Market rebounds in Jan. behind fleet; SAAR tops 16M; Ford, Honda, Hyundai rack up gains; Toyota slides

Editor's note: An earlier version of this story misstated the mix of Toyota Motor Corp.'s U.S. fleet sales in January.

U.S. light-vehicle deliveries rose 4.5 percent in January and the seasonally adjusted, annualized rate of sales came in at 16.2 million vehicles, above the range of forecasts, with higher fleet shipments offsetting flat retail volume.

The SAAR last topped 15 million in October and last surpassed 16 million in May 2021, when the market ran extra hot for three months starting in March of that year, in a favorable comparison to the early months of the pandemic when demand tanked.

"January’s performance indicates that the market remains somewhat resilient in the face of economic uncertainty and lingering supply chain disruption," LMC Automotive said Thursday.

Another key metric from an LMC Automotive report on Thursday estimates that the industry's sales per selling day in January – typically one of the weakest months of the year – was 43,200, compared to 47,500 units per sales day in December.

"The fundamental conditions in the market have not changed significantly from December to January, and supply disruptions are distorting normal seasonality to some extent," LMC said. "With record high transaction prices, economic uncertainty and lingering inventory problems for some [automakers], it is not difficult to see what is holding back the market."

Most automakers that report monthly results easily posted higher volume compared to January 2022, when the chip shortage wreaked havoc on inventory and sales.

Honda Motor Co. snapped a 17-month losing streak and Toyota Motor Corp. volume dropped 15 percent, while Ford, Hyundai and Kia racked up another month of U.S. sales gains on improved inventory levels, higher fleet volume and electric vehicle demand.

Toyota, hampered by some of the industry's lowest inventory levels, said deliveries dropped 17 percent at the Toyota division and 0.9 percent at Lexus, the luxury brand's 12th straight decline.

Five of Toyota's top sellers – Corolla, Camry, RAV4, 4Runner and Highlander – posted declines of 15 percent or more. Toyota said fleet represented about 9.5 percent of total sales last month, in line with the company's target of an 8 to 10 percent mix.

The automaker ended January with 130,315 cars and light trucks in inventory – most of it at ports or in transit, up from 116,201 at the end of December and 125,423 at the close of January 2022. That translates to a 23-day supply at Toyota and a 28-day supply at Lexus, the company said Wednesday.

At Ford, sales rose 1.8 percent last month, with volume up 1.9 percent at the Ford division and 1.2 percent at Lincoln. It was the second straight month of gains for both brands.

The Ford division's results were aided by F-Series, up 8.8 percent; Bronco, up 26 percent; and Transit, up 106 percent. TrueCar estimates Ford's fleet deliveries rose 11 percent to 35,289 last month. The automaker said it had nearly 370,000 cars and light trucks in stock to start February, including units in transit. 

Ford said it produced 181,912 light vehicles in North America last month.

Honda, also saddled with low stockpiles in wake of the severe chip shortage, said January volume rose 14 percent, behind a gain of 10 percent at the Honda division and 66 percent at Acura. The company said Honda brand inventory on hand more than doubled last month compared to January 2022, helping "to overcome the impact of winter storms." Sales of the Accord jumped 42 percent while CR-V deliveries surged 49 percent, Honda said.

Volume in January rose 8.6 percent to 52,001 at Hyundai and 22 percent to 51,983 at Kia, the companies said Wednesday. It was the sixth consecutive month of year-over-year gains for the two brands, with Hyundai edging Kia by just 18 vehicles.

Hyundai said retail sales rose 1 percent to 48,247 last month. The company said it ended January with 45,158 cars and light trucks in stock, up from 37,379 at the end of December and 18,060 a year ago.

Kia set a January record and said five models – Niro, Sportage, Telluride, Carnival and Forte – also posted record deliveries for the month. Combined deliveries of Kia’s electrified vehicles jumped 128 percent.

Subaru, another brand hindered by lean inventory, said January sales edged up 0.5 percent, for its sixth straight monthly gain. The results were aided by record January deliveries of the Crosstrek.

Mazda posted sales of 22,967, a 9 percent increase and the company's fourth consecutive gain.

Genesis also reported record January sales of 3,905, a 7.3 percent gain.

Volvo, the last automaker to report its January results, on Friday said its deliveries rose 8.2 percent to 7,693.

Automakers are counting on continued pent-up demand in the wake of tight but improving inventories to drive sales higher this year, after industry volume slumped 8 percent to 13.865 million in 2022.

As the chip shortage eases, automakers are also ramping up output and filling a backlog of fleet orders from rental operators and other commercial and government customers.

Chris Hopson, principal analyst at S&P Global Mobility, said consumers face an uncertain purchase environment as 2023 unfolds.

"While positive developments regarding mildly retreating vehicle prices and rising pockets of inventory bode well, interest rates remain high and economic headwinds persist," said Hopson.

Affordability, driven by elevated transaction prices, also remains a hurdle. J.D. Power and LMC Automotive estimate the average new-vehicle retail transaction price in January will reach $46,437, a 4.2 percent increase from January 2022, but a decline from a record high of $47,362 in December.

"Consumers continue to face rising new-vehicle prices across the industry," said TrueCar analyst Zack Krelle. "However, the pace has slowed as inventory for many high-demand vehicles grows. Fewer vehicles are seeing markups, particularly for import brands, which faced pronounced scarcity during the peak of the shortages."

Inventory remained well below normal levels, but retail stockpiles topped 1 million for the fourth straight month in January, J.D. Power and LMC Automotive said. Most Asian brands, which are generally more reliant on Chinese parts supplies that remain volatile given the country's recent COVID-19 outbreaks, are still struggling to rebuild car and light-truck stocks.

In another sign inventory shortages are easing, S&P Global Mobility, in a report Thursday, said there was a 91 percent increase in advertised new-vehicle dealer stock at the end of December 2022 compared to February 2022, and a 43 percent jump compared to August 2022.

S&P Global Mobility said Jeep, GMC and Mazda have a broad availability of vehicles, and may be in a position to adjust incentives upward to grab market share.

“We're in the formative stages of inventory, rebuilding following six months of year-over-year increases that ended 35 months of year-over-year declines in July 2022,” said Joe Langley, associate director of research at S&P Global Mobility. “Stellantis is the closest to having normalized inventory. They are going to have to ask themselves, ‘What do we do next?’”

Discounts also remained low, but continued to creep up at some automakers. TrueCar estimated January incentives averaged $1,441 per new vehicle, down 20 percent from $1,804 in January 2022 but up 8.1 percent from December's $1,333 level. General Motors, Ford, Stellantis, Nissan, Subaru and Volkswagen all hiked discounts last month over December. (See chart above.) J.D. Power and LMC Automotive estimated January incentives averaged $1,260, a 7 percent decrease from a year earlier.

• There were 24 selling days last month, the same as January 2022 but three fewer than December.
• The average incentive on light trucks in January was expected to tally $1,265, down $98 from a year earlier, while the average spending on cars was expected to be $1,290, down $31 from January 2022, J.D. Power and LMC Automotive projected.

“The market performed largely as expected in January. In year-over-year terms, volumes were up, but sales are still subdued compared to their pre-pandemic levels. Retail sales appeared to fall year over year, with the highest share for fleet sales since the onset of the pandemic helping to keep the total market afloat. Fleet traditionally sees a bump in share in January, and we expect this side of the market to play an increasingly important role in 2023 as the retail environment becomes more challenging. Overall, these results suggest that the market can grow this year, despite the challenges, barring any further major shocks."  – David Oakley, manager of Americas sales forecasts at LMC Automotive