New car sales in the United States are expected to decline slightly in January 2023, according to a report by J.D. Power and GlobalData.
Total sales, including retail and non-retail transactions, are estimated to fall by 1.5% to around 1,087,900 units compared to January 2022.
This dip results from slower sales following the holiday season, as most car buyers take advantage of year-end deals and incentives in December.
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- New vehicle sales in the US are expected to decrease by 1.5% in January 2023 compared to January 2022
- The drop is attributed to seasonally slower winter sales and cooling demand for electric vehicles.
- Average new vehicle transaction price forecast to decline over $1,600 versus last January
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US New Vehicle Average Transaction Price Forecast to Decline Nearly 2% in January
Consumers are expected to spend approximately $37 billion on new vehicles in January 2023, a 2% decrease from the $37.8 billion spent in January 2022.
This would be the first monthly year-over-year decline in spending since April 2022.
Automakers are expected to increase incentive spending in the winter months to entice buyers, with an average incentive spending of around $2,346 per unit, a 74% increase from January 2022.
Despite this, lower purchase motivation is expected to persist through the winter.
Electric vehicle (E.V.) demand is also expected to decline, with E.V. retail share predicted to slip to 8.1% in January compared to 9.2% at the end of 2022 due to tighter qualification criteria for government E.V. rebates that took effect on January 1st.
On a positive note, prices are beginning to ease after vehicle shortages last year led to record-high transaction prices.
The average estimated transaction price for January 2023 is $45,106, down $1,636 from January 2022. Prices may slowly decrease as supply chain hurdles improve.
January’s sales numbers indicate a decrease in demand after last year’s post-pandemic surge.
However, automakers remain optimistic for recovery as the year progresses and anticipate total sales will remain healthy.
Consumers benefit from normalizing inventory levels and more affordable choices hitting the market.
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