U.S. auto sales drop 17% in April; SAAR slides to 14.7M

U.S. light-vehicle sales fell 17 percent to about 1.26 million in April from a year earlier, when industry volume soared briefly, as key parts shortages and jammed supply lines continue to undermine light-vehicle output and shipments.

But in a sign of incremental progress, LMC Automotive on Wednesday reported industry sales rose by 5,000 units in April over March, traditionally a stronger month.

The seasonally adjusted annualized rate of sales came in at 14.7 million, near the high end of the range of forecasts, 14.3 million to 14.8 million,  from LMC, J.D. Power, Cox Automotive and TrueCar. April's sales pace was well below the torrid 18.5 million pace set in April 2021, but higher than March's 13.4 million rate. Except for January, the SAAR has been stuck below 15 million since July.

LMC said General Motors, which does not release monthly sales figures, was the market leader in April, outselling Toyota Motor Corp. by 16,000 units. GM was also the only automaker to top sales of 200,000 units last month, LMC said. The Chevrolet Silverado was the top-selling light vehicle, followed by the Toyota RAV4 and Ford F-series.

“While most measurements would indicate a positive April, the industry is still being impacted by the parts shortage that has plagued sales for almost a year now," said Augusto Amorim, senior manager for sales forecasting in the Americas for LMC Automotive. "General Motors, Toyota and Stellantis sold fewer vehicles in April than in March, and Honda sales fell more than those of any other automaker. Yet, for GM, the worst seems to be behind them."

U.S. new-vehicle sales were expected to fall around 20 percent in April, analysts predicted, as automakers struggle to rebuild depleted dealer inventories amid the chronic microchip shortage and other supply chain hurdles.

The period of March, April and May 2021 was among the hottest three-month sales stretches ever, reflecting a sharp rebound from the early days of the COVID-19 pandemic and a time before the chip shortage began throttling global production.

Sales at Toyota Motor, Ford, Honda Motor, Hyundai and Kia dropped by double digits in April compared with a year earlier.

Toyota Motor, saddled by some of the industry's lowest inventory levels, said April volume skidded 23 percent, with deliveries down 23 percent at the Toyota division and 18 percent at Lexus. Sales at Toyota Motor, the top-selling automaker in the U.S. last year and in the first quarter, have now dropped nine consecutive months.

The Toyota brand's top sellers all racked up double-digit declines: Camry, off 12 percent; RAV4, down 18 percent; Highlander, off 29 percent; Corolla, down 21 percent; and Tacoma, off 27 percent.

Toyota Motor closed April with a 20-day supply of vehicles; 137,067 cars and lights trucks, or just 13,831 in dealer stock and 123,236 at ports or in transit, a spokesman said.

Ford Motor Co.'s deliveries fell 11 percent, with volume decreasing 11 percent at the Ford division and 12 percent at Lincoln. Three of the Ford brand's most popular light trucks racked up double-digit declines: F-Series, down 22 percent; Explorer, off 23 percent, and Ranger, down 60 percent.

Ford, which has pushed back allocations and advised dealers that wholesale deliveries will be lighter until late May, said April sales of key models improved over March. It ended April with gross stocks of 238,000 vehicles, down from 268,000 at the close of March and 265,000 at the end of April 2021.

“While industry semiconductor chip shortages persist, improved inventory flow in April delivered a significant share gain of 1 percentage point over a year ago with Ford outperforming the industry," said Andrew Frick, vice president of sales, distribution and trucks at Ford. "Inventory flow bolstered stronger F-Series, Mustang Mach-E, E-Transit and record April Ford brand SUV sales."

Honda Motor Co., citing "difficult supply constraints," said sales fell 40 percent in April, the company's ninth-straight monthly decline, with deliveries down 41 percent at the Honda division and 33 percent at Acura.

Four of the Honda brand's five biggest sellers dropped by 20 percent or more: Accord, down 20 percent; Civic, off 51 percent; CR-V, down 56 percent; and Pilot, down 43 percent. HR-V deliveries rose 6 percent.

A Honda spokesman said Tuesday the company started 2022 with U.S. dealer stocks under 20,000 cars and light trucks and began April slightly below that level. For comparison, the automaker had 300,000 vehicles in dealer inventory at the start of 2021.

Deliveries fell 20 percent at Hyundai and 16 percent at Kia last month, mostly on weaker car sales. It was the second-straight month of double-digit declines at the two Korean brands.

“We continue to have challenges with production and distribution of our vehicles,” said Eric Watson, head of U.S. sales for Kia. “Our dealer inventories continue to be at historic lows, somewhere between seven and nine days' supply of vehicles on the ground.”

