Hyundai and Kia racked up more U.S. sales gains in March, setting records for the month, as inventories continue to improve across the industry.
Volume rose 27 percent to 75,404 last month at Hyundai, with retail deliveries increasing 15 percent to 68,312. Hyundai said sales to fleet customers represented 9.4 percent of March volume.
The company ended March with 53,119 cars and light trucks in U.S. inventory, down slightly from 54,156 at the close of February but up from 17,271 a year earlier.
U.S. sales advanced 20 percent to 71,294 at Kia, its fifth-straight month of a gain of 20 percent or more.
Kia said four models — Carnival, Sportage, Telluride and Forte — set March records while sales of electrified models increased 10 percent, even as deliveries of the EV6 slumped 69 percent to 988 from 3,156 a year earlier.
Kia has one of the lowest days-supply of vehicles across the industry and on Saturday said production and availability of key utility vehicles and “in-demand” electrified vehicles will improve “throughout the year.”
Hyundai and Kia have now posted higher sales eight consecutive months, the longest streak among mass-market brands in the U.S.
Genesis also set a monthly U.S. sales record with volume of 5,656, up 23 percent, its fifth straight gain, on higher crossover deliveries.
Most other automakers will report March or first quarter U.S. sales on Monday, followed by Ford Motor Co. on Tuesday, and Mercedes-Benz, Volvo and Jaguar Land River later in the month.
The U.S. auto market is forecast to rise 1-7 percent in March, based on forecasts from J.D. Power-LMC Automotive, Cox Automotive, TrueCar and S&P Global Mobility, capping a first-quarter rebound. Volume is being driven mostly by stronger fleet shipments and stable retail deliveries, as higher interest rates, falling used-vehicle prices and tightening credit conditions sideline some new-car shoppers.
Fleet sales are expected to total 240,200 in March, up 3 percent from March 2022, J.D. Power and LMC Automotive projected, with fleet volume expected to account for 19 percent of total light-vehicle deliveries, up from 15 percent a year ago.
“Retail demand for vehicles remains strong, due primarily to considerable pent-up demand,” said Thomas King, president of the data and analytics division at J.D. Power. “The availability of new vehicles in inventory at retailers is improving, resulting in a softening of dealer margins and increased manufacturer incentive spending. But, overall, the industry remains supply constrained, and profitability is well above historical norms.”
Chris Hopson, principal analyst at S&P Global Mobility, said retail demand — while somewhat muted — reflects “consumers willing, ready, and able” to buy a new vehicle and continue to do so, even in light of rising interest rates and high price levels.
“The specter of further hikes in interest rates, and acceptance of current unsettled economic conditions, may be providing impetus for those considering purchasing a new vehicle,” Hopson added.
Showroom traffic and purchase intent remains strong, according to Brad Audet, chief marketing officer for Mazda North American Operations, but higher interest rates, rising monthly loan payments and down payments are challenging conversion rates.
“The industry, as a whole, has an affordability problem right now,” Audet said.
The seasonally adjusted, annualized rate of sales in March is expected to come in at 13.8 million to 14.7 million, based on forecasts from analysts, up from 13.67 million in March 2022, but down from January (16.21 million) and February (15.19 million), signaling a slowdown as the spring selling season gets underway.
March 2023 incentives
| Manufacturer | March 2023 Forecast |
March 2022 Actual |
Feb. 2023 Actual |
YOY % Change |
MOM % change |
|---|---|---|---|---|---|
| BMW | $2,861 | $1,823 | $2,758 | 57% | 3.7% |
| Daimler | $2,289 | $1,760 | $2,202 | 30% | 4% |
| Ford | $1,198 | $1,595 | $1,085 | -25% | 10% |
| GM | $2,083 | $1,927 | $2,000 | 8.1% | 4.1% |
| Honda | $1,349 | $1,098 | $1,285 | 23% | 5% |
| Hyundai | $1,019 | $645 | $950 | 58% | 7.3% |
| Kia | $568 | $890 | $559 | -36% | 1.7% |
| Nissan | $2,311 | $1,772 | $2,174 | 30% | 6.3% |
| Stellantis | $2,581 | $2,212 | $2,456 | 17% | 5.1% |
| Subaru | $836 | $873 | $832 | -4.2% | 0.5% |
| Toyota | $729 | $905 | $714 | -20% | 2.1% |
| Volkswagen Group | $2,273 | $1,528 | $2,307 | 49% | -1.5% |
| Industry | $1,558 | $1,472 | $1,485 | 5.8% | 4.9% |
Incentives remain low, reflecting tight supplies and demand, but are on the rise across much of the industry.
Average incentive spending per new vehicle last month was expected to reach $1,558, up 45 percent from $1,073 in March 2022, J.D. Power and LMC Automotive estimate, while discount spending as a percentage of the average MSRP is expected to increase to 3.3 percent, up 0.9 percentage points from March 2022.
TrueCar also pegged average March discount spending at $1,558 per new car and light truck, with major increases at nearly every automaker. (See charts above and below.)
To counter higher consumer interest rates at banks and credit unions for new-vehicle loans — which averaged 6.66 percent in March, or 228 basis points higher than a year earlier, J.D. Power said — some automakers are offering finance terms as low as 0.9 percent to 4.9 percent, and delaying payments for 90 days as an enticement to purchase.
