Auto Sales Are Expected to Slow After a Strong 2023 (2024)

After enjoying a strong rebound in sales in 2023, the auto industry appears headed for slower growth this year as consumers struggle with elevated interest rates and high prices for new cars and light trucks.

Edmunds, a market researcher, expects the industry to sell 15.7 million vehicles this year. That would amount to a modest increase from the 15.5 million sold last year, when sales jumped 12 percent.

“There’s definitely pent-up demand out there, because people have been holding off purchases for a while,” said Jessica Caldwell, head of insights at Edmunds. “But given the credit situation, we don’t think the industry will see a ton of growth this year.”

Since the coronavirus pandemic, automakers have struggled with shortages of critical parts that have prevented them from producing as many vehicles as consumers wanted to buy. In 2023, the shortages, especially for computer chips, finally eased, allowing production to return to more normal levels.

But over the past year, the Federal Reserve has significantly raised interest rates, which has pushed up costs considerably for car buyers.

For years, many people took advantage of zero-percent loans to buy vehicles, even as prices climbed. But such deals, offered by automakers to move inventory, have nearly disappeared in the wake of the Fed’s rate hikes. In the fourth quarter of 2023, new-vehicle sales with zero-percent financing accounted for just 2.3 percent of all sales, according to Edmunds.