New car and truck sales likely fell to their lowest level in a decade last year because of a global shortage of computer chips and rising interest rates that have pushed up the cost of buying vehicles.
Analysts expect the auto industry to have sold fewer than 14 million light trucks and cars in the United States in 2022. That would amount to a decline of more than one million vehicles from 2021 and about two million compared to the prepandemic high of around 17 million.
Automakers began reporting their year-end sales totals on Wednesday, and if the dour forecasts are confirmed, last year’s sales total would rank as the lowest since 2011, when the industry had only just begun recovering from the financial crisis and sold 12.7 million new cars and trucks
“It seems likely that rising interest rates are now constraining demand in the retail auto market,” Charles Chesbrough, senior economist at market researcher Cox Automotive, said in a statement. “With record-high prices and elevated loan rates, the pool of potential new-vehicle buyers is shrinking.”
Tesla on Monday reported a 40 percent increase in its global sales for 2022 but its deliveries in the last three months of the year fell short of analysts’ expectations. The company’s stock, which ended down 65 percent last year, fell about 12 percent on Tuesday.
And Rivian, a smaller electric vehicle company, said on Tuesday that it fell several hundred vehicles short of its goal of producing 25,000 trucks, sport-utility vehicles and vans in 2022.
Other established automakers are expected to report significant declines for 2022 when they release their totals later on Wednesday and on Thursday in the case of Ford Motor.
The auto industry has been hampered for the last three years: first by the coronavirus pandemic, which forced manufacturers to idle their factories for two months in 2020, and then by a shortage of computer chips that has disrupted auto production worldwide since early 2021.
The chip shortage has eased but still caused some automakers to slow or stop production temporarily at times last year. In the case of electric cars and trucks — the fastest-growing segment of the industry — many automakers also struggled to acquire enough batteries. That has meant that some buyers have been waiting months for certain models like the Ford’s F-150 Lightning and G.M.’s Hummer pickup trucks.
Many consumers are eager to purchase new vehicles but have shied away from showrooms because prices have been pushed higher by the chip shortage or because the cars they want are not available. The Federal Reserve’s campaign to raise interest rates in an effort to slow inflation has also effectively increased the cost of buying a vehicle because many people must borrow money to buy a new car.
According to Edmunds, another market researcher, U.S. consumers on average paid $47,681 for new vehicles in November, the most recent month for which data is available. That’s a record high and up from $45,872 in November 2021.
“Rising interest rates are increasingly top of mind for consumers in all aspects of life, including auto loans,” said Ivan Drury, Edmunds director of insights. “Even rates that are near or slightly below average can rack up thousands more in interest paid compared to years past.”