Unit Auto Sales Weakened in December
Sales of light vehicles totaled 13.3 million at an annual rate in December, down from a 14.2 million pace in November and a 15.2 million pace in October. It was the nineteenth consecutive month below the 16 to 18 million range, averaging just 13.66 million over that period (see first chart). Weak auto sales had been largely a result of component shortages that limited production, resulting in plunging inventory and surging prices. More recently, weak consumer confidence, elevated inflation, and rising interest rates are likely contributing to softer demand.
Breaking down sales by the origin of assembly, sales of domestic vehicles decreased to 10.5 million units versus 11.4 million in November and 12.2 million in October. Imports fell to a 2.84 million rate from 2.85 in November and 3.0 million in October. Domestic sales had generally been in the 12.5 million to 14.5 million range in the period before the pandemic, averaging 13.3 million for the six years through December 2019. The domestic share came in at 78.7 percent in December versus 79.9 in November.
Within the domestic light-vehicles category, domestic car sales were 2.00 million in December versus 2.39 million in November, a drop of 16.3 percent. Domestic light truck sales were 8.48 million versus 8.97 million in the prior month, a fall of 5.5 percent. That puts the domestic light truck share of total domestic auto sales at 80.9 percent, up from 79.0 percent in the prior month.
Domestic assemblies slowed in November, coming in at 9.91 million at a seasonally adjusted annual rate. That is off 5.5 percent from 10.48 million in October, below the 10.8 million average pace for the three years through December 2019 (see second chart).
Ward’s estimate of unit auto inventory came in at 149,100 in November, up from 136,700 in October. November is at the highest level since June 2021 (see third chart). The Bureau of Economic Analysis estimates that the inventory-to-sales ratio rose to 0.556 in November, from 0.528 in October.
The average consumer expenditure for a car fell to $30,184 in November, down 1.4 percent from October (see fourth chart). The average consumer expenditure on a light truck fell to $48,071 from $48,379 in October, off 0.6 percent for the month (see fourth chart). Both are down significantly from their June 2022 peaks.
As a share of disposable personal income per capita, average consumer expenditures on a car fell to 53.26 percent versus 54.19 percent in October and 59.67 percent in June, while the average consumer expenditure on a light truck as a share of disposable personal income per capita was 84.82 percent versus 85.65 percent in October and 89.10 percent in June (see fourth chart).
Robert Hughes
Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.
