The car shopping experts from Edmunds forecast 4,048,922 new cars and trucks will be sold in the U.S. in the second quarter of 2023, which will be a 16.1% increase from the second quarter of 2022 and a 13.8% increase compared to the first quarter of 2023.
“If you look at Q2 in the aggregate, new vehicle sales appeared to settle into a stable groove, which is a nice departure from the tumult that the industry has witnessed over the last few years. More consumers returned to the market with older trade-ins, which indicates that pent-up demand helped buoy sales,” said Ivan Drury, Edmunds’ director of insights. “But digging a bit deeper into the data, June tells a slightly conflicting story. After five consecutive months of increasing discounts and vehicles sitting on dealer lots for longer periods of time, June shows that those trends are stalling a bit.”
Edmunds data revealed the average age of vehicles traded in toward new-car purchases increased in Q2 2023, climbing to 5.6 years, compared to 5.2 years in Q2 2022 and 6.1 years for Q2 20191. Edmunds analysts noted inventory has also continued to slowly improve but isn’t close to returning to prepandemic levels---which is keeping prices elevated.
“This road to recovery for the industry has been a winding one. With many automakers committing to better aligning production and demand, we might be on the cusp of seeing what a new normal sales pace looks like compared to the prepandemic years, when bloated inventories and deep discounts shaped the industry,” said Drury. “Automakers and dealers are well prepared to pivot amid shifting market dynamics, but this isn’t the best news for consumers hoping for more generous deals heading into the Fourth of July weekend. A return of summer sales banners, waving inflatables and tent events are more likely to be an exercise in advertising over the next few months than desperation to move the metal.”
Edmunds analysts advise consumers to approach car shopping with a pragmatic mindset even if they encounter sales messaging or promotions this summer because interest rates are expected to stay elevated and discounts will likely be limited.
“If holding off on a car purchase is no longer possible this summer, it’s time to seriously evaluate your list of must-haves versus nice-to-haves,” said Drury. “Are you really planning on using that third row? Do you really need those extra bells and whistles? Because any of those upgrades are likely going to cost you far more than you might expect.”
Source: Edmunds
Abby Andrews