D. Power and GlobalData. They expect November auto sales of about 1.2 million, up 10.2% vs. a year ago.

In a separate forecast, Cox Automotive predicted an increase in November auto sales of about 6.5%. Cox Automotive forecasters said they consider that a relatively small increase, considering the increase in inventories.

With just one month to go in 2023, analysts said U.S. auto sales are on track for an increase of about 1.5 million cars and trucks for the full year.

Earlier this month, GlobalData said it expects U.S. auto sales of about 15.4 million cars and trucks for all of 2023, up from a disappointing 13.9 million in 2022. For 2024, GlobalData expects U.S. auto sales of around 16 million.

Last year, a computer chip shortage cut into new-vehicle production. In turn, that cut into last year’s sales total. The computer chips used in auto manufacturing are still in relatively short supply. But chip production is on the rise, and the impact of the shortage has been smaller in 2023, according to AutoForecast Solutions.

Consumer demand is still so high, J.D. Power expects 21.4% of new-vehicle sales in November to be above Manufacturer’s Suggested Retail Price. That’s extraordinarily high by historical standards. But a year ago, when new-vehicle inventory was more scarce, it was even higher, at 37.1% in November 2022.

Meanwhile, higher interest rates are responsible for higher average monthly payments. According to J.D. Power, the average monthly finance payment in November is an estimated $727, up 1.5% vs. a year ago. The average new-vehicle loan rate is an estimated 7.3% in November, up 95 basis points, or 0.95%, vs. a year ago.