General Motors reported Tuesday that its U.S. auto sales rose 14% in 2023 compared to 2022, retaining its crown as the top-selling automaker in the country. The results beat Toyota Motor Corp’s sales and defied analyst expectations that price hikes and higher interest rates would dampen sales.
Auto Industry Rebounds From Pandemic Lows
The auto industry showed strong signs of recovery in 2023 after struggling during the pandemic years of 2020 and 2021. Most major automakers reported double-digit percentage increases in sales last year.
After the economy shut down in early 2020 due to COVID-19, auto plants closed and sales plummeted. But as vaccines rolled out and states lifted restrictions, buyer demand came roaring back faster than the industry could boost production.
| Automaker | 2023 US Sales | Percent Change |
|---|---|---|
| General Motors | 2.6 million | 14% increase |
| Toyota | 2.1 million | 9.6% increase |
| Ford | Over 2 million | 17% increase |
Dealers have struggled to keep vehicles in stock, while automakers have been plagued by shortages of computer chips and other parts. For much of 2022, many dealers were practically out of new vehicles.
But factories came back online in 2023 and inventories grew. With new computer chip factories coming online, most analysts expect production issues to ease further this year.
High Prices, Interest Rates Fail to Deter Buyers
Many industry analysts worried that high prices and rising interest rates would dampen sales in late 2023. New vehicles now cost an average of around $46,000, up nearly 9% from a year ago, according to J.D. Power. Loan rates on new vehicles averaged around 6% at year-end, almost double what they were a year earlier.
But buyers seem to have shrugged off those headwinds in December, with most major automakers reporting higher sales compared to December 2022. Industry sales rose 12% overall last year.
“Vehicle sales in 2023 were stronger than anticipated, due to continued strong demand and improving inventory levels,” said Jeff Schuster, president of global forecasting for LMC Automotive.
Schuster expects those tailwinds to continue at least through the first quarter of 2024. But rising interest rates could squeeze buyers during the spring and summer months, he warned.
Labor Strikes Had Minimal Impact
Most analysts believe the 49-day UAW strike against General Motors from September through October had little effect on GM or industry sales overall.
Production issues at Ford and Stellantis also caused fears that sales would be impacted in late 2023. But analysts say automakers were able to make up for lost production in the final months of the year.
“Despite the lengthy strike, GM’s retail sales outpaced the industry each month since November,” GM spokesman David Barnas told the Detroit Free Press. He cited strong customer demand across GM brands.
EV Sales Continue to Accelerate
Electric vehicles continued their march toward mainstream popularity in 2023. EV leader Tesla said its global deliveries jumped 40% last year, to 1.3 million vehicles. The Model Y became the best-selling EV model in the world.
Most major automakers reported even faster growth rates for their EV models. Ford’s EV volume rose 126% to 61,575 vehicles, as production of the F-150 Lightning pickup ramped up. Startup Rivian quadrupled its production from 2022.
Industry forecasters expect EV sales growth to accelerate rapidly for at least the next five years. But most mainstream models remain in short supply, with wait lists stretching out a year or more.
Outlook for 2024: Clouds Gathering?
After the surprisingly strong rebound in 2023, most industry executives see slowing growth ahead, with potential storm clouds on the horizon.
“High interest rates coupled with lofty vehicle prices could pose affordability challenges for car shoppers in 2024, testing automakers’ and their dealers’ pricing power in the new year,” said Kayla Reynolds, analyst for Cox Automotive.
Jeff Schuster warns higher interest rates and lower used car values will start squeezing buyers this spring. But others see mostly blue skies ahead, at least early in 2024.
“We expect solid auto sales momentum to continue through winter,” GM chief economist Elaine Buckberg told reporters Tuesday. With inventories rebuilt and factories running near capacity, she expects the sales environment to remain healthy for at least the next six months.
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