Auto Industry Recap: 2023 Sales Totals and 2024 Predictions

Looking back on the past 12 months in the automotive industry brings to mind a popular mis-quote from Lewis Carroll’s Alice in Wonderland: “If you don’t know where you’re going, any road will do.”

In truth, it’s a pretty lazy paraphrase of Alice’s winding conversation with the Cheshire Cat. Still, it serves as a tidy little lesson on the value of having a solid plan. (Unless you’re an overlander, in which case it might be a personal mantra about choosing journeys over destinations.)

My point here is that, while the auto industry looked busy during 2023, it felt a bit aimless. Like that guy in the office who’s always shuffling papers but never gets a whole lot done.

The usual direction toward economic health was in place – improve supply, meet demand, wash, rinse, repeat. But the exciting new paths that seemed pretty well-defined before, now look messy and nebulous through a 2024 lens.

This is particularly noticeable where future technology is concerned, specifically electric and autonomous vehicles. Despite ambitious press announcements and aggressive legislation, several automakers and even some Tier 1 suppliers rounded out the year by pulling back on EV investments or carefully revising their new-product strategies. GM essentially iced its self-driving program, and manufacturers overall seem to be taking a much more sober look at artificial intelligence.

That’s not to say the industry isn’t healthy or poised to deliver some ground-breaking innovations this year, just that the chaotic hype-man energy has toned down. Indeed, words like “normalcy,” “cautious optimism,” and “slow growth” are dominating 2024 industry forecasts.

So, with the reality-check whiplash wearing off, let’s take a closer look at how we got here and maybe even hazard a few guesses about where we’re going.

Show Me the Data

Year-end totals place new-vehicle sales at just around 15.5 million units in the U.S. – a 12.4% increase over last year, per Wards Intelligence data. While still well below the pre-pandemic average of about 17 million, the double-digit bump is notable. It’s also surprising considering all upheaval the industry saw this year, including high inflation, increased interest rates, and a six-week-long labor strike.

Never underestimate American consumerism, though, which proved that the hunger for new vehicles can persist even as prices climb. According to Cox Automotive, the average new-vehicle transaction price clocked in at $48,759 last month. If you’re into splitting hairs, that’s roughly a 1.3% increase from the month prior but a 2.4% decrease from 2022.

Rising alongside MSRPs were interest loan rates. The Federal Reserve issued four rate hikes in 2023, adding to the seven it made in 2022. On the bright side, at least three cuts are expected in 2024 with the first possibly arriving by March.

Still, in the interim, new (and used) car buyers are looking at some rough monthly payments. Bankrate data indicates the national average for a 60-month auto loan is 7.71% for new cars and 8.92% for used, placing estimated monthly costs at an average $726 and $533, respectively.

Lastly, let’s talk insurance – because those costs didn’t just jump, they skyrocketed. Between rising repair costs and an alarming spike in traffic fatalities, vehicle insurance premiums soared 24% to mark the highest annual increase for car insurance since the mid-70s. Insurify says to expect another 7% bump this year.

Love the One You’re With

With those bruising financial numbers in mind, it may not shock you to learn that in May, S&P Global Mobility reported the average age of light vehicles in operation in the U.S. rose to 12.5 years – another all-time high. This spells good news for the aftermarket, which will thrive on vehicle owners’ maintenance needs and customization wants.

In fact, SEMA reports that despite ongoing uncertainty and the need to raise prices, many businesses in the specialty equipment industry saw double-digit growth in 2023, and they remain largely optimistic for the year ahead as well. Manufacturers reported seeing the most opportunity in the off-road and overlanding segments, with retailers and installers zeroing in on muscle cars, hot rods, restorations, and classics.

As for vehicle trends, pickup trucks continue to dominate aftermarket sales – though SUVs, classics, and sports cars are not far behind. With several popular models seeing complete redesigns or tailored refreshes for 2024, including the Toyota Tacoma, Ford F-150, Ford Ranger, Chevy Silverado, and GMC Sierra, you can expect restylers to cook up some exciting new products.

