Hot Car Sales Volumes Will Begin to Cool for Dealers

Dealers shouldn’t expect automakers’ significant revenue gains to boost their stores’ bottom lines.

According to Cox Automotive, U.S. auto sales volume is expected to decline modestly in July from the previous month, mainly due to one fewer selling day in July versus June. And dealers should expect to feel a squeeze.

“The return of supply – nearly 80% higher than one year ago – has been the key driver of sales this year. However, it isn’t consumers buying all these cars and trucks; rather, it is being fueled at least in part by rental and commercial fleets,” says Charlie Chesbrough, senior economist at Cox Automotive.

“When COVID disrupted supply chains and vehicle production, OEMs focused on keeping retail channels as stocked as possible, leaving fleet demand unfulfilled,” he says. “However, now that production is returning to normal, fleet sales (fulfilled by manufacturers) have rebounded, and these sales are significantly lifting industry volume.”

In June, sales to large commercial, government and rental fleets, not including sales to dealer and manufacturer fleets, increased nearly 45% year-over-year to 217,572 units, says Cox Automotive.

Through the first half of 2023, total new-vehicle sales in the U.S. increased more than 12%, with retail sales increasing about 9% and total fleet sales jumping more than 34%. Here are other findings from Cox:

Although sales have shown strength thus far in 2023, some slowdown in the second half of this year is expected primarily due to high prices and tight credit. Plus, some of the pent-up consumer demand has likely been fulfilled.

Incentives are among the positives that will continue to help build new-car sales, Cox says.