U.S auto sales preview:
There could be some more ripples in the U.S. auto sector next week is the selling pressure continues for electric vehicle names like Tesla (TSLA), Rivian Automotive (NASDAQ:RIVN), Lucid Group (LCID), Fisker (FSR), Lordstown Motors (NASDAQ:RIDE) and Nikola (NKLA) without any solid catalysts seen to spark a new rally. Earnings reports from within the sector are anticipated to show production run rate below initial targets due to the ongoing supply chain issues. In addition, overall April U.S. light vehicle sales are forecast to decline ~24% year-over-year on a selling day adjusted basis, which translates to a seasonally adjusted annualized rate of a disappointing level of around 13.9M units.
Bank of America is not optimistic of a quick turnaround in the sector, pointing to the supply chain disruptions from global semiconductor shortage, the Russia-Ukraine conflict, and COVID-induced shutdowns in China. The firm warns dealer lots could be short vehicles through 2022 and likely well into 2023. “As production remains under pressure and inventory remains constrained, we anticipate OEMs will continue to push price and mix as a means to bolster margins,” updates BofA.