New vehicle sales in the U.S. barely increased in the second quarter as buyers balked at still-high prices

DETROIT (AP) — Sales of new vehicles in the United States rose only slightly in the second quarter, despite deeper discounts and slightly lower prices.

But stronger sales could be on the horizon: Auto industry analysts say they expect prices to fall further and there is a possibility lower interest rates This would make taking out a loan for a new vehicle more affordable.

Overall, U.S. sales rose just 0.1 percent from a year earlier as continued high prices kept many potential buyers out of the market, according to preliminary figures released Tuesday by Motorintelligence.com.

Sales were slowed in late June when cyberattacks hit our CDK Global software Dealers are using the tools to complete sales paperwork. CDK said most dealers were back up and running Tuesday afternoon, but companies like General Motors said the issue pushed some deliveries into the third quarter.

Analysts say inventory at dealerships is building up, especially for pickups and other more expensive vehicles.

Discounts vary based on demand for vehicles, with smaller, less expensive models and gasoline-electric hybrids generally less available. Many customers are delaying purchases, thinking that bigger discounts are coming.

“Waiting might be the optimal strategy here,” said Charlie Chesbrough, senior economist at Cox Automotive.

Toyota, which sells many popular gasoline-electric hybrid vehicles, reported a 9.2% sales increase from April to June. Honda’s sales rose 2.7%, while General Motors posted just a 0.3% gain and Hyundai reported a 1.8% increase. Subaru reported a 5.4% sales increase.

Stellantis sales fell 20.7% in the second quarter, while Ram sales fell 26% and Jeep sales fell 19%. Nissan sales fell 3.1% and Kia sales fell 1.6%.

Overall, automakers reported selling about 4.13 million new vehicles from April through June, on track to meet forecasts of nearly 16 million for the year, slightly more than last year’s 15.6 million.

Ivan Drury, director of research at Edmunds.com, said interest rates on new vehicles average just over 7 percent, a high number for people who bought or leased vehicles years ago but now realize they need to replace their vehicles.

Many, he said, are turning to the few remaining inexpensive vehicles in the mid- to upper-$20,000 price range.

“Affordable products are the most sought after,” Drury said. “You really have to offer an attractive product at an attractive price point for it to sell today.”

For example, sales of the Chevrolet Trax compact SUV, which starts at $20,400 excluding shipping, increased 152.7% during the quarter.

Kevin Roberts, director of analysis at automotive site CarGurus, said automakers want to continue making more profitable SUVs and trucks as a large portion of buyers seek less expensive vehicles such as compact sedans.

“We’re seeing more and more people looking for affordable vehicles. We’re seeing people looking for vehicles under $30,000,” Roberts said.

The U.S. industry, he said, is at an inflection point where automakers will have to add discounts to lower prices, or they will have to change what they produce to “try to get more attractive pricing and try to maintain those leaner inventory levels.”

A move toward lower prices, however, could hurt Detroit automakers, which exited the low-cost small- and midsize sedan markets years ago after struggling to make money on those vehicles.

Since the coronavirus pandemic began in early 2020, cars have been in short supply due to a shortage of critical computer chips that has hampered production. Combined with high demand, the car shortage has pushed average prices to nearly $50,000 by December 2022.

But this year, chip supplies have improved, production is up and inventories are up. As of June, dealers had about 3 million vehicles in inventory, up 55% from a year ago, according to Cox.

As a result, average sales prices fell 1% to about $48,400 last month. That’s 3% below the peak of nearly $50,000 reached in December 2022, but still 20% higher than before the pandemic.

Among the vehicles that stay the longest at dealerships, all are full-size pickups or SUVs made by Detroit automakers. Stellantis’ Ram 1500 tops the list, with a 141-day stay at dealerships, according to CarGurus.

Roberts says there are good deals to be had on vehicles that sit on the lot longer. For example, 6% of new-vehicle sales listings from national dealers are for the 2023 model year.

U.S. electric vehicle sales rose 7% in the first half of the year to 599,134 units, Motorintelligence reported. Electric vehicles accounted for 7.6% of the U.S. new vehicle market, roughly the same percentage as last year as a whole. Leases, which include federal tax credits, helped boost sales.

Sales of gasoline-electric hybrid vehicles jumped 35.3% from January to June to 715,768 units, eclipsing sales of electric vehicles. Plug-in hybrid vehicles, which can travel a short distance on battery power before a gasoline-electric powertrain kicks in, also saw a surge. Sales rose 24% to 159,399 units. Both vehicles provide an alternative for people who worry about running out of power with an electric vehicle.

Earlier Tuesday, Tesla reported Ford said its global sales fell 4.8% in the second quarter, with a 6.6% decline in the first half. The company does not disclose U.S. sales. Ford will release sales figures Wednesday.