U.S. auto retail sales expected to rise slightly in 2022, forecaster says

Despite continued new-vehicle inventory constraints, U.S. retail vehicle sales should rise in 2022 with higher gross and finance and insurance profits per vehicle, according to one industry expert.

Thomas King, president of the data and analytics division at J.D. Power, said U.S. retail sales should increase to 13.4 million to 13.8 million in 2022, up from 13 million in 2021.

King, speaking at the J.D. Power Auto Summit in Las Vegas on Thursday, said that in August 2021, inventory levels at dealerships dipped below a million vehicles and stayed there. Since that point, retail sales have been constrained to about 1 million vehicles per month, King noted.

"Said differently: We are an inventory-constrained market," King said. "We have been since August. It's about a million units a month and the industry is operating on a one-in, one-out basis."

Annual total U.S. light-vehicle sales edged just over 15 million in 2021 and were up 3.3 percent compared with 2020.

King pointed out that the current sales pace has nothing to do with demand but rather "a function of many vehicles are produced and show up at dealers each month."

King said inventory circumstances are likely going to remain the same until at least the third quarter.

"This environment, it's basically going to stick around for quite some time," he said.

King said gross profit combined with F&I per vehicle should rise to $4,100 to $4,700 per retail vehicle sale in 2022, up from $3,700 per retail vehicle in 2021.

"If you've got constrained supply and strong demand, you get remarkable financial results," King said.

With higher profits per vehicle multiplied by higher sales volumes, "it's going to be, any way you cut it, a record year for retailers," King said. "So an increase from $48 billion to somewhere around $55 to $65 billion. So percentage wise, a very, very robust profit environment."