U.S. light-vehicle market cools in January

The U.S. light-vehicle market, after a surge to finish 2023, cooled considerably in January, even amid improving inventory, higher discounts and strong fleet deliveries.

Sales rose 0.1 percent to 1.06 million last month, GlobalData said in a preliminary report Friday, falling well short of estimates that called for volume to rise as much as 8 percent.

The seasonally adjusted annualized rate of sales came in at 14.8 million, GlobalData said, well below forecasts that ranged from 15.2 million to 15.8 million, and down from 16.08 million in December and 15.26 million in January 2023. January is typically one of the weakest months of the year for new-vehicle sales.  

GlobalData said retail sales totaled an estimated 837,000 last month while fleet sales accounted for
approximately 221,000 units, or 20.9 percent of all industry deliveries. If those preliminary figures are confirmed by final data, GlobalData said fleet's share of total industry volume would hit an 11-month high in January.

"January was a difficult month with economic challenges and interest rates making it a tough retail environment,” Randy Parker, CEO of Hyundai Motor America, said in a statement.

David Oakley, head of automotive sales forecasting in the Americas for GlobalData, said U.S. consumers "remain price-sensitive and if the right deals are not available, volumes are liable to suffer."

Charlie Chesbrough, senior economist at Cox Automotive, said large winter storms and deep freezes across much of the country also had a negative impact on sales last month even as improving inventory and more deals lure consumers back to showrooms.

Analysts said the EV market, already showing signs of slower growth and adoption, will also be undermined in early 2024 by several vehicle models that no longer qualify for federal consumer tax credits as of Jan. 1.

After rising 13 percent to 15.6 million in 2023, the growth in U.S. light-vehicle sales is expected to taper off in 2024, with many forecasters anticipating volume of about 16 million.

Toyota Motor Corp. and Honda Motor Co. continue to rebound, posting double-digit U.S. sales increases in January, while Ford Motor Co. deliveries rose for the second straight month and Hyundai and Kia, coming off a record 2023, posted lower volume.

Toyota Motor, hampered by chip shortages and severe inventory shortages in early 2023, said January U.S. light-vehicle sales rose 23 percent to 165,753, with car sales up 36 percent and light trucks rising 18 percent.

Sales rose 26 percent at the Toyota division and 10 percent at Lexus.

Nearly every top-selling Toyota model racked up double-digit gains last month: Corolla, up 36 percent; Camry up, 32 percent; RAV4, up 55 percent; Corolla Cross, up 70 percent; 4Runner, up 27 percent; and Tundra, up 49 percent. Sales of the Tacoma pickup, another top seller and redesigned for 2024, tumbled 54 percent, Toyota reported.  

Toyota Motor said fleet represented nearly 15 percent of its January sales, higher than normal, and that it expects fleet deliveries to total 10 percent of 2024 volume.

The auto maker ended January with a 34-day supply of vehicles, or 220,180 cars and light trucks, with 116,694 in dealer stock and 103,486 in ports or in transit. The Toyota division has a 30-day supply of vehicles while Lexus has a 54-day supply, the company said.

Sales rose 4.7 percent last month at Ford Motor, with the Ford division up 4 percent and Lincoln volume jumping 20 percent. It was the second consecutive monthly gain at the Ford brand and third straight monthly increase at Lincoln. 

The biggest sellers at the Ford divisions had a mixed month: F-Series, down 12 percent; Explorer, up 21 percent; Maverick, up 98 percent; Escape, up 38 percent; Bronco Sport, up 4.1 percent; and Mustang Mach-E, down 51 percent.

Ford said it ended January with gross vehicle stocks of 482,600, down from 497,900 in December.

Honda Motor Co. reported a 10 percent rise in January volume, with a 13 percent increase at the Honda division offsetting a 9 percent decline at Acura, which snapped a 12-month streak of gains at the luxury brand. Honda division sales have now advanced 11 straight months year over year.

