New Vehicle Sales in the U.S. Rise Despite High Interest Rates
Despite high interest rates, new vehicle sales in the U.S. rose by 5.1% from January through March. Automakers sold nearly 3.8 million vehicles in the first quarter, with an annual rate of 15.4 million in sales. However, the growth in electric vehicle sales slowed during the same period, with mainstream buyers expressing concerns about limited range and a lack of charging stations.
With inventory levels on dealer lots increasing towards pre-pandemic levels, auto companies were forced to reduce prices. The average sales price in March was $44,186, down 3.6% from a year ago, marking the largest recorded decline for the month of March. Automaker discounts in March were also higher, with an average of around $2,800, including increased availability of lease deals.
Sales of electric vehicles grew only 3.3% to nearly 270,000 during the quarter, far below the 47% growth seen last year. The EV share of total U.S. sales fell to 7.15% in the first quarter, with Tesla leading the slowdown. Edmunds Director of Insights Ivan Drury noted that early adopters and environmentally conscious buyers have already purchased electric vehicles, leaving automakers to face more skeptical mainstream buyers.
As interest rates remain near 24-year highs, consumers are expecting the Federal Reserve to cut rates later in the year. This has led to a decline in sales of large and expensive SUVs, with more affordable vehicles selling faster. General Motors, Stellantis, Kia, and Tesla reported declines in sales, while Toyota, Honda, Nissan, and Subaru saw increases in sales during the first quarter.