© Reuters. FILE PHOTO: Automobiles are seen for sale in a car lot in Queens, New York, U.S., May 24, 2018. REUTERS/Shannon Stapleton
(Reuters) – U.S. auto sales are expected to rise for a second straight quarter as automakers are able to ship more vehicles to dealers on time, analysts said, while focus will also be on watching out for signs of plateauing demand.
Vehicle production took a hit after the pandemic disrupted supply of semiconductor chips and other raw materials, hurting carmakers’ ability to meet the upsurge in demand for personal mobility. The companies have been playing catch-up ever since as the supply chain snags gradually ease.
But rising interest rates and fears of a recession may play spoilsport in an industry where most vehicle purchases are financed with loans, analysts say. The average transaction price of vehicles, too, has surged over the last one year.
“Consumers are facing credit uncertainty as rapidly rising interest rates have created barriers to entry for even the most qualified buyers,” said Jessica Caldwell, executive director of insights at auto research firm Edmunds.
Detroit giant General Motors Co (NYSE:) said earlier this year it would halt production at its Fort Wayne Assembly truck plant in Indiana for two weeks to manage inventory.
The automaker is set to post a 15% rise in first-quarter U.S. sales, while Japanese rival Toyota Motor (NYSE:) Corp’s sales are likely to fall nearly 10%, when they publish data beginning Monday, according to consultant Cox Automotive.
Toyota has continued to struggle with inventory shortages sparked by supply constraints, losing its crown as the top selling U.S. automaker to GM.
Edmunds forecasts overall 3,502,324 new cars and trucks to be sold in the U.S. in the quarter through March, higher than last year, but a 1.8% decrease from the fourth quarter.
Trucks and crossover SUVs are expected to account for majority of new retail sales in the quarter, according to automotive data company J.D. Power.
