Skip navigation
0929CoxQ3.jpg Getty Images
Retail sales may soon match fleet sales increases, Cox predicts.

Cox Keeps Sales Forecast High

Cox forecasts higher light-vehicle sales, but UAW strike is a wild card.

Despite threats from the UAW strike and high-high interest rates, Cox Automotive hikes its 2023 U.S. light-vehicle sales forecast based on higher fleet sales, better new-vehicle availability, slightly higher consumer incentives and pent-up consumer demand.

“It is very hard to predict what will happen with the strike,” says Jonathan Smoke, Cox Automotive chief economist, during the Q3 2023 Cox Automotive Industry Insights and Sales Forecast Call.

In the meantime, the higher forecast is good news for dealers. Percentage-wise, most of the increase comes from higher fleet sales, as opposed to retail sales to individual consumers, but Cox Automotive expects retail sales to improve, too.

The new Cox Automotive forecast ranges from 15.3 million to 15.4 million cars and trucks, up from a forecast of 14.2 million, which was last updated in April. Cox Automotive began 2023 forecasting U.S. light-vehicle sales of only 14.1 million. In 2022, sales were a supply-constrained total of 13.9 million.

Cox Automotive now expects 2023 retail light-vehicle sales of 12.6 million, up about 5.9% vs. the firm’s original forecast for the year. Its fleet forecast is now 2.8 million, up about 27.2% from its original forecast.

The two obvious downside risks to the higher forecast are the UAW strike against the Detroit Three automakers and the ongoing affordability crisis, Smoke says.

“A defining characteristic of the auto market so far this year has been recovering new-vehicle production, leading to growth in new-vehicle sales, improving new-vehicle inventories, improving affordability through modest price declines and increasing incentives,” he says.

Smoke says that the UAW strike could reverse those positive trends depending on how long it lasts. High interest rates also are hurting sales as many shoppers postpone their purchases in hopes of a better deal, Cox Automotive says.

“The UAW strike is clearly a major factor that — should it persist — could see progress on normalization give way to tightening supply and increasing prices in both new and used,” Smoke says.“If the strike lasts beyond Thanksgiving, the industry is likely to see a setback and a repeat of much of the dynamics we saw in 2021."

For example, when there weren’t enough new vehicles in 2021, automakers cut back on fleet deliveries to prioritize dealer stocks. Meanwhile, the shortage of new vehicles drove transaction prices to all-time highs. Used-vehicle prices rose, too, as new-vehicle shoppers switched to used.

Based on the first 10 days, the strike hasn’t affected inventory or transaction prices, but that can change pretty quickly, Smoke says.

“So far, the impact has been negligible. However, we’ll likely start seeing the first signs of real impact in October,” Smoke says. “And if disruption continues, the impacts will cascade into the used market as well — just as we saw in 2021.”

 

 

TAGS: F & I
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish