U.S. auto market hits post-COVID high

General Motors Co. and Ford Motor Co. eked out small fourth-quarter gains while Toyota Motor Corp. and Honda Motor Co. finished 2023 with double-digit sales increases in December, capping the U.S. auto industry's best full-year total since 2019.

The market rose 16 percent to 1.5 million last month, well above forecasts, GlobalData said Jan. 4 in a preliminary report, and finished up 13 percent at 15.6 million for all of 2023.

"End-of-year deals appeared to lure many more buyers across the country, with auto makers willing to offer more significant discounts and, in some cases, divert more volume to fleet sales," GlobalData said.

The seasonally adjusted, annualized rate of sales last month tallied 16.4 million, the highest since May 2021, GlobalData said, and well above the range of forecasts of 15.1 million to 15.4 million. The sales pace, which totaled 13.77 million in December 2022, had cooled since its previous 2023 peak of 16.22 million in June.

But there are signs of a slowing market in 2024, as elevated borrowing costs and new-vehice prices continue to sideline some shoppers. Among major auto makers, Stellantis was the only one to post a fourth-quarter and annual decline.

"Consumers in December showed a willingness to purchase if the price was right. Continued discounting or moderating pricing could bring a more pronounced lift to demand in 2024," said Jeff Schuster, vice president of research and analysis at GlobalData's automotive practice. "We expect a slight January hangover in demand, given the likely pull forward, and there remains economic risk that needs to be factored as we start the new year."

Schuster said the state of the overall U.S. economy, notably employment levels and interest rates, and pricing trends will be the dominant drivers in auto demand for 2024.

GM said U.S. sales last quarter rose 0.2 percent, its smallest increase of the year, with a 57 percent gain at Buick offsetting declines of 0.5 percent at Chevrolet, 6.5 percent at GMC and 7 percent at Cadillac. For the year, GM deliveries rose 14 percent to 2.6 million, enough to remain the market leader.

Ford Motor's fourth-quarter sales rose 1 percent, with the Ford division up 0.6 percent and Lincoln advancing 8.8 percent.

Results for Ford's biggest sellers were mixed last quarter: F-Series, down 4.9 percent; Ranger, off 92 percent; Maverick, up 22 percent; Escape, up 33 percent; Bronco, down 54 percent; Bronco Sport, up 59 percent; and Explorer, down 5.4 percent.

Ford Motor's U.S. sales rose 7 percent last year, with the Ford division advancing 7.5 percent but Lincoln down 2 percent.

Ford CEO Jim Farley called 2023 "a year of challenges, from a labor strike to supply issues," but said the auto maker is "spring-loaded for 2024" with new versions of Ford's most popular pickups and utility vehicles, notably the F-Series, Explorer and Expedition, as well as the redesigned Super Duty and Mustang that launched in 2023.

Toyota Motor's December volume rose 26 percent to 226,116, with deliveries rising 18 percent at the Toyota brand and 88 percent at Lexus.

It was the eighth consecutive monthly increase for Toyota and 11th straight for Lexus as the auto maker recovers from chronic inventory shortages.

The Toyota brand's biggest sellers posted mixed results last month: Camry, down 1.9 percent; Corolla, up 30 percent; RAV4, up 40 percent; Corolla Cross, up 33 percent; Tacoma, down 6.6 percent; and Tundra, up 25 percent.

Honda Motor Co.'s rebound continued, with December volume surging 31 percent. Sales increased 33 percent at the Honda brand and 23 percent at Acura. For the year, the Honda brand's deliveries jumped 33 percent to 1.16 million, just short of the company's goal of 1.2 million. 

Hyundai's U.S. sales rose for the 17th consecutive month, and Kia set an annual record.

Hyundai said December deliveries rose 4.3 percent to 75,164, helping to produce record fourth-quarter volume of 206,048, up 5.1 percent, and record annual sales of 801,195, an increase of 11 percent.

Hyundai said its U.S. retail sales have now set a record three straight years, driven by improving inventories, more generous discounts, an expanded electric vehicle lineup and popular crossovers. U.S. sales of the Tucson, Hyundai's top seller, rose 20 percent to 209,624 last year, marking the first time deliveries of the compact crossover have topped 200,000.

The company said it ended December with 69,097 cars and light trucks in U.S. inventory, down from 73,923 at the close of November but up sharply from 37,379 at the close of 2022.

Kia snapped a 16-month streak of sales increases with December volume of 60,275, down by 147 vehicles, but the company easily set an annual sales record of 782,451, up 13 percent from 2022. Two of Kia's top sellers — the Sportage and Telluride crossovers — posted lower sales in December.

Genesis racked up its 14th straight monthly gain, with December volume rising 10 percent to 6,803. The luxury brand's U.S. sales rose 23 percent to an all-time high of 69,175 last year.

Hyundai Motor Group's Kia and Hyundai-Genesis units surpassed Stellantis to become the No. 4 seller in the U.S. in 2023, behind GM, Toyota Motor and Ford Motor. The Korean auto maker combined to top Stellantis by more than 125,000 vehicles last year.

