April 05, 2023

Small decline in auto sales suggests retailers are adapting to affordability headwinds

Auto loanTotal vehicle sales declined in March, falling from 15 million annualized units in February to 14.8 million units, with monthly sales levels rising 9.2 percent year-over-year. NAFCU Economist Noah Yosif analyzes the data in a new Macro Data Flash report.

“While the industry remains challenged by higher interest rates in conjunction with general economic uncertainty, the tepid deceleration in overall auto sales suggests retailers are adapting to these headwinds by keeping prices affordable and congruent with the financial appetite of prospective consumers,” said Yosif. 

Car sales remained flat last month, while truck sales decreased from 12 million annualized units in February to 11.8 annualized units in March. Domestic production increased 1 percent in February; inventory rose to 0.61 months of sales. 

“The industry will have to remain flexible in the near-term, as an elongated tightening cycle by the Federal Reserve alongside potential credit crunches stemming from last month’s bank failures could create additional upward price pressures. These conditions will be especially challenging for consumers on the lower end of the income spectrum, but will also create a plethora of opportunities for credit unions, and other nontraditional lenders with experience serving these communities,” concluded Yosif.

For more up-to-date economic insights from NAFCU's award-winning research team, view NAFCU's Macro Data Flash reports