So, the automotive industry has shaken off its pandemic cobwebs and is back, pedaling hard on the accelerator. This resurgence is marked by a strong embrace of energy efficient cars, but not necessarily Teslas, signifying a major shift in the industry’s driving preferences. So, what are consumers actually after?
2024 looks set to be the industry’s comeback tour, complete with high consumer confidence, flirtations with high interest rates, and everyone’s favorite drama — EV adoption. Let’s look into what happened in the automotive world, this month.
KEYPOINTS:
- The automotive industry is showing positive signs of recovery.
- Rough start for EV this year, but looks like bright times ahead as Tesla gets greenlight in China.
- Car inventory is actually growing and moving. Which means, what? Cars are actually selling.
- Consumer confidence is good, but interest rates are high. Projecting slower sales in the last month.
Road to Recovery and Growth
Let’s talk numbers, because nothing says ‘economic recovery’ like throwing some SAAR figures at you. April saw U.S. light vehicle sales hit a SAAR of 15.7 million units, which is a cute little 0.6% bump YoY. But before we pop the champagne, let’s remember it was a shy under the 15.8 million forecast. Seems like the automotive industry is playing it safe, like ordering a vanilla latte instead of that new TikTok-inspired flavor.
Looking forward, the projections are optimistic, with an expected increase in sales to 16.1 million units in 2024, marking a 4% YoY growth. Furthermore, automotive sales are anticipated to continue growing, reaching a peak of 17-18 million units by 2028. As real wages are going steady and rising higher, this long-term growth trajectory underscores confidence in the market’s potential and recovery.
Sure, less people are taking on new debts with the stubborn, high, irritating interest rates. But The Fed might cut them some time soon due to the elections, and we might see a spike in automotive sales in the next half of 2024.
💡 If you're wondering why there was a 9% drop from March to April, well, it could be that tax rebate season made March look really good, or maybe it's just that higher interest rates in April made consumers clutch their wallets a bit tighter. Or maybe, just maybe, it's the good old inventory dance—too much last month, not enough this month.
What’s Going on in the EV Market?
Now, let’s switch gears to EVs. Tesla, our favorite automotive drama queen, has had a bit of a rough start this year, with earnings falling and sales halved YoY. Even with prices slashed. Ouch.
We aren’t sure how this data will help their plans for future cheaper models, but for now, they have snagged a Full Self-Driving (FSD) approval in China, which is basically the “Golden Ticket” in the automotive Willy Wonka factory.
And about those job cuts—Tesla’s trimming the fat, focusing on making their Superchargers run smoother rather than just building more. Why so much lay-offs, Elon Musk? Look at it this way, it’s like deciding to clean your room instead of just buying a new house because the old one’s messy. We’re looking forward to a much more systematic, efficient and powerful future, Elon!
💡 We’ve said this before, and we’ll say it again. EVs are still in the experimental stage of the market. People are buying it, because it’s cool. Social status. They’re just hopping on the trend. The real deal? Hybrids. More and more consumers are realising that hybrids are the way to go. No chargers? Just fill up some gas. No time? Gas. Battery issue? Gas. In the long run, having options between charging your car and pouring fuel will be the smarter choice, and we think most people are realising this now, and that’s why EV adoption has been rather slow lately.
Consumer and Financial Health
With inventories up by 90,000 units to a cool 2.7 million in April, it looks like the factories have been busy. It’s good news because it means not only is production up to speed, but those cars are actually selling. You know, instead of sitting in a lot somewhere collecting dust.
Now, here’s a plot twist—while consumers are ready to spend (thanks, post-pandemic confidence boost!), those pesky high interest rates are playing the villain in our spending spree story. But rumor has it, as we’ve mentioned before with the upcoming U.S. elections, we might just see those rates take a dive. Fingers crossed!
💡 We think consumers know, and are just eagerly waiting for those rate cuts to make big purchases. As we see in this report, they have no problem spending their money. Wallets aren’t tight. There’s no doom and gloom. Only interest rates are making them think twice. So, we think prior to elections, car sales are going to go crazy.
Full Throttle Ahead!
So, what’s the takeaway? The automotive industry is doing a stellar job at bouncing back. Sure, the interest rates are a bummer, and the EV market is more temperamental than a cat on a hot tin roof, but there’s a lot of good stuff on the horizon. And let’s not forget—Tesla’s making moves in China, which could be and would be a game-changer.
In conclusion, the automotive industry might have had a few flat tires along the way, but it’s all gassed up and ready to go. Whether it’s revving up for a future dominated by EVs, navigating economic speed bumps, or just cruising towards a brighter future, it’s certainly not the time to stock up for the apocalypse. Buckle up, because it’s going to be an exciting ride!
