American auto maker, General Motors Co. said Wednesday U.S. sales rose 2.5% to 2.74 million for 2022, retaking its U.S. sales crown from Toyota Motor, outselling its Japanese rival by about 165,630 vehicles last year. Toyota had overtaken GM in 2021 as the U.S.’s top-selling auto maker, largely because of semiconductor supply constraints. Toyota said its U.S. sales were down 9.6% in 2022. Ford Motor Co. plans to report 2022 sales results Thursday. Hyundai Motor reported American sales fell 2% decline last year and Nissan Motor posted a 25% decline in U.S. auto sales.
GM was able to navigate the chip shortage and supply constraints by prioritizing production of its highest demand vehicles. GM also gained significant retail market share in the full-size pickup segment in the US while benefiting further from strong pricing and mix. Another tailwind came in the form of high used vehicle prices in connection with low new vehicle inventories.
Supply Chain and Low Inventories Hurt US Auto Sales
U.S. auto sales are projected in a joint forecast by J.D. Power and LMC Automotive to total 13.7 million vehicles in 2022, this would be the lowest in over a decade and an 8% decrease from the prior year. Sales pre-pandemic well around 17 million.
Semiconductors Shortage Led to Near Record High Prices
Semiconductor shortages created pent-up demand for new vehicles, along with media hysteria no doubt. Vehicles went to waiting buyers almost as soon as they hit lots. The lack of availability left buyers paying top prices, pushing the average price paid for a vehicle in December to a near record high of $46,382, according to J.D. Power.
The strong pricing saw solid auto maker profits last year despite the shrinking sales volume and insulated the industry from a broader decline in consumer spending. Tesla is an example at what can happen though when prices go too far, and branding becomes a problem.
Invasion of Ukraine Crimpled Key Auto Parts Supply
Russia’s invasion of Ukraine, a key supplier of auto parts, added to the supply-chain troubles. Ukraine has a small car parts industry and a key supplier of wiring harnesses that are needed to organize a car’s wiring and connect its various components. Suppliers of such systems with plants in Ukraine include Leoni AG, Japan’s Fujikura Ltd., Aptiv Plc, and Nexans SA . Work at these plants stopped almost immediately after the start of Russia’s invasion, hitting VW’s factories in Eastern Europe as well as Germany.
Toyota Motor shut down its plant in St. Petersburg shut. Ford Motor Co. suspended its joint venture with Russia’s Sollers OJSC and halted sales to the country. South Korea’s Hyundai Motor Co. Ltd., one of the biggest car makers in Russia, shut down its plant in St. Petersburg.
Toyota Projects Higher Sales
Toyota projects U.S. auto sales could grow to 15 million units in 2023, an increase driven by improving inventory levels at dealerships, low unemployment and falling fuel prices.
“It’s not all doom and gloom,” Mr. Hollis said. “There are some positive signs for the industry.”
Now as the realization of high interest rates and inflation hit home the pressure on new sales grows. Like with a new home, affordability is going to be a real question throughout the near future.
Jack Hollis, the sales chief for Toyota in North America said. “Look at the average transaction prices. I don’t know how many people in America can make those dollar commitments. Affordability is going to be a real question throughout the year,” said
Used Car Prices Fell Out of Bed
Car auction company Manheim tracked the largest used car price dive ever based on the firm’s data. Cox Automotive reported that its Manheim Used Vehicle Value Index, which tracks the auction prices of used cars, plunged 14.2% from a year ago. The index has also slid to the lowest point since August 2021 as used-car sales fell 10% in November. This has smashed the value of trade-ins, cutting down number of buyers who can use the equity in their existing vehicles to trade up to purchasing a new one.
GM’s Electric Focus
With all the news about Tesla missed deliveries numbers and the TSLA stock collapse there has been much talk on electric vehicles. Electric truck developer Rivian Automotive reported it built 24,337 electric vehicles in 2022, narrowly missing its annual target of 25,000 as it ramped up production in the final months of the year.
Electric vehicle leader Tesla (TSLA) reported earlier that it made 405,278 deliveries in Q4, a 31% increase from the previous year but below Bloomberg’s estimate of nearly 421K. Chinese EV makers also reported their production numbers yesterday:
- XPeng (XPEV) +2.54% after reporting 11.3K deliveries for December (-29% Y/Y, +94% M/M)
- Li Auto (LI) +1.88% after reporting 21,233 deliveries for December (+51% Y/Y, +41% M/M)
- Nio (NIO) – 0.31% after reporting 15,815 deliveries for December (+50.8% Y/Y, +12% M/M).
Electric-vehicle sales accounted for nearly 6% of the retail market in the U.S. in 2022, up from about 3% in the prior year, according to J.D. Power & Associates. General Motors cut its EV sales target for 2023 because of a slower-than-expected increase of battery production.
GM has been boosting its capital investments in electric vehicles (EVs) and self-driving technology (AVs), up from $8 billion to $35 billion from 2020-2025. Back in 2021 GM unveiled the production version of the Cadillac Lyriq, its first all-electric vehicle as the automaker confirmed that every new Cadillac vehicle will be all-electric starting now. Cadillac brand should be all-electric a little bit ahead of the rest of General Motors target of electric only by 2035.
GM launched its first Ultium-based vehicles in 2021, specifically the GMC HUMMER EV Pickup and the BrightDrop EV600 electric commercial vehicle. Ultium batteries are proprietary to GM. Then, in early 2022, GM they launched the all-electric Cadillac LYRIQ SUV. These are just some of 30+ EV models launching in North America and China by 2025.
A key aspect to this is that GM’s plan to add two battery cell plants in the US, beyond the two currently under construction. GM targets selling more than 1 mln EVs globally by 2025 and earning EV market leadership in North America.
“This is the spark. The dawn of a bright new era. Our electric future, rooted in more than a century of innovation, begins with an uncompromising electric SUV. Meet the Cadillac LYRIQ. An EV that inspires its driver to charge forward to a greater purpose—with every sublime detail. Prepare yourself for our newest creation.” GM said at the LYRIQ launch
It should be noted that China makes up over 40% of total vehicle sales for GM, so this is a crucial market for the company. Given the Zero Covid issues there and the rampant virus spread there are doubts about that market entering 2023.
GM brought back Hummer as an all-electric sub-brand of GMC, starting with a new pickup truck and an SUV to follow shortly after with Super Cruise†, HUMMER EV with driver-assistance technology for hands-free driving and automatic lane changing works on more than 200,000 miles of compatible roads and growing. Gm says the world is now the home of two revolutionary all-electric supertrucks—the HUMMER EV Pickup and the HUMMER EV SUV.
From The TradersCommunity Research Desk