March sales look robust, thanks to incentives and inventory

Analysts are expecting March to be one of the strongest months of the last three years when automakers report their monthly and first-quarter U.S. sales results next week, as increased incentives and rising inventories continue to keep consumers active in the market as the spring selling season arrives.

Estimates from Cox Automotive, S&P Global Mobility, Edmunds and GlobalData put sales volumes over 1.4 million vehicles in March, up 5 to 6 percent from a year ago and only the second time since May 2021 that monthly sales have topped that level.

Cox estimates quarterly sales will come in at 3.76 million, which would be a 5.5 percent increase over a year ago when inventories were tighter, but down slightly from the fourth quarter of last year because of seasonality. Cox pegged the seasonally adjusted, annualized rate of sales would reach 15.5 million in March. S&P Global Mobility projected volumes to reach 1.47 million in March and also estimated the month’s selling rate would reach 15.8 million. GlobalData predicted an even more robust SAAR of between 16 and 16.4 million.


“Leading into the close, things are pretty strong,” said Jeff Schuster, global vice president of automotive research at GlobalData. “Consumers are still shelling out cash for new vehicles. The inventory improvements in terms of availability is helping, and the increased incentives are helping to mitigate some of the increases in pricing, which has leveled off over the last several months.”

Despite the relatively strong market, individual automaker results are expected to be mixed, thanks in large part to comparisons with last year, when several Japanese automakers were still struggling to rebuild their inventories. Cox predicted quarterly gains of 14 to 22 percent for Toyota, Honda and Mazda, while predicting year-over-year losses at Stellantis, General Motors and Hyundai. Other automakers were forecast to finish up in single digits.

While sales were expected to be up, pricing is going in the opposite direction.

Cox Chief Economist Jonathan Smoke said the pricing power that dealers enjoyed has dissipated. “The tables have turned, as the consumers now have control. Affordability does continue to improve,” Smoke said.

Chris Hopson, principal analyst at S&P Global Mobility, cautioned that prices haven’t fallen enough to meaningfully boost sales.

“High interest rates, slowly receding vehicle prices and uncertain economic conditions continue to push against any consistent upshift for demand levels,” he said.

Charlie Chesbrough, senior economist at Cox Automotive, said there are some larger trends playing out within the sales results that are worth watching, including how affordability and pricing have begun to alter consumer choices within segments. Chesbrough said he looked at the market share changes in the eight largest segments and saw a similar pattern everywhere.

“Across every type of product — cars, trucks, SUVs, used vehicles — you see that there’s a shift toward the compact or subcompact version, and away from the midsize or full size, and the takeaway is that this is how consumers are dealing with affordability,” Chesbrough said. “They still need the functionality of what it is they’re shopping for, but they need to get the less expensive version, the smaller version, in order to be able to afford it.”

Cox said average transaction prices dropped in March to $47,244, down 2 percent from a year ago and 5 percent from their peak in December 2022.

Within the electric vehicle market, Cox said days’ supply declined in March to 114 days, down from 159 in February. Meanwhile, EV prices continue to decline, thanks largely to price drops from Tesla and greater incentives, while growth in EV sales slows. Cox said EV sales were up 15 percent compared with the first quarter of last year but may have declined from the fourth quarter of 2023.

Edmunds said that dealers in March had sold their highest percentage of previous-year models — 13 percent — since March 2020.

“We’ve officially come full circle: It’s time for car shoppers to dust off their old, pre-pandemic playbooks because automakers are falling back into familiar traps of aging inventory and prevalent discounting,” said Ivan Drury, Edmunds’ director of insights. “But shoppers need to temper their expectations as to the brands that they’re going to find deals on.”


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