Wondering what will be top of their lists? According to SEMA, performance products related to engine, suspension, and handling continue to see the most growth, with interior and exterior categories holding on strong. Exterior accessory lights, in particular, saw a big jump among electronics in 2023.

Even this corner of the market can’t escape inflation, though. SEMA says to expect price increases on the road ahead.

What’s in the Pipeline?

Despite the challenges, automakers still managed to deliver exciting new and revised models last year, including a boxy new Toyota Land Cruiser, powerful plug-in hybrid RAM Ramcharger, Ford Mustang Dark Horse, Chevy Corvette E-Ray, an entire series of “Last Call” Dodge Challengers and Chargers, and, of course, the strange but nonetheless compelling Tesla Cybertruck.

The innovation won’t stop anytime soon, either. According to John Murphy, lead automotive analyst at Bank of America Merrill Lynch and author of Car Wars, an annual study of U.S. product pipeline, automakers will launch roughly 245 new models over the next four years. The brisk pace equates to about 61 new vehicles each year. Expect 60% of them to be either electric or hybrid, and a whopping 78% to be crossovers and light trucks.

Whether or not those electric offerings will take overall market share depends on several factors, with consumer attitude being a big one. Despite many vehicle owners expressing trepidation and even anger toward EVs, Murphy’s study takes an upbeat look, increasing its predictions for U.S. EV market penetration by 2030 to 36%.

The EV Enigma

According to Kelley Blue Book, a record 1.2 million U.S. vehicle buyers chose to go electric last year. EV market share came in around 7.6%, which is up from 5.9% in 2022 but indicates slower growth from the previous year.

This is partly because the initial wave of “early adopters” has passed and EVs now need to capture the interest of more traditional consumers. With the aforementioned financial stressors bearing down – plus new, unfamiliar anxieties around range and charging infrastructure – these buyers have been harder to convince.

Industry experts predict a record number will make the switch from ICE to electric in 2024 as power-of-choice improves. An additional 25 new models will go on sale next year, with many coming from brands just getting their feet wet in the segment. Acura, Dodge, Honda, Jeep, and Land Rover are just a few of the nameplates expected to launch their first full BEVs in 2024.

However, consumer demand is still iffy – and lukewarm receptions could impact those debuts, says Wards Auto. Attractive discounting should help motivate some shoppers, along with new (albeit, confusing) federal tax credits. This past fall alone, average EV transaction prices dropped almost 19% according to Cox Automotive.

For those on the fence, hybrids are emerging as a good compromise. Consumers enjoy the environmental benefits of an EV without sacrificing the long-range convenience and comfortable familiarity of a gas-powered vehicle.

S&P Mobility data shows that 8.3% of gas-car households who returned to the market for a new vehicle between January and October 2023 opted for a hybrid model. What’s more, this is a rising trend, reaching 9.9% in October. That’s good news for brands like Toyota and Honda who hedged their future product bets by keeping reliable hybrids in the lineup.

Labor’s BIG Year

It’s impossible to look back on 2023 and not notice the enormous impression left by labor unions. It seemed like every industry, from entertainment to transportation to food service, was navigating a dispute around fair wages and workers’ rights. The auto industry was most certainly not left out.

The United Auto Workers (UAW) union took center stage for its historic September 14 walkout that lasted six weeks and ultimately secured record contracts for its members. Key to its success was the decision to target all three Detroit automakers, using coordinated stoppages at critical plants. The union then adjusted its strike strategy as talks progressed or stalled at each company, effectively playing each one off the other while wringing out concessions.

In an equally savvy move, the UAW also broke precedent by making its negotiations unusually public. In addition to posting each automaker’s offers online, the union’s fiery new president was seen on Facebook livestreams wearing an “Eat the Rich” t-shirt and throwing unaccepted contract proposals in the trash.

The newfound transparency earned the union many supporters – an incredible feat for an organization that is still under the watchful eye of a federally-appointed monitor after a multi-year investigation convicted 16 top officials of fraud and embezzlement.

