2022 New Car Sales Looking Halfway Decent
Despite the turmoil of gas prices under the new administration and 8% (some reports that the real inflation numbers are already in double digits). car dealers have little to cry about.
Data suggest that we’re on track to see total new vehicle sales to be around 15.4 million, much higher than the 12.2 million in 2021, as the country slowly started to slacken COVID restrictions, but a far cry of 17.3 units sold in 2018 before COVID.
However, it’ll be interesting to see the profits made by car dealers in 2022. Inflated prices, and in some cases, double digit% markups over sticker prices have made the news. Low inventory lets dealers negotiate from a position of strength.
For premium brands/models, dealers have taken to adding personalization to the vehicles. especially for big tickets cars like Rolls Royce, Bentley and other brands. The profit on personalization, custom colors, customer wood trim and so on inflate the sticker price and the profit margin.
To the 1%ers, it’s like ordering double desserts.
Indeed, a report from Haig Partners, a Florida-based dealership-sale advisory group, found that in the year ending March 2022, publicly owned new-car dealerships recorded an average profit of $7.1 million, a whopping 242 percent increase over 2019 and then doesn’t count April through December 2022.
Meanwhile, we peasants are paying more for everything, and new cars are no exception. In 2012, the average price of a new car was $31,000. Today, it’s $48,000.
Oh, if you’re trying to save money by buying an electric car, the average price of an electric car is now $66,000. That’s an increase of 13% over 2021.
In other news, in Q3 of 2022, electric car sales accounted for 6% of all 2022 new car sales.
More data showing that things are changing in the world of new cars is the age of the existing cars on the road. In 2022, the average age of all of the cars on the road reached 12.2 years. In other words, the average car you see driving around today is 12.2 years old. There are several factors adding to the increasing average age of cars on the road. One, in the current economic environment, is that it’s hard to get a new car! That and the price of a new car (even used cars) has really jumped in 2022.
The scrappage rate has influenced the average car age, too. Historically over the past decade or so, the annual scrappage rate for passenger cars dropped from 5.5% per year to the mid-4% range. More current scrappage has gone back up to the 5% range, even with fewer miles driven during the pandemic and rising vehicle prices. Lower sales of new vehicles makes the average car age for vehicles in operation (VIO) even older.
The average age of a vehicle in the US will hit 12.3 years in 2023, according to a projection by Hedges & Company. By contrast, the average age of a vehicle in Europe in 2022 is 11.8 years according to the ACEA.
Americans bought more than 200,000 electric cars in the third quarter — a first. Electric car sales grew faster than any other segment of the auto industry.
Americans bought 67% more electric cars in the third quarter of 2022 than in the same period in 2021, according to our third-quarter Electrified Light Vehicle Sales Report. Overall new car sales fell 0.1% in the same period.
So while 2022 new car sales look impressive, the car dealers are really, really happy that 2022 profits are 242% higher than in 2019.
So, if you’re considering buying a new car, don’t expect great deals.