NEW YORK–Credit unions’ lending volumes are tightly tied to auto loans, and a surprise in 2022 has been just how strong auto sales have been this year.
“American car shoppers have been flocking to dealerships so far this year, shaking off concerns about rising interest rates and inflationary pressures,” the Wall Street Journal reported. “The auto industry is expected to have notched a 12%-to-14% rise in new vehicle sales for the first half of this year, a pace far ahead of industry forecasts heading into 2023.”
The report noted that automakers including Kia, Nissan and others have been reporting increased sales, while EV makers such as Tesla and Rivian have reported much-stronger-than-usual deliveries of vehicles during Q2.
“Dealers and car executives point to pent-up demand from shoppers who have been on the sidelines for three years as vehicle shortages resulted in slim pickings and high prices,” the Journal stated.
Now that supply-chain pressures have eased and automakers are more consistently churning out vehicles, buyers are responding, and sales are bouncing back faster than many analysts had expected, the report added.
“Consumer confidence is still there, mostly because there has been that backlog of supply for so long,” Scott Kunes, chief operating officer of Wisconsin-based Kunes Auto and RV Group, which sells most major domestic and foreign automotive brands, told the Journal.
Brisk Demand
As CUToday.info has reported and the Journal further noted, brisk demand has helped to keep the average dollar amount that buyers are paying for new vehicles at near-record levels, despite predictions from Wall Street analysts that prices would come down as more vehicles arrive at dealer lots.
The average price paid rose 3% over the first half of the year, and was about $46,000 in June, according to J.D. Power.
“People are continuing to buy up” to choose pricier models and features, General Motors finance chief Paul Jacobson said last month at a Deutsche Bank investor conference.
The Journal further pointed out that in June Cox Automotive said it would raise its full-year U.S. vehicle-sales forecast to 15 million vehicles, from its previous estimate of 14.1 million vehicles.
‘Taking Their Toll’
“Still, persistently high sticker prices have started to take their toll on buyers’ enthusiasm,” the report cautions. “Cox Automotive predicts that demand will wane in the second half of the year, as the pool of eager buyers shrinks.”
In the years leading up to the pandemic, the industry eclipsed 17 million vehicle sales annually. In June, there were an estimated 1.9 million vehicles on dealership lots or being shipped to stores, a 52% increase from a year earlier, according to research firm Wards Intelligence, the Journal said, reminding that before 2020, monthly inventory levels would regularly reach between 3.5 million and four million vehicles.
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