With an expanded crossover lineup, its first pickup and the new Ioniq 5 electric vehicle, Hyundai has focused on retail sales, which tallied 61,668 last month. The company reported zero fleet deliveries in April for the fourth month.

Hyundai closed April with 15,809 vehicles in inventory, down from 17,271 at the start of the month and 123,046 a year ago.

Randy Parker, senior vice president of national sales for Hyundai Motor America, said the company continues to sell at a very high and efficient rate because consumer demand remains "extremely" high.

“We do see light at the end of the tunnel," Parker said. "Perhaps in the third and fourth quarter, based on our current business plan, we should start to see some improvement in product availability.”

Subaru deliveries, down 25 percent in April, dropped for the 11th consecutive month. Volume edged down 3.3 percent at Mazda, snapping two consecutive monthly gains.

At Genesis, April volume rose 53 percent to 5,039, a record for the month and the brand's 17th straight increase. Sales of the GV70 crossover eclipsed combined deliveries of the brand's three sedans.

Volvo sales dropped 9.2 percent, its eighth monthly decline.

U.S. dealers had fewer than 900,000 new cars and light trucks in inventory last month, J.D. Power said. Kia, Honda, Toyota, Land Rover, Lexus and Subaru are among the brands with the lowest inventory, while Chrysler, Audi, Ram, Lincoln and Dodge have some of the highest stockpiles, according to Cox Automotive.

In addition to parts shortages, tightened security and screening along the Texas-Mexico border has resulted in shipping delays. And government-ordered COVID-19 lockdowns in China have slowed the production of auto parts and vehicles exported to the U.S.

In a positive development, LMC said Wednesday that first-quarter North American light-vehicle production came in about 75,000 units higher than forecast.

Honda Motor, which warned in early April that parts supplies continue to fluctuate, has been forced to reduce new-vehicle allotments in May and June for some U.S. dealers.

The lingering inventory crunch has led analysts and automakers to cut forecasts for U.S. auto sales in 2022 to around 15.3 million to 15.5 million, from as high as 16.5 million in initial estimates.

"The situation on the ground has not changed significantly for months. Product availability remains constrained, and many customers can only order their vehicles for future delivery," Cox Automotive Senior Economist Charlie Chesbrough said. "Improved inventory conditions will likely not happen in 2022, as many customers are now waiting for their already reserved vehicles to be built."

The average incentive per new vehicle was on pace to reach an all-time low of $1,034 last month, a decrease of 66 percent from April 2021, J.D. Power said. Incentive spending per vehicle expressed as a percentage of the average sticker price was also trending toward an all-time low of 2.3 percent, down 4.8 percentage points from April 2021 and making for the third consecutive month below 3 percent, J.D. Power and LMC said.

TrueCar estimates average incentives dropped 55 percent to $1,466 in April, with four brands — Toyota, Hyundai, Kia and Subaru — with discounts well below $1,000. (See chart above.)

With lean inventories and consumer demand high, the average transaction price for a new vehicle is expected to reach an April record of $45,232, up 19 percent from a year earlier and the second-highest level since a peak of $45,247 in December, LMC and J.D. Power said. (See chart below)

• There were 27 selling days last month vs. 26 in April 2021.
• April fleet sales are expected to fall 24 percent from a year earlier but increase 19 percent from March, when adjusted for the same number of selling days, TrueCar estimates.
• Leasing will account for just 18 percent of retail sales in April, J.D. Power and LMC said, down from 30 percent of all new-vehicle retail volume in all of 2019.
• The average interest rate on a new-vehicle loan was 4.8 percent in April, up from 4.6 percent in March, TrueCar said.
• The average term on a new-vehicle loan was 70 months in April, according to TrueCar.

“As we progress through 2022 and into 2023, we do see supply and demand forces starting to balance out, leaving the consumer to drive the level of recovery by next year. If the Fed is able to orchestrate a soft landing, there could be some upside potential to the outlook late in 2022 and 2023. That said, given the auto market has lost more than 7 million units of volume since 2020, there most certainly will be an element of demand destruction. We do expect light vehicle sales to reach 17.3 million units by 2026, but don’t see the market making up more than half of the pandemic-lost sales."

— Jeff Schuster, president of Americas operations and global vehicle forecasts for LMC Automotive

"The industry is still far from 'normal' assembly levels. Stabilization of microchip supplies may not emerge until the second half of 2022, and lost production recovery efforts may only start in earnest in 2023. The delicate balance between available supply levels and consumers facing inflation headwinds will continue to constrain demand levels in the immediate term."

— Chris Hopson, manager of North American light-vehicle forecasts at S&P Global Mobility

Carly Schaffner and Larry P. Vellequette contributed to this report.