U.S. new-car sales seen slightly higher in April, but tight inventories and rising prices will keep a lid on any big jumps

U.S. car sales in the U.S. are expected to increase slightly in April from March, but investors continue to worry about low stocks, soaring vehicle prices and few, if any, sales incentives. they will continue to reduce demand.

Estimates of the seasonally adjusted annual rate for April are around 14.5 million vehicles, more than about 13.4 million vehicles in March, but far from the April 2021 SAAR of about 18.6 million of vehicles, and then a spike in the recovery in car sales following pandemic-related factory closures. .

“Unfortunately, there are no significant signs of improvement in the new car market in April,” said Jessica Caldwell, an analyst at Edmunds.com. “We are seeing the same trends from the first quarter to the second quarter: inventory remains very low, leaving consumers disturbed by high prices and poor selection.”

Caldwell said the market realities are a “marked” contrast to carmakers trying to generate excitement around this year’s electric vehicle launches. Supply chain problems, including a shortage of chips and auto parts, “are really holding back the momentum and buzz of the market.”

Ford Motor Co. F,
on Wednesday earlier it reported a 10.5% year-on-year drop in its April sales as sales of its trucks fell.

General Motors Co. GM,
and Tesla Inc. TSLA,
they do not report monthly sales, but quarterly figures, and are expected to update the markets on their production and deliveries in early July.

Investors have been concerned about the possible destruction of demand amid falling consumer sentiment, as well as industry-specific hurdles.

April sales data “reminded us that in the foreseeable future, inventory / supply remains the main limitation, as gross inventories remain close to their all-time low,” Dan Levy told Credit Switzerland.

Supply constraints will eventually be reduced, but “to unlock more sales, prices will have to go down a bit from record levels,” Levy said.

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Rising car prices have been a big help to the U.S. auto industry as it has increased results, kept the 2022 prospects of major U.S. automakers intact, and taken part of the impact of higher commodity prices and costs.

Manufacturers have also reduced sales incentives and dealers report selling vehicles at or above a suggested adhesive price, which had been unusual for years before the pandemic hit.

Ford last week promised to be “as aggressive” in pricing as possible to avoid rising costs, and Tesla and other manufacturers have also raised prices.

RBC Capital’s Joseph Spak said Wednesday in a note that Ford could decide to raise car prices further, including increases for the F-150 Lightning, the EV version of its best-selling van and a major weapon in Ford’s quest to turn to manufacturing. and selling mostly electric vehicles.

“Management believes there is room for more, especially in (electric vehicles.),” Spak said, referring to recent meetings with Ford executives.

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“In our opinion, it may be necessary to take more price on BEVs given the inflation of battery metals. There could be room for Ford to raise the price of the F-150 Lightning because most of the interest is still in reserves. , not the configured orders, “the analyst said.

Deutsche Bank analysts, led by Emmanuel Rosner, said U.S. car sales in April were slightly ahead of expectations. Adjusted inventories are expected to continue, they said.

In late April, industry inventories fell to 23 days, one day less than in March and 10 days the previous year, “which could help maintain strong price conditions,” analysts at Deutsche Bank.

Analysts maintained their U.S. sales forecast for 2022 for 15.4 million seasonally adjusted and seasonally adjusted vehicles, which has a “marked SAAR improvement” for the second quarter of the year.

Cox Automotive said Wednesday that its team is still calculating April sales, but maintained initial projections that sales for the month will be down more than 20% from last year’s levels.

But it’s probably more about last year’s sales than April’s sales, which could be considered “relatively normal if we consider last year” a new normalcy “for the industry,” Cox said.

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