Mixed car sales at the Honda division—Accord down 18 percent but Civic up 24 percent—were offset by big gains for two key light trucks: a 32 percent rise in CR-V volume and a 49 percent increase in HR-V deliveries last month.

Honda said electrified models set a January sales record of 17,004, with the CR-V hybrid and Accord hybrid each posting best-ever January volume.

The Honda brand had about 91,200 vehicles on the ground or in dealer stock at the end of January, up from 76,100 to start 2024, and 36,700 in early February 2023.

January volume fell 8.6 percent to 47,543 at Hyundai in January, snapping a streak of 17 consecutive monthly gains, with just two volume models—Kona and Palisade—generating higher sales year over year. 

Two of Hyundai's core car models, Elantra and Sonata, saw declines of 20 percent or more last month. 

Hyundai Motor America CEO Randy Parker, noting the company's lower-than-normal inventory levels in early January after a record end to 2023, said in an interview that Hyundai "didn't have the right car and the right trim package in the right place" at the start of the month but said stockpiles improved as January closed.

Hyundai said it ended January with 83,189 cars and light trucks in U.S. inventory, up from 69,097 at the close of 2023 and 45,158 at the end of January 2023.

Volume slipped 1.7 percent to 51,091 at Kia—the second consecutive monthly decline year over year—with record January utility vehicle sales offset by sharply lower car deliveries that largely reflected the discontinued Rio.

January also marked the sixth time over the last year that Kia has outsold Hyundai on a monthly basis.

Subaru's January sales edged up 0.3 percent to 44,510, the brand's 18th straight monthly gain.

Genesis reported January sales of 4,269, a gain of 9.3 percent and the luxury brand's 15th consecutive monthly increase.

Mazda set a January sales record with U.S. deliveries jumping 32 percent to 30,279 for its third straight monthly gain.

January sales results from Volvo will be released on Monday Feb 5. Other auto makers report U.S. sales on a quarterly basis.

J.D. Power and GlobalData said U.S. retail inventory stood at 1.6 million at the end of January, a 3.3 percent increase from December 2023 and 38 percent higher than January 2023.

Auto makers and dealers continue to sweeten deals as inventory rebounds and to counter higher interest rates, J.D. Power and GlobalData said, with the average incentive per vehicle rising 74 percent from January 2023 to $2,346 last month, but down $287 from December 2023. Leasing is projected to account for 26 percent of retail sales, up 8 percentage points from January 2023's 18 percent, J.D. Power and GlobalData said.

Smaller and less expensive vehicles are becoming more widely available with the industry's chip shortage now in the rearview mirror. With consumers trading down to more affordable cars and light trucks in the wake of higher borrowing costs and monthly payments, average new-vehicle retail transaction prices are declining. J.D. Power and GlobalData said average transaction prices were tracking at $45,106 in January, down $1,636—or 3.5 percent—from January 2023.

Fleet sales are expected to be a major driver of new-vehicle sales in January and the remainder of 2024. Fleet shipments rebounded in December after dropping in October and November, when Detroit auto makers were hit by UAW strikes.

Cox Automotive, citing strong commercial and rental car demand, is forecasting fleet sales in 2024 will increase more than 7 percent from 2023, and outpace growth in retail volume.

• There were 25 selling days last month, one more than January 2023 but one less than December 2023.
• The average incentive per new light truck in January is expected to be $2,546, up $1,186 from a year ago, J.D. Power and GlobalData said, while the average spending on cars is expected to be $1,727, up $434 from a year ago.
• Only 19 percent of new vehicles were sold at prices above MSRP in January, down from 33 percent in January 2023, J.D. Power and GlobalData said.

“We continue to expect 2024 to be a return to more normalized patterns of sales and pricing to stabilize, albeit at a higher-than-normal level. Growth in incentives and the eventual cut in interest rates should prove to be a catalyst for continued growth in 2024. There is no question the transition to EVs will be slower than many in the industry expected, but don’t write off EVs in 2024, there will be 47 new BEVs on the market in 2024, accounting for 10% of the total volume."

— Jeff Schuster, vice president of automotive research and analysis at GlobalData