On the decline

Sales of Toyota Motor Corp., Honda Motor Co., Hyundai Motor Co., and Kia Motors in the United States fell by double digits in April...

Nearly a year ago, we saw an increase in vehicle production, but the chip shortage continues to plague the industry. Light vehicle sales and shipments have declined on average by nearly 25% across four major OEMs.

Toyota has seen the brunt of the impact with a nearly 23 percent drop in production volume in April alone, along with a 9 percent decrease in sales on the dealership side. According to a representative for Toyota, the company ended up with 137,067 light vehicles, 123,236 at ports or on route for delivery, and just shy of 14,000 vehicles in dealer inventories.

Honda Motor Co. reported a 40% drop in April sales, the company's ninth consecutive month of decline due to chip shortages. According to a Honda spokesperson, the business began 2022 with under 20,000 automobiles and light trucks in dealer inventories in the United States and began April slightly below that number. In comparison, at the start of 2021, the company had 300,000 automobiles in dealer inventories.

Deliveries fell 20 percent at Hyundai and 16 percent at Kia last month, following the trend of a four-month decline. Hyundai also reported zero fleet deliveries in April for the fourth month. Hyundai closed in April with 15,809 vehicles in inventory, down from 17,271 at the beginning of the month and 123,046 a year ago. Eric Watson, head of U.S. sales for Kia. “Our dealer inventories continue to be at historic lows, somewhere between seven and nine days' supply of vehicles on the ground.”

What it means for the auto industry

Consumers are in a difficult situation

Average hourly earnings growth is still above 5%, but real wage growth is negative, as inflation continues to outpace wage growth. Employment, on the other hand, has shown a dramatic increase. Despite population and job growth, new jobless claims are now at 50-year lows, which is a record low since the start of the pandemic. Demand is currently the strongest element of the US economy, which we believe is good news for the auto industry.

"Auto sales will effectively be locked at the current level until additional supply arrives," says Cox Automotive Senior Economist Charlie Chesbrough. Cox Automotive has lowered its full-year new-vehicle sales forecast from 16.0 million to 15.3 million, citing the fact that new-vehicle inventory levels have yet to recover, and that, given recent disruptions from Russia's invasion of Ukraine and a major earthquake in Japan, getting back on track will likely take longer than expected.

Key Takeaways;

• Four major Import brands; Toyota, Honda, Hyundai, and Kia, struggle to keep up with production as demand increases.

• Auto sales are contingent on production, so we shouldn't expect to see a jump in sales until more cars enter the market.

• We suggest making the best use of you marketing tools by implementing a curated data set that will help you penetrate this trying market. 
  

   

  If you have any questions, feel free to reach out to us at anytime, we're happy to help answer any questions you have and share our insights on how you can leverage this situation and come out on top. Don't be a stranger!

  
  

Sources:

Phillips, D., 2022. U.S. auto sales drop 17% in April; SAAR slides to 14.7M. [online] Automotive News. Available at: <https://www.autonews.com/sales/april-us-auto-sales-toyota-ford-honda-hyundai-kia-volume-falls-double-digits-again-chip-woes> [Accessed 6 May 2022]. 

Schirmer, M. and Hailes, D., 2022. Cox Automotive March Forecast: Slow March Auto Sales to Cap Weakest Q1 in a Decade - Cox Automotive Inc.. [online] Cox Automotive Inc. Available at: <https://www.coxautoinc.com/news/cox-automotive-march-forecast-slow-march-auto-sales-to-cap-weakest-q1-in-a-decade/> [Accessed 6 May 2022].