Prices too high, automakers too slow cutting them from the pandemic spike. Stellantis sales plunged 20%, a fiasco.
By Wolf Richter for WOLF STREET.
Total new vehicle sales in Q3 – retail and fleet deliveries by dealers and automakers to end-users – fell by 5.0% year-over-year to 3.88 million vehicles. This reduced the sales gain over the first nine months to just 0.7%, according to the data from the Bureau of Economic Analysis today.
Sky-high prices, a result of massive price increases during the shortages, are preventing sales from happening. In the used vehicle market, dealers have responded by cutting prices to boost sales. Since mid-2022, used vehicle prices have dropped sharply, working off over half of the pandemic price spike.
But new vehicle prices inched lower too slowly as automakers tried to protect their record profit margins they extracted from car buyers during the era of the shortages, particularly Stellantis, where sales plunged 20% in Q3, and it now has a dealer revolt on its hands due to its pricing policies as inventory piled up. What buyers need in order to crank up volume are big price cuts, and automakers will have to give up some of their big-fat profit margins to get there.
New vehicles in the US, in terms of the number of vehicles sold, have been a no-growth business for over two decades, and only price increases and going upscale have kept revenues growing for automakers.
Too-high prices, with everyone going upscale, has had the effect of stifling sales during the good times and killing sales during bad times.
With Q3 delivery data now in the box, we estimate that sales for the whole year will be up slightly from a year ago, in line with the sales increase over the first nine months of the year.
But it’s not equally spread: The US legacy automakers along with Toyota and Nissan have lost lots of sales since 2015, while Hyundai-Kia and Tesla have eaten their lunch (charts with annual sales for each of the big automakers from 2013 through 2023).
Average incentives per vehicle sold rose 63% year-over-year in September to $3,047, or 6.2% of MSRP, according to J.D. Power estimates. Leasing, about 22% of retail sales, drove some of the incentive spending to get to discounted lease payments.
But automakers are still clinging to their hopes for big-fat profit margins. During periods in 2019, as inventories were also piling up, incentives ran over 10% of MSRP. To really get sales going, automakers should roll back some of their pandemic-era price increases. Tesla and other EV makers have already cut prices on EVs.
The average transaction price – including all incentives, discounts, and addendum stickers – fell about 3% year-over-year to $44,467 in September. J.D. Power cited rising incentives by manufacturers, rising discounts by dealers, and increased sales (due to increased availability) of lower-priced vehicles that automakers had deprioritized during the era of shortages, in favor of high-dollar vehicles.
The ATP had spiked by 36% during the pandemic, from $34,900 in December 2019 to $47,300 in December 2022. Since that peak, the ATP has dropped by 6.0%.
Sales at the biggest automakers in Q3.
#1 General Motors, Sales: -2.2% year-over-year, all brands combined, to 696,086 vehicles in Q3.
ICE vehicle sales, including hybrids, fell 4.1% year-over-year; EV sales jumped 60% year-over-year. Demand growth was in EVs, while demand for ICE vehicles sagged.
| GM | Q3 2024 | Q3 2023 | |
| Total | 659,601 | 674,336 | -2.2% |
| EVs | 32,095 | 20,060 | +60% |
| ICE vehicles, incl. hybrids | 627,506 | 654,276 | -4.1% |
GM killed the Bolt EV and Bolt EUV at the end of 2023. But it has a slew of new EV models now on the market, including a full-size truck. Like all automakers, it is having trouble ramping up production of EVs, which require new supply chains with lots of kinks to be worked out, and GM’s EV sales are still small, but are growing rapidly, now that it has a range of models.
#2 Toyota, Sales: -8.0% year-over-year, Toyota and Lexus brands combined, to 542,872 vehicles in Q3.
Toyota has spent years pooh-poohing EVs, but last year, it got religion, and started producing its first battery-electric vehicle, the bZ4X (the rest of its “electrified” vehicles are ICE vehicles with hybrid powertrains). It sold only 4,109 bZ4Xs in Q3, but that was up 45% year-over-year.
Last year, Toyota announced big production plans of 1.5 million EVs by 2026, trying to gin up hype. But no one can ramp up production of EVs from zero to 1.5 million units in three years, not even Toyota, because the supply chains simply aren’t there. So in September, it scaled back those lofty production plans for 2026 to 1.0 million EVs, and even that will be a challenge. That’s what you get for pooh-poohing EVs for a decade.
#3 Ford, Sales: +0.7% year-over-year, Ford and Lincoln brands combined, to 504,039 vehicles in Q3.
