After a year plagued by low inventory on dealer lots, 2022 is expected to end with automakers selling just under 14 million new vehicles for the lowest sales in more than a decade, according to Kelley Blue Book estimates released this week.
Automakers will report their full-year, fourth-quarter and monthly sales next week. Full-year sales should finish near 13.9 million, which is the lowest level the industry's seen since 2011's 12.7 million sales when the U.S. economy was still recovering from the Great Recession. Sales in pandemic year 2020 were 14.6 million.
The decline is the result of supply chain issues and now lowering demand as a result of higher prices and interest rates. Now that supply is starting to rebound slowly for some automakers, demand has started to soften in a higher interest-rate environment.
"This December, there were fewer giant red bows than dealers would have liked," said Charles Chesbrough, senior economist at Cox Automotive Inc., a vehicle information company that owns Kelley Blue Book, in a statement. "Given the large improvement in supply levels, it seems likely that rising interest rates are now constraining demand in the retail auto market. With record-high prices and elevated loan rates, the pool of potential new-vehicle buyers is shrinking."
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The Federal Reserve has been raising interest rates throughout the year to tamp down inflation. The Fed most recently raised the base interest rate a half a percentage point to a target between 4.25% and 4.5%, marking the highest level in 15 years, CNBC reported.
An unsold 2023 Countryman S John Cooper Works model sits on the showroom floor of a Mini dealership Nov. 10, 2022, in Highlands Ranch, Colo.
The Fed's increases have made auto loan costs the highest they've been in more than 20 years, which has pushed some shoppers out of the market, according to Cox. In fact, since October, the sales pace has declined significantly by nearly 2 million units.
Heading into 2023, Cox analysts and others are expecting the economy to see weak growth given the high interest rates. New-vehicle sales should "increase modestly," according to Cox, with growth in fleet sales expected.
Rust in peace: Vehicles that are dying in 2023
Acura ILX
Never like the Acura Integra that it replaced, the ILX always seemed like a pretender to the throne. A half-hearted effort on Acura's part dating to 2013, the Acura Integra thankfully takes its slot for 2023.
Acura NSX
The second-generation NSX proved that hybrids didn't have to be boring. Yet as the world's exotic carmakers are planning to release hybrids, Acura is killing theirs despite the contemporary demeanor of the NSX.
Buick Encore
Seemingly, there will be no encore for the Encore, a diminutive subcompact SUV that once accounted for half of Buick's U.S. sales. Now it's outsold nearly 3-to-1 by the larger, cheaper Encore GX.
Chevrolet Spark
Diminutive in both size and price, this was the cheapest car in America. No, it wasn't speedy or sizable, but it was thrifty. A decent small car in a nation in love with large ones.
Chevrolet Trax
Tall and narrow, a new Chevrolet Trax is reportedly arriving for 2024. So maybe it's not dying so much as taking a very long nap.
Ford GT
This $500,000 Ford was an homage to its Le Mans-winning race cars of the 1960s. But as Ford shifts to an electrified lineup, an electric GT could always be a possibility. A gas-powered one? Evidently not.
Honda Insight
With the launch of a new Civic Hybrid, the need for a separate but same-size hybrid seems as if it came from the Department of Redundancy Department. But its visual eloquence will be missed.
Hyundai Accent
Still popular, this handsome little sedan is being replaced by the Venue SUV as Hyundai's cheapest model, although the Venue starts more than $2,300 higher.
Hyundai Ioniq
These Hyundai hybrids are being shown the door as Hyundai offers a number of hybrids across its lineup. But its name is being repurposed for an all-electric sub-brand, starting with the Ioniq 5.
Hyundai Veloster
With more versatile vehicles like the Elantra N and Kona N introduced into the Hyundai lineup, this unique model has seen its popularity plummet in the past two years. Arrivederci.
Infiniti Q60
The Q60 coupe receives the coup de grâce this year as Infiniti continues to suffer from a lack of a clear identity. This is the most fun of all its vehicles to drive, so its loss doesn't help Infiniti's image.
Lamborghini Aventador
Still sexy despite its age, this is the last year for this 12-cylinder supercar, which will replaced by an electrified model within a couple years. While it will be good, it won't be the same.
Mercedes-Benz A-Class
This was Mercedes-Benz's least expensive model in 2022, starting at less than $34,000. That honor now falls to the GLA crossover, at less than $37,000.
Nissan Rogue Sport
Filling the spot between the Rogue and the Kicks, the Rogue Sport appears absent from Nissan's 2023 lineup. The question is: Will anyone miss it?
Toyota Avalon
The car that wears the name of the island where King Arthur's body was taken upon his death is now joining the legendary king in eternity.
Volkswagen Passat
This American-built Passat bore little resemblance to its European counterpart, with little character or superb handling. Unsullied and faultlessly ordinary, it never captured the imagination.
Jeep Grand Cherokee WK
The old version of the Grand Cherokee stuck around as a lower cost alternative to its newer sibling. But the new one is so good, who wants the old one?
Ram ProMaster City
This one always looked kind of odd for a Ram, and that's because it's really Fiat Doblo cargo van. Yet its sales seemed solid, so its demise may mean something better is about to arrive.
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