Auto Service World
News   April 29, 2022   by Adam Malik

How new vehicles sales are predicted to trend

In the short term, new vehicle sales will be negatively impacted by supply chain constraints and semi-conductor shortages. Longer-term, however, as these issues ease, numbers will go up despite some barriers, according to a new report.

Retail sales of new motor vehicles in the U.S. are forecast to increase 3.2 per cent annually in unit terms through 2025, predicted The Freedonia Group in its report Motor Vehicles: United States.

Interest rates that are expected to remain low, easing supply chain constraints, increased personal income and a growing population were all considered factors to support new vehicle sales.

But there will be limitations. The report highlighted the following issues that will keep growth in check:

  • The ongoing retirement of baby boomers
  • The later acquisition of drivers’ licenses among young people
  • Urban populations growing faster than the general population, expanding the size of a cohort with easy access to public transport and ridesharing services
  • Increasing reliability of vehicles

Used vehicles, despite increasing in prices, will also compete for market share. That said, the report notes limited inventory of used vehicles could lessen its impact on new vehicle sales.

Short-term sales growth will be supported by a release of pent-up demand as consumers delayed purchases due to the COVID-19 pandemic. That, however, will be reliant on product availability. And if there continues to be a significant shortage, prices will increase and prevent faster sales growth, the report noted.


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