EV sales rose by 12.2%; ICE vehicle sales, which include hybrids, inched up 0.2%. Ford has faced enormous challenges producing EVs. It figured that EVs would be a high-dollar premium product, but Tesla has been cutting prices and cranking out the numbers profitably, thereby trashing Ford’s EV strategy. So Ford has now begun to rejigger its EV strategy, focusing on lower price points and lower costs, and less reliance on China for its batteries.
| Ford | Q3 2024 | Q3 2023 | |
| Total | 504,039 | 500,504 | +0.7% |
| EVs | 23,509 | 20,962 | +12.2% |
| ICE vehicles incl. hybrids | 480,530 | 479,542 | +0.2% |
#4 Hyundai-Kia, Sales: +5.5% year-over-year, to 426,051 vehicles.
Hyundai is the parent company of Kia, with Hyundai holding a 33.9% stake in Kia, and Kia holding stakes in Hyundai subsidiaries. They share vehicle platforms, and for our purposes, we look at them as one automaker with two brands.
It’s hard to sort out total EV sales because Hyundai’s Kona is available as an ICE vehicle and as a pure EV, but Hyundai doesn’t split out the Kona EV sales, so we’ll have to ignore them here.
EV sales without Kona EV rose by 8.2% year-over-year to 25,118 vehicles.
Their EVs currently don’t qualify for the federal tax rebates, except when leased. Other automakers have had similar issues with some of their models, such as Tesla with certain versions of its Model 3. That missing $7,500 tax rebate is a tough issue to jump over, and it seriously hurt Model 3 sales for Tesla. Kia and Hyundai are now planning to shift production of their EVs to the US to get them to qualify for the rebates. US production is supposed to start in 2025.
# 5 Honda, Sales: +8.0% year-over-year, Honda and Accura brands combined, to 366,214 vehicles in Q3.
Honda just got started with EVs. The Prologue, its first and only pure EV is new this year. It sold 3,785 in September, up from zero last year.
# 6 Stellantis, sales: -20% year-over-year, all brands combined, to 305,294.
- Ram pickup truck sales: -19%;
- Chrysler sales: -47%;
- Jeep sales: -6%;
- Dodge sales: -43%.
This company has a fiasco on its hands, and a dealer revolt, as dealers are drowning in inventory amid plunging sales. It will need huge discounts and incentives to move the iron, and it will need to sacrifice its rapacious pandemic-era profit margins, and while at it, it might just fire its European CEO and replace him with someone who knows how to price and sell trucks in the USA. Its stock has already crashed by 53% since March, long way to go.
#7 Nissan, Sales: -2.2% year-over-year, Nissan and Infiniti combined, to 212,068 vehicles.
- EV sales (Leaf and Ariya): +65.7% yoy to 10,066 vehicles.
- ICE-vehicle sales: -4.4% yoy to 202,002 vehicles
Tesla doesn’t disclose US sales. It only discloses global sales. For Q3, global sales rose by 4.3% year-over-year, to 462,890 EVs, its best Q3 ever, but still behind Q1 and Q4 2023. For now, the high-growth story has shattered (our discussion, including on the Cybertruck).
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Interesting. It looks like the auto market is just like the housing market. Buyers simply can’t afford it anymore and are on strike.
I need a new car since we now have four kids. A base model Ford Expedition Max or Suburban is over $65K. Insanity. Automakers have lost their minds.
how you getting about these days?
The obvious answer here is a minivan. You will be safer, more comfortable, save tens of thousands in the purchase price and have better fuel economy. Sliding doors make for easier access and there is plenty of storage capacity. You can even haul sheets of plywood, something most trucks and SUVs can’t do these days.
@EAJ and themsicles – I have a Toyota Sienna minivan and have owned it for over 10 years.
There’s not enough space in the third row and cargo area when all six of us are in the car. Put both seats in the third row up and there is barely any cargo area. The third row is also not great for long rides for anyone who isn’t a kid. My two older ones are almost teenagers. My youngest are in car seats.
I am one of the few people who truly have a need for a full size SUV but it just isn’t worth the price. So I’ll keep driving the minivan and look for a used SUV in a year or so.
…and there’s the whole coolness factor. You’ll be swimming in that.
Yes because the vehicle driven almost primarily by families is so much cooler than the other vehicle driven by families.
But hey, you can pretend how you just cross the gobi or came from a long cattle drive/baclwoods adventure.
