Car sales start slowly in 2022

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Cox Automotive expects tight supplies to keep car sales weak through the rest of the winter, which could help contain prices.

In its new car forecast released Wednesday, Cox Automotive said new cars were expected to be sold at a seasonally adjusted annual rate of 14.4 million vehicles in February. That would be down 4.3% from January and 9.6% from the rate of 15.9 million a year earlier.

Used car sales are also down. On Tuesday, Cox Automotive estimated that the seasonally adjusted annual rate (SAR) for used car sales was 32 million in January, down 11.5% from December and 18.6% from a year ago. one year old.

Credit unions are a major player in auto credit, holding about 31% of the value of such loans in December. A recent CUNA report showed credit unions held $408.2 billion in auto loans as of Dec. 31, up 5.9% from a year earlier, while the Fed showed auto loans autos rose 7.7% to $903.4 billion among other lenders.

The Cox Automotive report noted that the number of selling days in February was the same as a year ago. And new vehicle inventory is now 62% lower than a year ago, including a decline last week after rising for several weeks.

Charlie Chesbrough, senior economist at Cox Automotive, said the drop in the pace of sales was not due to seasonal adjustments, but rather a tight supply situation that continues to dampen the market.

“The market is heading for a very interesting time,” Chesbrough said. “With low supply and sales volume, and no tangible market changes expected, a sharp decrease in the pace of sales – a significant drop in SAAR – is likely to be expected for the next month.”

It would be a relief for car buyers. Edmunds, a Santa Monica, Calif.-based car buying analytics firm, reported earlier this month that buyers were paying above the manufacturer’s suggested retail price (MSRP) in a record 82.2% of all new vehicle purchases in January, down from 2.8% in January. January 2021 and 0.3% in January 2020.

Edmunds found that the average transaction price of a new vehicle jumped to $728 above MSRP in January 2022, from $2,152 below MSRP in January 2021 and $2,648 below MSRP in January 2020 .

Jessica Caldwell, executive knowledge director at Edmunds, said those numbers would have been “unthinkable” just a year ago.

“Part of this is because affluent consumers are willing to shell out more money to get the vehicles they want, but there is also a vast population of people who are forced to do so simply because they need transportation and have no other choice,” Caldwell said.

Chesbrough said the vagaries of seasonal adjustments mean the relatively strong SAAR can be signaled in winter, when low sales volumes are expected, which he said happened in January and February.

“But in the spring, when sales are expected to be much higher, SAAR will look particularly weak,” he said. “Without a big jump in stocks, the March SAAR is going to show a significant decline.”

For used cars, January’s SAAR 32 million was down from December’s level of 36.2 million and down from the January 2021 sales pace of 39.3 million.

“Used vehicle inventory has improved since last summer’s drought, but product availability remains well below pre-COVID levels,” Chesbrough said.

Retail sales of used vehicles – vehicles sold through a dealership, thereby eliminating sales to individuals – were 18% lower in January than a year earlier. The retail SAAR estimate used in January was 16.9 million, down from 20.5 million last year and 18.9 million in December.