The market is seeing some improvement, but there’s still instability in the forecast according to S&P’s newest estimate for October. With a projected volume of approximately 1.139 million units, U.S. auto sales in October will reach a seasonally adjusted annual rate (SAAR) of 14.7 million units, according to S&P Global Mobility estimates. While this would mark the strongest monthly SAAR level in eight months, the underlying dynamics of the market “remain in flux”.
“Pockets of vehicle inventory levels continue to improve more quickly than expected from extraordinarily low levels and bring welcome news on the supply side of the equation. However, auto consumers are likely feeling the pressure of current economic headwinds,” said Chris Hopson, Principal Analyst at S&P Global Mobility. “While we continue to point to inventory levels as a major factor in stemming immediate-term momentum in auto sales levels, the deteriorating economic conditions are becoming more prevalent.”
The report predicts that with higher interest rate settings and lower levels of jobs growth than previously anticipated, consumers are expected to retrench—thereby becoming a major input factor to auto demand levels over the next 12-18 months. In its October 2022 US Economics update, S&P Global Market Intelligence team has revised downward its projection of real GDP growth in the U.S. in 2023 from 0.9% to -0.5%. The base forecast now includes a mild recession starting in the fourth quarter of this year, with “an anemic recovery taking hold in the third quarter of next year.”
According to the report, “If there’s a silver lining, the potential for faster new-vehicle inventory growth should allow for downward pressure on vehicle pricing and provide some clearance for auto consumers willing to test the market in 2023.”
