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.