Cox Automotive is forecasting that first quarter new vehicle sales volume will increase by nearly 6 per cent, year-over-year, to reach 3.5 million units.
In a news release, the company said that the sales volume in March (the end of Q1) is anticipated to reach almost 1.30 million—an increase of 2.6 per cent from the same month in 2022. It also points to a seasonally adjusted annual rate (SAAR) forecast of 15.0 million, up more than 6 per cent compared to the first quarter of 2022.
“The stronger start to 2023 has led us to make positive revisions to our vehicle sales forecasts, but we continue to believe supply constraints and affordability issues will put a ceiling on what’s possible in the year ahead,” said Jonathan Smoke, Chief Economist at Cox Automotive, in a statement.
He added that, as the job market remains strong, the biggest problem for the automotive industry this year will be rising interest rates that will inevitably push many would-be buyers out of the market.
As for the increase in Q1 sales, Cox Automotive said much of this can be attributed to an improvement in new-vehicle inventory levels—up approximately 70 per cent from the early months of 2022. Fleet sales were up 58 per cent YOY in January, and increased by 48 per cent in February. A similar increase is anticipated for March.
However, Cox Automotive Senior Economist Charlie Chesbough does not expect the upside market experienced in Q1 to last throughout the year.
“In fact, sales volume in Q1 will be down 3 per cent from last quarter, suggesting that market headwinds are growing,” he said in a statement. “Inventory levels at some automakers are moving back up above pre-pandemic normal, suggesting that overall demand has slowed in some corners of the market.”