Pent-Up Demand Expected to Prop Up New Vehicle Sales in Q2, According to Edmunds
Although analysts forecast strong sales for Q2 on the whole, they caution that June figures point to a potential plateau for the industry heading into the summer
SANTA MONICA, Calif., June 29, 2023 (GLOBE NEWSWIRE) — The car shopping experts from Edmunds forecast that 4,048,922 new cars and trucks will be sold in the U.S. in the second quarter of 2023, which will be a 16.1% increase from the second quarter of 2022 and a 13.8% increase compared to the first quarter of 2023.
“If you look at Q2 in the aggregate, new vehicle sales appeared to settle into a stable groove, which is a nice departure from the tumult that the industry has witnessed over the last few years. More consumers returned to the market with older trade-ins, which indicates that pent-up demand helped buoy sales,” said Ivan Drury, Edmunds’ director of insights. “But digging a bit deeper into the data, June tells a slightly conflicting story. After five consecutive months of increasing discounts and vehicles sitting on dealer lots for longer periods of time, June shows that those trends are stalling a bit.”
Edmunds data reveals that the average age of vehicles traded in toward new-car purchases increased in Q2 2023, climbing to 5.6 years, compared to 5.2 years in Q2 2022 and 6.1 years for Q2 20191. Edmunds analysts note that inventory has also continued to slowly improve but isn’t close to returning to prepandemic levels — which is keeping prices elevated.
“This road to recovery for the industry has been a winding one. With many automakers committing to better aligning production and demand, we might be on the cusp of seeing what a new normal sales pace looks like compared to the prepandemic years, when bloated inventories and deep discounts shaped the industry,” said Drury. “Automakers and dealers are well prepared to pivot amid shifting market dynamics, but this isn’t the best news for consumers hoping for more generous deals heading into the Fourth of July weekend. A return of summer sales banners, waving inflatables and tent events are more likely to be an exercise in advertising over the next few months than desperation to move the metal.”
Edmunds analysts advise consumers to approach car shopping with a pragmatic mindset even if they encounter sales messaging or promotions this summer because interest rates are expected to stay elevated and discounts will likely be limited.
“If holding off on a car purchase is no longer possible this summer, it’s time to seriously evaluate your list of must-haves versus nice-to-haves,” said Drury. “Are you really planning on using that third row? Do you really need those extra bells and whistles? Because any of those upgrades are likely going to cost you far more than you might expect.”
SALES VOLUME FORECAST, BY MANUFACTURER
|SALES VOLUME||2023 Q2 Forecast||2022 Q2 Sales||2023 Q1 Sales||Change from 2022 Q2||Change from 2023 Q1|
MARKET SHARE FORECAST, BY MANUFACTURER
|Market Share||2023 Q2 Forecast||2022 Q2 Sales||2023 Q1 Sales||Change from 2022 Q2||Change from 2023 Q1|
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America’s best workplaces by Fortune, Great Place to Work and Built In, Edmunds is based in Santa Monica, California. Follow us on TikTok, Twitter, Facebook and Instagram.
1 Q2 2019 figures are included for prepandemic comparisons
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