U.S. Auto Sales Gain In June On Bigger Inventory, And Pent-Up Demand

Forecasters expect strong U.S. auto sales in June and for the second quarter compared with a year ago, despite higher interest rates, and general concerns about the U.S. economy.

S&P Global Mobility predicts new, light-vehicle sales volume in June to reach 1.38 million units. That would be an increase of 17% compared with June 2022. For the second quarter, its forecast is about 4.1 million units, up 16.5%. For the first half, that would mean sales of 7.7 million, up about 12%.

In a separate forecast, Edmunds had a similar estimate for the second quarter of about 4 million, up 16.1%. Automakers in the U.S. market report quarterly sales on Wednesday, July 5.

The large sales increase vs. a year ago is due to pent-up consumer demand, a modest return to incentives, and a bigger inventory of new cars and trucks, as the auto industry gradually recovers from a shortage of computer chips, analysts said.

“The largest demand problem for automotive is affordability,” said Jonathan Smoke, chief economist for Cox Automotive, in a webinar devoted to a mid-year review of U.S. auto sales.

That is, affordability is the largest threat to auto sales, as opposed to the chip shortage. That’s a departure from recent history.

U.S. auto sales have improved, as quarantining and social distancing related to the COVID-19 pandemic were phased out. However, the computer chip shortage, which also had its original roots in the pandemic, has been longer-lasting.

A greater supply of chips is gradually coming online as that industry builds new factories. In turn, U.S. dealers have a bigger selection of new cars and trucks.

According to Cox Automotive, U.S. dealers have new-vehicle inventory of around 1.8 million units, up 74% vs. a year ago. Prior to the pandemic, inventory was around 3.5 million in 2019.

It’s also fair to point out, June 2023 and the second quarter of 2023 benefit from an easy comparison vs. a year ago. A year ago. second-quarter sales were down 20.6% vs. the second quarter of 2021, according to Automotive News. Year to date, sales were down 18.3% in the first half of 2022.

Freelance contributor Jim Henry also writes for Automotive News.