US Auto Market Surges in Second Quarter Amid Booming Demand

US Auto Market Surges in Second Quarter Amid Booming Demand
GMC vehicles sit on display at the Sterling McCall Buick GMC dealership in Houston, Texas, on Feb. 2, 2022. (Brandon Bell/Getty Images)

Sales of new vehicles in the United States have increased sharply throughout the second quarter of this year. Figures indicate that inflation and rising interest rates have not dealt a significant blow to new-car purchases after production came to a virtual standstill during the pandemic.

Supplies of semiconductor chips and other raw materials were heavily impacted by the pandemic, leading to automakers’ decreased ability to meet consumer demand.

As the market appears to be moving in a more promising direction, car manufacturers are working quickly to make up for the losses and delays they incurred.

Despite record-high prices for consumers, automakers reported a distinct preference for higher-priced models, including SUVs and trucks, according to News Nation.

Consumer analytics specialists J.D. Power estimate that consumers paid an average vehicle price of nearly $46,000 in June—just short of the price peak of close to $47,500 in December 2022.

“Employed consumers with strong income gains eventually do find a way to buy new wheels,” said Cox Automotive’s Chief Economist, Jonathan Smoke.

While Toyota Motor’s North America unit (TMNA) reported an increase in U.S. sales of over 7 percent to over 550,000 units in the second quarter, this was surpassed by General Motors with an almost 20 percent rise—or a total of nearly 700,000 units—in the same period. The latter also included almost 16,000 electric vehicles (EVs).

Having struggled to meet demand by shipping insufficient numbers of vehicles to car dealers, TMNA is expecting an improvement in production and wholesale.

The supply chain is improving and “we expect the second half of the year to be better in production and wholesale to our dealers than the first half,” according to David Christ, group vice president and general manager at TMNA, adding that “The customer has been able to absorb the increase in transaction prices in the industry along with the rate increase.”

Total car sales also increased for FCA US, formerly known as Chrysler, as well as Korean carmaker Hyundai Motors, with the automakers reporting this month that their total sales increased by 6 percent and 14 percent, respectively.

The demand for electric vehicles has also increased, following incentives under the Inflation Reduction Act, as well as an associated price war initiated by EV market leader Tesla, Inc. The company reported record sales during the second quarter of this year.

Data released by Wards Intelligence on July 5 shows that overall U.S. new vehicle sales in June were approaching 1.5 million units, with an annual sales rate of over 15.5 million. However, it remains to be seen whether the trend will spill over to the third quarter and beyond.

Reuters contributed to this article.