Macro Report

**Flash Report – Auto Industry**


In 2023, the automotive industry faced a global computer chip shortage and a six-week UAW strike but rebounded, leading to the highest US vehicle sales since the pandemic. Affordability issues and high auto loan rates persist, though optimism exists with expectations of decreasing loan rates due to projected Fed interest rate cuts in 2024.


Last week, Wards Total Vehicle Sales exceeded market expectations, climbing up to 15.83m from the previous month’s

15.32m, against a forecast of 15.50m. Despite the steady climb over the past two years, this remains below the 10Yr average.

US Auto Sales Total Annualized

US Auto Inventory levels rose to 236.2k in November, up from 213.78k the prior month. Although still below pre-pandemic levels, there’s a steady increase observed, reversing a five-year trend of decreasing inventory levels.

US Auto Inventory Level

However, amid these rising inventory levels, US Domestic Auto Production fell to 131.6k in November from October’s 134.4k.

US Domestic Auto Production

In December, new vehicle Average Transaction Price increased 1.3%, but dropped 2.4% from last year. Monthly payments surged to near-record highs, averaging $739 in Q4 2023, up from $717 a year ago. The average 5-year new car loan rate is 7.71%, up from 4% when the Fed began raising rates. Auto Loan Debt hit a record high of $1.60 trillion in Q3 2023, becoming the third-largest US household debt category. Despite the overall increase in loan balances, the value of new loans dipped slightly, with 6.3 million opened in Q3 2023. This suggests stable and ongoing demand for vehicles.