Pricing continues to be a headwind despite the strong quarterly figures.
The industry average in March reached a record $45,818, up 3.5 percent from a year earlier, according to J.D. Power and LMC Automotive. TrueCar estimates the average transaction price was $45,397 with shipping, flat with February but up 5.6 percent from a year ago.
Analysts say the market could rebound even further if prices moderate.
“While the outlook has improved slightly, any true strength in recovery once fleet sales are replenished will hinge on vehicle pricing,” Jeff Schuster, executive vice president of global data at LMC Automotive, said in a statement. “There is pent-up demand and there are consumers that could re-enter the new vehicle market if pricing were to fall more than 10 percent from current levels and if a more severe recession is avoided.”
Chris Hopson, principal analyst at S&P Global Mobility, said retail demand — though muted — reflects “consumers willing, ready and able” to buy a new vehicle, even in light of rising interest rates and high price levels.
“The specter of further hikes in interest rates and acceptance of current unsettled economic conditions may be providing impetus for those considering purchasing a new vehicle,” he said.
Showroom traffic and purchase intent remain strong, said Brad Audet, chief marketing officer for Mazda North American Operations, but rising interest rates, monthly loan payments and down payments are challenging conversion rates.
“The industry, as a whole, has an affordability problem right now,” Audet said.
Hyundai’s Parker, however, said demand remains high and any price resistance by consumers is minimal.
“I do see those transaction prices moderating a little bit as we go forward and as availability continues to improve,” he said. “I think that will benefit the consumer going forward.”