Third quarter sales are expected to get a big boost from EVs and the expiring tax credit
The economy continues to show signs of turbulence as inflation is up and the unemployment rate climbed to 4.3% last month. These factors helped to push the Federal Reserve to lower interest rates.
While the Fed noted “uncertainty about the economic outlook remains elevated,” that hasn’t scared off car buyers. Quite the opposite as Edmunds expects this will be the strongest third quarter for new vehicle sales since 2019.
More: Americans Crushed By Auto Loans As Defaults And Repossessions Surge
If their projections pan out, Americans will have snapped up 4,075,132 new vehicles between July and September. That would be a 4.7% increase from last year, but a 3.3% drop from the second quarter.
An EV Slowdown Ahead?
That sounds like a mixed bag, so what’s driving the sales? Edmunds pointed to a number of factors including the elimination of the clean vehicle tax credit. It expires tomorrow, meaning shoppers have rushed out to buy EVs before the $7,500 incentive disappears.
That isn’t the only tailwind as the rate cut appears to have helped and Jessica Caldwell, Edmunds’ head of insights, noted “We’re seeing more consumers return to the market with aging trade-ins, which is a strong signal that there’s still real pent-up demand.”
However, the party is going to come to an abrupt end once the clean vehicle tax credit expires. Edmunds’ director of insights, Ivan Drury, suggests there will be an “EV hangover in the months ahead.” That’s an understatement as the elimination of the incentive will likely push some consumers to cheaper gas and hybrid vehicles.
Automakers have already alluded to this and GM’s Duncan Aldred recently said, “There’s no doubt we’ll see lower EV sales next quarter … and it may take several months for the market to normalize.” He added, we will “almost certainly see a smaller EV market” and the company will respond by cutting production.
Who Gains, Who Slips
We’ll learn the real numbers soon enough, but Edmunds is expecting Toyota to benefit from a 17% increase in third quarter sales compared to a year ago. Hyundai and Kia are expected to climb 12.7%, while Ford could be up 8.0%.
Not everyone is expected to climb, though. Stellantis may see a marginal dip of 0.3%, making it the only major automaker in Edmunds’ forecast with a year-over-year decline.
Google News
MSN Start
Hailing from Metro Detroit, it was practically destiny for Michael Gauthier to dive headfirst into… Read full bio

source