April 2022 Sales Results and Other Cox Automotive Facts and Opinions
Our team is finalizing its April new-vehicle sales estimates, but every indication so far is that the numbers will land very close to our April 2022 forecast posted last week. With a nod to today's date and the excellent work from our Senior Economist Charlie Chesbrough, “The force is strong with this one.” We expected a 20% year-over-year decline in new-vehicle sales, placing the SAAR at 14.3 million. And that's just about what we got.
In the forecast update posted last evening, our team notes that the significant year-over-year sales decline is perhaps more a reflection of last year’s sales strength than a dramatic drop-off in demand in the spring of 2022. In fact, new-vehicle sales in April might well be considered relatively normal if we consider the past year “a new normal” for the industry. Since June 2021, monthly new-vehicle sales volumes have averaged 1.14 million units, roughly the April result and essentially what is normal now.
Our team will have updates on inventory, fleet sales and average transaction prices in the coming days. Look for those posts in the Cox Automotive Newsroom.
Fed Moves Today
Our team will also be closely watching reports from the Federal Reserve today, as Fed members wrap up their latest meeting and are expected to approve an unusual half-percentage-point rate rise. Higher rates will likely impact auto loans and put even more pressure on vehicle affordability.
In today's market, affordability is a hot topic and, as Cox Automotive Chief Economist Jonathan Smoke noted recently, the auto industry is wrestling with an affordability paradox. “Higher vehicle prices and fewer entry-level vehicles mean the pool of who can buy new has shrunk. When we talk broadly about affordability, we’re talking about the people who have been eliminated from the pool. However, if you look at who is left in the pool, they don’t have a challenge with affordability, just supply.”
Indeed, higher-income households have substantial pandemic savings and have capitalized on record-low mortgage rates in recent years to cut their debt service. They also enjoy the many benefits of higher credit scores, which means their vehicle financing costs are much lower than the average buyer. The Fed's move today will impact everyone, but not everyone will be impacted equally.
Check back to Smoke on Cars later today, after the Fed's announcement, for Jonathan Smoke's take on how the decisions will likely impact the auto market going forward.
As always, we appreciate your interest in Cox Automotive. Be sure to check out the Auto Market Snapshot for a quick look at all the data we are tracking, powered by DRiVEQ, of course. And if you have any questions or want to connect with any of the analysts or experts at Cox Automotive, feel free to reach out. We'd be happy to help!