While Jeep, Stellantis' biggest brand, snapped a streak of nine straight quarterly declines, it wasn't enough to offest a drop of 8.1 percent at Dodge and 59 percent at Chrysler in the last three months of 2023. Stellantis' overall fourth-quarter sales slipped 1.1 percent. Ram volume rose 3.5 percent.

For the year, Stellantis deliveries slipped 1.3 percent, with Jeep off 6.1 percent and Ram down 1 percent.

Jeff Kommor, head of U.S. sales at Stellantis, said in a statement Wednesday the company expects sales momentum "to grow as we head into 2024,” as the auto maker launches EVs, notably the Ram 1500 REV, Jeep Recon and Wagoneer S, Dodge Charger Daytona and Fiat 500e.

At Nissan Motor Co., fourth-quarter sales advanced 5.6 percent, with volume rising 4.8 percent at the Nissan division and 17 percent at Infiniti.

Subaru's December volume rose 1.8 percent, and 2023 deliveries jumped 14 percent.

Double-digit gains in Atlas, Atlas Cross Sport, Jetta and ID4 sales helped Volkswagen to a 40 percent fourth-quarter gain and a 9.3 percent increase for 2023. 

Mazda's sales rose 45 percent to a December record of 39,518, with 2023 volume advancing 23 percent to 363,354.

Last year was also a milestone for two of Germany's luxury brands. Sales rose 6 percent in the fourth quarter at BMW, helping the auto maker set an annual sales record of 362,244, up 9 percent, while fourth-quarter sales rose 12 percent at Audi, helping deliver record annual volume of 228,550, up 22 percent.

Volvo's U.S. sales increased for the eighth straight month in December, rising 23 percent to 13,609, with 2023 volume advancing 26 percent to 128,701. Volvo said EVs and plug-in hyrbids accounted for 28 percent of its 2023 deliveries.

Fourth-quarter results from Mercedes-Benz, Jaguar, Land Rover and Porsche will be released later in the month.

U.S. light-vehicle sales were forecast to jump by a range of 6.2 to 13 percent in December, with 2023 volume projected to rise to 15.4 million to 15.5 million, up from 13.87 million in 2022, when chronic microchip shortages undermined car and light-truck supplies.

Improving inventories and rising incentives are luring consumers back to showrooms, while fleet shipments, suspended or curtailed by many auto makers during the pandemic and ensuing semiconductor shortage, are providing more support.

New-car and light-truck stockpiles totaled 2.56 million vehicles at the beginning of December, more than 900,000 above levels a year earlier, Cox Automotive said. J.D. Power and GlobalData estimated that retail inventory finished December around 1.7 million vehicles, a 7.6 percent increase from November and a 55 percent jump from December 2022. However, stockpiles remain 40 percent lower than before the COVID-19 pandemic, they said.

Toyota, Honda, Lexus, Land Rover, BMW, Kia, Cadillac, Subaru, Mini and Hyundai had the tightest supplies last month, Cox Automotive data shows, while stockpiles were highest at Dodge, Lincoln, Chrysler, Jeep, Nissan, Infiniti, Mitsubishi, Buick, Ram and Ford.

Average new-vehicle discounts were expected to rise $145 from November and 91 percent from December 2022 to an estimated $2,458 last month, J.D. Power and GlobalData said.

In November, incentives exceeded $1,000 per vehicle at every major auto maker; in the case of the Detroit 3, incentives topped $2,400, according to Motor Intelligence.

Fleet sales, which suffered in October and November in the wake of the UAW strike against the Detroit 3, will rebound in December, analysts say.

Fleet shipments are projected to tally 227,660 in December, up 14 percent from December 2022 when adjusted for selling days, GlobalData and J.D. Power said.

"December is expected to show a return to stronger fleet activity, and these sales could have a big impact on the month's final tally," said Charlie Chesbrough, senior economist at Cox Automotive.

Most analysts see sales rising to 15.9 million to 16.1 million this year, with affordability and higher borrowing costs continuing to keep a check on faster growth and a return to the heady period of 2015 to 2019, when annual volume consistently topped 17 million. Edmunds says high interest rates will limit the increase in 2024 volume at 1 percent, to 15.7 million.

Cox Automotive is more cautious, projecting an increase in 2024 industry sales to just 15.6 million.

"High vehicle prices and high interest rates remain the industry's Grinch right now, and that trend will continue into 2024," Chesbrough said.

• There were 26 selling days last month vs. 27 in December 2022.
• The average new-vehicle retail transaction price was on track to reach $46,055, down $1,274 from December 2022, when it hit a record $47,329.
• The average incentive per new light truck in December was expected to total $2,645, GlobalData and J.D. Power estimated, up from $1,346 a year earlier, while the average discount on new cars was expected to tally $1,880, up $634 from December 2022.
• The average interest rate on a new-vehicle loan was expected to increase 0.46 percentage points from December 2022 to 6.9 percent in December 2023, J.D. Power and GlobalData said.

"The competition is going to be arguably very heated in 2024. Everybody is going to have inventory. Everybody’s going to be back marketing and advertising, sales promoting, merchandising, putting incentives in the marketplace. It’s going to be monthly hand-to-hand combat versus our key competitors."

— Randy Parker, CEO of Hyundai Motor America

Carly Schaffner contributed to this report.