Won’t even go into people that think their “coolness” is tied to their vehicle’s projected image
It has nothing to do with coolness.
I have four kids and owned a minivan for the last 10 years. There simply isn’t enough space for six people. It no longer fits my needs.
I never understand why people like you care about what others drive.
I get a kick to of the determined looking girl driving up the spillway……or the never seen guy who helps out the hikers.
Office workers are so mechanically and physically stupid….but they like that leather interior and all the useless features. For different terrain, especially.
Just bought my son a 2019 expedition with 39k miles for $35k. It’s like new. Took about a month to find the right combo. Almost half price unless you must have new.
won’t buy anything newer than 2019
to many computer chips/govt regs
actually going back to pre-2012 diesel
can’t take mileage eating DEF
my 2001 diesel gets twice mileage 2016
at 10 mpg it’s getting to expensive – why I have older work truck
We bought the same Expedition (2019, 35k miles, Max Texas trim with every bell and whistle) for about the same price. But that was 3 years ago. I guess the used market is still pretty pricey.
Great news on decreasing new car prices, by the looks of your graph, in a year or two this trend would bring prices back to the pre pandemic trend line.
Too bad none of this is affecting price on more special vehicles like Z06, 718 GT4 or Emira, all of them are still sky high in asking even on the used market…
they are high, but they have crashed a lot. especially the z06 is going to be a mass produced product. those paying premium for it are burning their money. same has happened to a lot of this premium segment. 911 prices have been more resilient.
I personally gave up my upgrade cycle of every 5 years. To stick my middle finger to the auto makers.
I can easily wait another 5 years and be perfectly happy with my current car.
The Porsche 718 GT4 and 718 Spyder are no longer produced, effective Spring 2023. The Porsche GT4 RS and Spyder RS replaced them…for a mere $100K more for a reasonably optioned vehicle. Oh…and you need to get in line to purchase one.
Phoenix_Ikki,
Speed. You want speed? A 2025 Ducati Panigale V4 S is $34k.
But, please be careful doing any lane-splitting out there in California.
“The secret to a long life is you try not to shorten it.” -Nobody
@Prairie Rider Oh yeah I am familiar with the speed a good old Sportbike can offer, it’s unlike anything a car can offer until you get to Supercar level. I get to experience that on my Streetfighter V4S from time to time..
Still fun to take a nice handling car to the twisties though, different feeling compared to the bike hence the reason I am considering something like a GT4, Emira or Z06 but then once I see how much insurance cost for that…a big part of me say heck no
Buy an older exotic some of these new cars feel so disengaged from the experience and after 500 HP every car feels crazy fast.
My newest SUV is faster than my older exotics were hah.
Grab a 2016 Boxster spyder with the flat 3.8L it was the most surprisingly fun car I drove recently that a friend purchased earlier this year.
Kracow,
Much of that disengagement is from the steering systems on most new performance cars. “Feeling the road through the steering wheel” in a steer by wire electronic linkage does not happen.
Yes, one of the seed dealers I worked with in rural northwest Minnesota had one of the first Boxster S vehicles — with a 6-speed manual. That machine was a blast to drive! Even though now, on specs at least, it is a mid-powered car. But it had balance and light weight. Run it at a very fast speed until late; punch the brakes hard; let up a bit on the brakes to shift the balance back; turn the steering wheel to hook up the front; slam the throttle to the floor. Exit the corner in a slight drift.
Phoenix_Ikki,
Great to hear you have a Streetfighter V4S!
And I do understand the enjoyment that both a performance motorbike and a performance car offer — each in their own way. Don’t forget a sleek & fast racing bicycle too!
By the way, the Emira has that old-school steering feel. It is hydraulically assisted, and one of the last of this dying breed.
The answer is C5 ZO6. Power, light weight, heavenly soundtrack, and low cost of ownership. Sure, there’s lots of plastic, but when you drive it, you don’t care.
When I arrived in the US in 2013 my first car was a new Toyota Corolla for $22K. It was a big step up for me having driven small cars in India. It used to feel so big adding to the challenges of learning to drive on the right side of the road.
Now it is impossible to find a decent car in that price range. Even decent used cars often are priced higher. So low interest rates are working as intended.
What are you talking about?
A Toyota Corolla starts at $23k. A Honda civic starts at $24k. Both are significantly better than your 2013 model and not significantly bigger. (2-3 inches longer, 1/2 inch wider)
I would think higher labor costs (UAW contract) is one reason for the hesitation to lower prices significantly. Maybe Congress can step in with a Money for Mo’New Cars program. /sarc
It appears that the management of the US automakers has decided they can’t compete long term for the reason you cited. So they are skimming the market as best they can for as long as they can and will layoff workers rather than cut margins and will eventually go out of business
As Wolf has said many times here “The cure for high prices is high prices”.
