10 auto industry predictions investors should keep an eye on this year

by | Jan 17, 2023 | Business

A customer looks at a vehicle at a BMW dealership in Mountain View, California, on Dec. 14, 2022.David Paul Morris | Bloomberg | Getty ImagesDETROIT — Wall Street and industry analysts remain on high alert for signs of a “demand destruction” scenario for the U.S. automotive industry this year as interest rates rise and consumers grapple with vehicle-affordability issues and fears of a recession.Since the onset of the coronavirus pandemic in early 2020, automakers have experienced unprecedented pricing power and profits per vehicle amid resilient demand and low inventory levels due to supply chain and parts disruptions affecting vehicle production.Those factors created a supply problem for the auto industry, which Cox Automotive and others believe may switch to a demand problem — just as automakers are slowly improving production.”We’re swapping a supply problem for a demand problem,” Cox Automotive chief economist Jonathan Smoke said Thursday.Cox has 10 predictions for the U.S. auto industry this year that point to such an outcome. Here they are along with reasons why investors should be mindful of them.10. Federal incentives will encourage more fleet buyers to consider electrified solutionsWhile electric vehicle tax credits under the Inflation Reduction Act have not been finalized, incentives for commercial vehicles and fleet owners promise to be a major benefit.Unlike consumer vehicles that qualify for credits of up to $7,500, fleet and commercial vehicles do not need to meet stringent U.S. requirements for domestic parts and batteries.  “This is actually where we think the majority of growth will be in new vehicle sales in ’23,” Smoke said.Cox forecasts U.S. new vehicle sales will be 14.1 million in 2023, a slight increase from nearly 13.9 million last year.9. Half of vehicle buyers will engage with digital retailing toolsThe coronavirus pandemic forced franchise auto dealers to embrace online retailing more than automakers ever could, as consumers dem …

Article Attribution | Read More at Article Source

Share This