Driving highest auto sales since pandemic: General Motors overtook Toyota Motor to remain the top-selling automaker in the United States in 2023, on the back of easing supply snags and sustained demand.

The auto industry was driven by the American automaker to its best year since the pandemic.

The Detroit automaker, home to brands Chevrolet, GMC, Cadillac and Buick, shrugged off a hit from a costly auto strike to report US new vehicle sales of about 2.6 million units for 2023, registering an uptick of 14.1 per cent from 2022.

 Toyota's annual sales rose 6.6 per cent to about 2.25 million vehicles.

Auto Sales

Overall, US new vehicle sales last year finished at around 15.5 million units, of which electrified vehicles including hybrids made up nearly 17 per cent as per data released by Wards Intelligence on Wednesday. 

Sales were the highest since 2019 and surpassed nearly 13.9 million in 2022, according to Cox Automotive.

The steady recovery in vehicle sales has reinforced other signs that the US economy is absorbing the shock from the rapid rise in interest rates without sliding into a recession.

Worries on Recovery

Some analysts still warn of higher borrowing costs taking a toll on demand this year.

"High vehicle prices and high interest rates remain the industry's Grinch right now," Cox noted.

Car dealers offered generous incentives and discounts in December for promoting sales and unload older inventory in the market, two years after holding back on promotions.

"This is the third consecutive year in which US consumers spent more than half a trillion dollars buying new vehicles," JD Power said in a report last month.

EVs in the race

Electric vehicles grabbed a bigger share of consumer spending in 2023.

Toyota on Wednesday said its sales of electrified vehicles, including hybrid vehicles and all electric models, rose 30.4 per cent to 657,327 vehicles - making up 29.2 per cent of overall US sales.

BZ4X and Lexus RZ, pure-play EVs of the Japanese automaker totaled 14,715 units in 2023 and accounted for about 2.23 per cent of overall electric vehicles sales.

GM sold 75,883 EVs, of which 62,045 were Bolts and 13,838 were Ultium platform EVs.

The Detroit automaker expects robust demand to carry over into the current year, forecasting total industry sales of 16 million units for the year.

Shares of Ford, Elon Musk’s Tesla and GM settled lower on Wednesday, as well as US-listed shares of Stellantis. Tesla lost the most, dropping 4 per cent after nearly doubling in 2023.

GM said it would offer $7,500 incentives on its EVs.

The electric vehicles recently lost a US government tax credit this week.

Demand Forecast

Hyundai's, reported a 11 per cent rise in its annual sales, annual EV sales comprising 55,783 units. 

Mazda and Honda also reported higher annual sales.

Notably, the total US EV sales are expected to be about 8 per cent of overall auto sales in 2023, with that number rising to around 10 per cent this year, Cox added. 

Analysts however say high interest rates are set to hurt EV demand as well.

"Sales of EVs are likely to continue to improve, just not at the astronomical rate the industry saw in years past," AutoForecast Solutions said in a report.

(With Reuters Inputs)