It appears we’re starting to see that play out in the auto market.
Wolf – is it safe to say that consumers are responding to the heavier incentives on EVs than on ICE vehicles at this point?
Germany pulled back on EV incentives and EV sales dropped 69% in Q3 (vs 2023 Q3), so my guess is YES.
Yes, the incentives where huge, and they caused a massive frontloading of purchases in Germany.
Nevertheless…
13.7% of all new vehicle registrations were EVs in August, with zero incentives I just looked it up for you.
In the US, the EV market share was 9.0% in Q2.
Tesla had its biggest growth years when it no longer qualified for the original $7,500 rebates (2018-2022), when it became a major automaker. EVs don’t need the rebates, they’re bad policy in terms of sales. The market is much better left alone.
What this new generation of EV rebates IS doing though — and that’s a good thing for the US economy: it’s encouraging automakers to manufacture EVs and batteries in the US, rather than import them. So there are a lot of new factories under construction for EVs and batteries, part of the factory construction boom we described here many times. And I mentioned a few of those coming EV factories here in the article.
ICE vehicle prices are way too high. They spiked during the pandemic and need to come down. It’s just as simple as that. And it’s happening too slowly.
I agree that the rebates for purchase are encouraging US manufacturing. For example MB opened a battery plant in Alabama for their EQ products. However, my observation on the front line is that it takes quite a bit more incentives, rebates, and dealer discounts to move EVs off the lot. We are discounting a decedent amount of our ICE models now, but not nearly to the same extent of the EVs. I have been telling clients, that if they want a deal, an EV is where you will get the most bang for your buck. But we are deep in the red on these deals and management doesn’t like that. Without the extra $7500 lease rebate and manufacturer incentives, they are expensive. I wonder how well they would sell without the subsidies.
I’ll pile on to the Stellantis woes: my wife has leased Grand Cherokees for 12 years now. She loves them.
Her most recent one, a 2024, was leased in December last year. Prices on the Overland trim we have always purchased have increased from $40k to almost $70k asking, and we flat out told the sales rep we’ve worked with for 12 years: “Sorry, but this is insane. We’re buying out the existing lease.”
That week in December ’23, Stellantis finally started playing ball and tossed enough factory money on the hood to make it make sense for us to lease new again. In early ’24 the factory saw the writing on the wall and finally cut MSRPs across the board.
The market at work. Healing….albeit slowly.
The assumption is there is a juicy tax write- off here or money is so abundant it doesn’t matter because otherwise it makes no financial sense.
Honestly, I don’t know how Subaru is staying in business. They gave me 20K for a car I drove for 3 years and 40,000 mile. After the trade-in I paid 12K for the new model. Crazy.
By building a decent car at a fair price?
Every time I get involved with an auto dealer I get screwed….the degree does vary…Damned if I know how they are all getting the money out of me to support their lifestyles…and the dealership lights and stuff…..back room is most of it, I know, but still?..maybe there is one of those multiplier effects or something tricked down from somewhere?
Guess I should have taken Econ, then I’d know, but it was just too damned boring.
The Edmunds survey is complete nonsense. Alex from EV Buyers Guide has a video on YT debunking it.
Just wanted to mention some highlights of the data Alex shared in his video… In reality, only 13% of Tesla owners replaced their vehicles with a gas model and many if not most of those appear to have changed to a type of vehicle where there weren’t many EV options at the time (for example, going to a large SUV).
Interesting. I assumed Edmonds was a reliable source. I wonder what motivated them to publish deceptive information based on incomplete data knowingly it was certain to make potential future EV buyers (like myself) hesitant. I guess they only care about clicks.
As I mentioned in a recent post on a related topic… Toyota can sell a lot more cars if they could arrange for more metal on dealer lots. Their dealer inventory is less than half the industry average and Lexus is even worse. And what little inventory their dealers do have is skewed towards models which are currently less favored by buyers, namely Tundras. It’s a shame they can’t seem to be able to churn out more product. That said though, this constrained inventory does seem to helping them them make nice profits on the units they do sell.
The Toyo manufacturing system: ‘just in time’ extended to retail lol.