Q1 2023 incentives
| Manufacturer | Q1 2023 | Q1 2022 | Q4 2022 | YOY % Change |
QOQ % Change |
|---|---|---|---|---|---|
| BMW | $2,741 | $2,358 | $1,616 | 16% | 70% |
| Daimler | $2,127 | $2,012 | $1,707 | 5.7% | 25% |
| Ford | $1,139 | $1,824 | $1,071 | -38% | 6.3% |
| GM | $2,021 | $1,974 | $1,382 | 2.4% | 46% |
| Honda | $1,325 | $1,163 | $999 | 14% | 33% |
| Hyundai | $948 | $890 | $974 | 6.6% | -2.7% |
| Kia | $601 | $1,260 | $476 | -52% | 26% |
| Nissan | $2,130 | $1,848 | $1,457 | 15% | 46% |
| Stellantis | $2,380 | $2,413 | $1,669 | -1.3% | 43% |
| Subaru | $859 | $901 | $547 | -4.7% | 57% |
| Toyota | $710 | $1,025 | $653 | -31% | 8.8% |
| Volkswagen Group | $2,154 | $1,769 | $1,514 | 22% | 42% |
| Industry | $1,486 | $1,631 | $1,168 | -8.9% | 27% |
New-vehicle inventory hovered around 1.82 million in the middle of March, up by 755,000 units from March 2022, but remains tight, Cox Automotive said, though stockpiles vary widely across brands and segments. Toyota, Lexus, Kia, Honda, Hyundai, Subaru and Land Rover continue to have some of the tightest supplies, while Chrysler, Jeep, Buick, Dodge, Alfa Romeo and Volvo have some of the highest stockpiles, according Cox Automotive.
March 2023 average transaction price
| Manufacturer | March 2023 Forecast |
March 2022 Actual |
Feb. 2023 Actual |
YOY % Change |
MOM % change |
|---|---|---|---|---|---|
| BMW | $68,392 | $65,608 | $69,659 | 4.2% | -1.8% |
| Daimler | $79,502 | $71,290 | $78,472 | 12% | 1.3% |
| Ford | $52,995 | $46,933 | $54,193 | 13% | -2.2% |
| GM | $52,620 | $49,901 | $50,845 | 5.4% | 3.5% |
| Honda | $38,506 | $37,830 | $38,008 | 1.8% | 1.3% |
| Hyundai | $36,541 | $36,402 | $37,351 | 0.4% | -2.2% |
| Kia | $34,108 | $34,573 | $34,035 | -1.3% | 0.2% |
| Nissan | $37,718 | $34,511 | $38,202 | 9.3% | -1.3% |
| Stellantis | $55,112 | $52,890 | $54,994 | 4.2% | 0.2% |
| Subaru | $34,839 | $34,365 | $34,373 | 1.4% | 1.4% |
| Toyota | $42,515 | $40,866 | $42,288 | 4% | 0.5% |
| Volkswagen Group | $49,607 | $47,080 | $48,550 | 5.4% | 2.2% |
| Industry | $45,397 | $42,978 | $45,400 | 5.6% | 0% |
With healthy demand, tight inventories and low incentives, new-vehicle transaction prices continue to rise, with the average price reaching a March record of $45,818, up 3.5 percent from a year earlier, J.D. Power and LMC Automiotive said. TrueCar estimates average transaction prices were $45,397 last month, flat with February, but up 5.6 percent over March 2022.
Q1 2023 average transaction price
| Manufacturer | Q1 2023 | Q1 2022 | Q4 2022 | YOY % Change |
MOM % Change |
|---|---|---|---|---|---|
| BMW | $68,851 | $63,860 | $68,810 | 7.8% | 0.1% |
| Daimler | $78,696 | $73,231 | $73,603 | 7.5% | 6.9% |
| Ford | $54,065 | $47,952 | $54,351 | 13% | -0.5% |
| GM | $51,808 | $50,664 | $52,422 | 2.3% | -1.2% |
| Honda | $37,919 | $36,632 | $37,366 | 3.5% | 1.5% |
| Hyundai | $37,054 | $36,412 | $36,879 | 1.8% | 0.5% |
| Kia | $34,150 | $33,925 | $34,643 | 0.7% | -1.4% |
| Nissan | $37,857 | $33,724 | $37,149 | 12% | 1.9% |
| Stellantis | $55,093 | $52,798 | $55,225 | 4.3% | -0.2% |
| Subaru | $34,704 | $34,677 | $35,363 | 0.1% | -1.9% |
| Toyota | $42,256 | $40,172 | $40,329 | 5.2% | 4.8% |
| Volkswagen Group | $49,148 | $45,346 | $48,883 | 8.4% | 0.5% |
| Industry | $45,452 | $43,701 | $45,397 | 4% | 0.1% |
U.S. auto sales are forecast to rise to 14.2 million to 15 million in 2023, up from 13.85 million in 2022, with major gains expected in the second half as inventories continue to rebound. Cox Automotive and S&P Global Mobility, citing the strong sales pace in January and February, have raised their 2023 forecasts slightly.
“We lost some momentum in March,” said Cox Automotive Chief Economist Charles Chesbrough. “The big unknown is what automakers do to offset the challenges facing the consumer and buyers today.”
- There were 27 selling days in March, unchanged from a year earlier.
- With inventory rebounding, new vehicles sat longer on dealer lots in the first quarter. Edmunds said the average days to turn for new vehicles climbed to 34 days in the first quarter, compared with 24 days in the first quarter of 2022.
- The average trade-in age of vehicles toward new car purchases increased slightly, climbing to 5.9 years in the first quarter compared to 5.3 years in the first three months of 2022 and 6.4 years for Q1 2015 to 2019.
- The average incentive spending per unit on trucksand SUVs in March is expected to be $1,627, up $545 from a year earlier, while the average spending on cars is expected to be $1,302, up $26 from a year earlier, J.D. Power and LMC Automotive said.
“Consumers are facing credit uncertainty as rapidly rising interest rates have created barriers to entry for even the most qualified buyers. As more consumers sit out of the market, we can expect to see pent-up demand grow even further.”
— Jessica Caldwell, executive director of industry insights at Edmunds