David Christ, head of Toyota Division, said the Japanese automaker experienced some weather-related “logistic issues” in delivering vehicles to dealers. He also said that rising consumer costs played a role in January results.

LMC noted that fleet sales jumped 79 percent last month to about 207,000 vehicles compared with a year earlier. Schuster said that while it could be that automakers were finally able to fill outstanding fleet orders, it also may be an indication of weakening retail demand as consumers hold back in the face of higher prices and rising interest rates.

Tyson Jominy, J.D. Power’s vice president for data and analytics, said overall industry inventory is higher, but so are sales, which is allowing dealers and automakers to still keep prices strong and incentives low, adding that he believes the industry set a record for January transaction prices.

“The sales pace is still being determined by production,” Jominy explained, also calling out the sharp rise in fleet sales in the month and noting that in this supply-constrained market, fleet might actually be helping to hold retail prices higher.

“Automakers are not agnostic between the two channels: They can make more money in the fleet market right now because automakers can take the full profits from the sale and not share them with dealers,” Jominy said. While January historically sees a seasonal uptick in fleet sales, he said, “Automakers are getting full pricing from the fleet channel, and those who may get too many vehicles too soon can use the fleet channel to keep retail prices high so you don’t have to return to incentives as quickly.”

Jominy said that “at this point in the inventory build, we should be expecting to see more automaker incentives. We haven’t seen it yet, and we attribute that to the ability to use this fleet channel to keep things balanced.”

Balancing supply and demand remains vital for continued profitability, both for dealers and automakers, LMC’s Schuster said.

“The outlook for autos is at a crossroads, as the rebalancing of supply and demand continues to play out,” Schuster said, adding that 2023 “will be a pivotal year in shaping the recovery going forward and setting the tone where the natural level of demand will settle.”



Source link

By Admin

Leave a Reply

Your email address will not be published. Required fields are marked *