I’m in the market for a new car. My Civic has 140k miles, is in good shape, and still has a lot of value for the right person or high school kid. One of those Hyundai/Kia EVs look pretty good. I’m pretty sure they can’t screw one up the way they did their combustion engines. And you get the $7500 for a lease. I’ve never leased before (I’m a cash guy), but my income going way up in 3 years, the technology is likely to make a jump to, so it seems like the right time to pull the trigger.
I really really like my Ioniq 6 but all of the cars from Kia/Hyundai on their EV platform are great. If you want the Ioniq 5 I’d wait for next year because it’s going through a refresh.
I went to Ford like 10-15y ago. I said, I want a car that is small on outside and big on the inside. It should fit my bike inside, maybe even sleep there. Should be a light car, good economy and be MT. Why are you not making such cars? People would buy it. I was ridiculed by the salesman. Never visited the big 3 anymore.
It’s not just Ford or the Big 3. Honda made the epitome of the ‘small on the outside, big on the inside’ vehicle: the Honda Fit. However, it stopped selling that model in the US a few years ago… supposedly for lack of buyer interest.
Fit have not fully fit the bill for me back then. Zoom zoom had its attractiveness to me too.
Toyota Matrix / Vibe was the reference for me. It even had AWD. I had Vibe GT for 23 years. Awesome. And went last month with the current closest equivalent: Rav4. The user’s satisfaction for Matrix has been top notch.
Why I have not got EV? My use case is different than for most.
I don’t drive in city much (walk + bike), but 90% of my trips is going far away from civilization to remote nature playgrounds in BC. No signal, even no gas stations around.
Dunster? Been there a couple times. Aunt and Great Uncle lived there, on 1/4 section way out north of “town”. 15 miles N out of Newcastle CO became “too crowded” for them, but I enjoyed living there a few weeks, too. Ate much weird shit.
Uncle said there was a train up around Prince George that would drop you off in REAL nowhere, and any other would pick you up when ready. Guess you just flagged them down in spot where they could see a long way? Was cool sounding, anyway.
Had elect pwr, came from generator on RR tracks in McBride.
Back in mid 70s.
Matrix gen1 was the best designed car I have ever seen. so many great details in addition to the space; hidden pockets, hook points, hatch window that opens, flush hatch opening, etc.
Gen2 lost a lot of that detail for .. looks?
RAV4 feels the same size inside. not surprised you picked that to replace.
Wonder if the salesman from 10 – 15 years ago didn’t know that several of their Ford Taurus, Mercury Sable and Lincoln Zephyr / MKZ models from that time had the backseat split and fold down with access to the trunk. Plenty of room for sleeping. Taurus X was a regular station wagon, not a SUV.
Yes, I was open for wagons but here they stopped making them many years ago. In Europe still easy to get one. The salesman was pushing his Explorers and Expeditions. I’m pretty sure that Wolf would have answer why Americans started to hate wagons in 80/90-ties?
This year, the safety car for the MotoGP race circuit is a BMW M3 Touring. Touring must mean station wagon in Bavaria. Watching the first race of the season and seeing a BMW wagon in front of the fastest bikes in the world as they did their formation lap put a smile on my face, I’ll admit.
“I’m pretty sure that Wolf would have answer why Americans started to hate wagons in 80/90-ties?”
I don’t know why*. But I know that they did.
But when the compact SUV came along — a little higher than a wagon and a little shorter, and called a “truck” instead of a “car” though they’re based on a car chassis and powertrain — everyone jumped on board, and they became the best-selling category, eventually even outselling pickups.
*I mean I can kind of guess.
To meet fleet milage or other requirements? Suvs were “Trucks” and exempt, anyway.
Marketing REALLY pushed them. I remember the commercials on TV.
You should have known that….maybe you need a break….go take a swim!
I mentioned looking for a car for a new driver in a previous thread. Found a 2016 Chevy Volt (hybrid) for $11.5K ($12.8K out the door with tax/fees). Decent enough price and in CA will save a lot on high gas prices for the kiddo.
As an aside, ended up going with Autonation. The price was great and the lack of negotiation is wonderful. Talked to another dealer who wanted $17.5K out the door for a 2017 with fewer features (but less mileage).
I always wonder if people actually enjoy less negotiation. I sure do, by my experience says otherwise.
I can’t negotiate for ****. My wife on the other hand loves it. We’ve learned to play good cop/bad cop when it’s necessary.
I feel like some think it’s necessary and for some it’s cultural (no shade!) It really is just price discovery, which is difficult for items as they become more unique, with houses being the most salient example. Bananas are pretty easy, cars are in the middle.