High Prices Persist, Even Though Automakers Build More Cars And Trucks In 2022

LAS VEGAS — Automakers can most likely construct an extra 2.6 million to three.2 million autos this yr vs. 2021, however even that many autos gained’t reduce it, when it comes to bringing provide again according to demand, forecasters mentioned.

In different phrases, excessive costs will probably persist all this yr, and perhaps all subsequent yr, too, as a result of demand continues to outstrip provide.

“This is going to be a better sales environment than last year,” mentioned Thomas King, president, Global Automotive, for J.D. Power. “More vehicles are going to be produced, and more are going to be sold.”

Just not that many extra, King mentioned, on the J.D. Power Summit right here on March 10, held at the side of the NADA Show, the annual conference and commerce present of the National Automobile Dealers Association.

Auto manufacturing dropped sharply in 2020 and 2021, because of the COVID-19 pandemic, a scarcity of pc chips, and different supply-chain issues. As a end result, there’s greater than sufficient pent-up demand from shoppers, and from business fleets, to absorb larger manufacturing in 2022 and 2023, he mentioned.

“All this pent-up demand gobbles up all the increased production, which makes it really hard to increase the inventory,” King mentioned. “This environment is basically going to stick around for some time.”

What King means by “this environment” is low stock, record-high costs, and correspondingly low reductions.

The stock of latest automobiles and vehicles accessible for retail gross sales has fallen to fewer than 1 million automobiles and vehicles, from 2.3 million earlier than the pandemic, J.D. Power mentioned.

King forecasts annual manufacturing for the U.S. market in a variety of 15.9 million to 16.5 million automobiles and vehicles for 2022, or 17.4 million to 18.3 million in 2023. Even the low finish of the vary, that will be a giant enchancment vs. 13.3 million in 2021, or 13.8 million 2020.

However, on the low finish of the vary in King’s restoration state of affairs, the web variety of autos in stock doesn’t get any higher by way of the top of 2023.

At the excessive finish of the vary, stock may get as excessive as about 2 million by the top of subsequent yr, he mentioned. But that’s nowhere close to sufficient to account for the final two years’ price of “lost” gross sales.

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