Despite the recovery of the supply chain, average price increases are expected to occur.
March 27, 2023 at 9:56 p.m. ET
Average new car prices in the US are expected to climb above $50,000 this year, and executives at Toyota’s US operations predict that trend will continue. Automotive news reports
This increase in prices is likely to occur despite the recovery of the supply chain, and demand is expected to outstrip supply again this year. Additionally, the report suggests that there are 6 million potential new vehicle buyers marginalized by inventory and pricing.
Jack Hollis, head of sales for Toyota Motor North America, has given an update on the automaker’s business, saying that in 2023 Toyota and Lexus are expected to receive 100,000 more sales on top of the 2.1 million they sold in the US last year.
However, a slight drop in Toyota’s market share is also possible. According to Hollis, the year would likely be split into two halves, with the first half below last year and the second ahead.
Hollis expects the automaker to end the year with about 30,000 vehicles in inventory sitting on dealer lots with continued consumer demand, meaning “we’ll sell every vehicle we can build.”
The report indicates that demand for used vehicles, bolstered by potential buyers of off-market new vehicles, will continue to keep residual values high. However, the entire supply chain and its fragility is the only thing holding the industry back. According to Hollis, if the industry were not constrained by supply problems, it could sell 16.7 to 17 million cars in the US this year.
Bob Young, vice president of purchasing supplier development, said inflationary pressures affecting the industry have been largely driven by rising raw material costs, but that Toyota is “starting to see some pullback in the markets”. “Inflationary pressures are really pushing all of us to work more aggressively and collaboratively on cost reduction,” Young said, adding that any reduction in commodity prices would likely not trickle down to end users until to 2024.