Moving forward, expect to see the UAW ride this momentum into its 2024 organizing efforts. Already, the union is making aggressive pushes at electric vehicle companies like Tesla and Rivian, as well as nearly a dozen foreign-owned manufacturers with U.S.-based assembly plants.

As for consumers, analysts seem split on whether automakers’ higher labor costs will translate to higher vehicle prices. Most argue that companies will be more likely to find new efficiencies to offset the costs, like automating certain manufacturing tasks.

Did you know…?

The technician shortage may finally be turning a corner going into 2024. According to the TechForce Foundation’s annual Technician Supply & Demand Report, the technician workforce grew by 4.3% from 2021 to 2022, outpacing the overall US Labor Force’s growth (4%) for the first time. Additionally, last year marked the first increase in all technical school completions in 10 years.

Self-Driving Setbacks

Last year’s big blow to the autonomous vehicle sector came from the sudden closure of the Argo AI startup. This year’s misfortune was significantly more serious – and its effects continue to reverberate throughout the industry.

Not long after securing regulatory support in San Francisco, GM’s self-driving subsidiary Cruise found itself implicated in a serious collision that sent a pedestrian to the hospital with multiple traumatic injuries. The victim, who was initially struck by a human driver, landed in the path of an oncoming Cruise robotaxi which then struck her a second time, trapping her underneath the rear axle. Unfortunately, the onboard software initiated an emergency pull-over sequence – unnecessarily dragging the woman an additional 20 feet.

With allegations flying that the company withheld critical evidence in the aftermath, Cruise grounded all its fleets nationwide, hurried the resignation of its founder and CEO Kyle Vogt, and cut about 24% of its workforce. Parent company GM pulled back on funding and announced an indefinite delay of the pod-like Origin robotaxi.

Other companies are still quietly pushing forward in the sector. (Waymo is about to set its fleet loose on Arizona freeways.) But the cloud of “potential public safety risk” looms large overhead and the industry appears spooked, as was evidenced at the types of vehicle-integrated AI applications on display at CES 2024. Think: in-vehicle voice assistants or dealership customer service bots as opposed to fully-autonomous concept cars that can learn the nuances of a busy city grid.

Tesla’s long list of lawsuits surrounding its “AutoPilot” ADAS technology isn’t helping matters either. Plaintiffs allege the company knows its software is dangerous and defective. Safety regulators have not deemed the system fundamentally unsafe, but did call it inadequate in ensuring driver engagement. A recall was issued in December.

2024 Predictions

If you’ve made it this far, then you know the U.S. auto industry’s Magic 8 Ball is pretty damn fuzzy. There are, however, a few forecasts we feel safe making.

• Business will not be ‘booming.’ We successfully dodged a recession in 2023, but economists are hesitant to declare we’re out of the woods just yet. While the “soft landing” the feds hoped for seems to be imminent, there will likely be a little turbulence along the way in the form of layoffs, stubbornly high prices, and reduced business capital spending.

• Greater vehicle inventory will push down on prices. We’re still not convinced pre-pandemic levels will become the norm again – Build-to-Order strategies are simply more sustainable (and profitable) – but we do expect to see more vehicles on dealer lots. This should help MSRPs come down a little and free up room for incentives.

• Hybrids will have another good year. As government and private business continue to figure out a reliable charging infrastructure and automakers work on pumping out more EVs that can meet the new tax credit requirements, hybrids will continue to pick up steam as a logical alternative – especially for fleets.

• Government will have more say in auto. From emissions standards and materials sourcing to labor relations and safety technology, the federal government is going to make automakers work for all those grants and subsidies they readily accepted.

• Data privacy is going to be a nightmare. A recent report from the nonprofit Mozilla Foundation already designated new vehicles as the worst category among tech products in consumer privacy. Expect that “F” rating to grow more complicated as integrated apps, OTA updates, and Chat-GPT enabled AI assistants take a seat in your car.