After having fun with a powerful rebound in gross sales in 2023, the auto trade seems headed for slower development this yr as customers battle with elevated rates of interest and excessive costs for brand new automobiles and lightweight vans.

Edmunds, a market researcher, expects the trade to promote 15.7 million automobiles this yr. That may quantity to a modest enhance from the 15.5 million bought final yr, when gross sales jumped 12 %.

“There’s undoubtedly pent-up demand on the market, as a result of folks have been holding off purchases for some time,” stated Jessica Caldwell, head of insights at Edmunds. “However given the credit score scenario, we don’t suppose the trade will see a ton of development this yr.”

For the reason that coronavirus pandemic, automakers have struggled with shortages of crucial components which have prevented them from producing as many automobiles as customers needed to purchase. In 2023, the shortages, particularly for pc chips, lastly eased, permitting manufacturing to return to extra regular ranges.

However over the previous yr, the Federal Reserve has considerably raised rates of interest, which has pushed up prices significantly for automotive consumers.

For years, many individuals took benefit of zero-percent loans to purchase automobiles, whilst costs climbed. However such offers, provided by automakers to maneuver stock, have almost disappeared within the wake of the Fed’s fee hikes. Within the fourth quarter of 2023, new-vehicle gross sales with zero-percent financing accounted for simply 2.3 % of all gross sales, based on Edmunds.

Month-to-month funds are at near-record highs. Within the fourth quarter, the common month-to-month fee on new automobiles was $739, up from $717 in the identical interval a yr in the past.

A number of automakers had been hoping {that a} speedy rise in gross sales of recent electrical automobiles would drive the trade to beneficial properties into 2024 and 2025, however these automobiles and vans haven’t taken off fairly as shortly as many analysts and executives had hoped.

In 2023, gross sales of battery-powered fashions in the US topped a million automobiles for the primary time, and Cox Automotive, one other analysis agency, expects gross sales to achieve 1.5 million this yr. However Normal Motors, Ford Motor, Volkswagen and different producers had been anticipating an excellent sooner ramp-up.

However customers have balked on the excessive costs of lots of the latest electrical fashions. Many drivers are additionally reluctant to make the swap to battery energy, as a result of they don’t seem to be certain they’ll be capable to discover sufficient locations to shortly refuel. That has compelled automakers to reset their plans.

G.M. had as soon as forecast it will produce 400,000 electrical automobiles by the center of 2024 however now has given up that focus on, and it has delayed the manufacturing of some electrical fashions.

Ford had been aiming to have sufficient manufacturing unit capability by the tip of 2024 to make 600,000 battery-powered automobiles a yr, nevertheless it not too long ago lowered manufacturing plans for its electrical F-150 Lightning and its electrical sport-utility automobile, the Mustang Mach-E.

On Wednesday, G.M. stated that its gross sales of recent automobiles in the US jumped 14 % final yr. The corporate bought 2.6 million automobiles and lightweight vans in 2023, up from 2.3 million in 2022, when the chip scarcity restricted manufacturing.

G.M. bought about 76,000 electrical automobiles, up from 39,000 in 2022. However most had been Chevrolet Bolts, a mannequin that the corporate not too long ago stopped making. Solely about 13,000 had been automobile primarily based on newer battery expertise that G.M. had been hoping would make its electrical automobiles inexpensive to many extra automotive consumers.

Gross sales for G.M. within the fourth quarter had been comparatively weak. They climbed simply 0.3 % from the identical interval a yr earlier and had been down 7 % in contrast with the third quarter of 2023. The corporate stated the gross sales of a number of essential fashions had been restricted by a strike at a few of its vegetation by the United Car Staff union.

Individually, Toyota Motor, the second largest vendor of automobiles in the US after G.M., stated its 2023 gross sales rose 7 %, to 2.2 million automobiles. The corporate’s gross sales within the fourth quarter had been 15.4 % larger than in the identical quarter a yr in the past and about 5 % larger than within the third quarter.

Stellantis, the maker of Chrysler, Ram and Jeep automobiles, stated that it bought 1.5 million automobiles and vans in 2023, about 1 % lower than the yr earlier than. The corporate plans to introduce eight new electrical automobiles this yr, and it goals to have battery-powered fashions account for half of its North American gross sales by the tip of the last decade.

Honda, Hyundai and Kia additionally on Wednesday reported sturdy U.S. gross sales for 2023 And on Tuesday, Tesla, which dominates the electrical automotive enterprise in the US, stated it bought 1.8 million automobiles worldwide final yr, up 38 % from 2022.

Ford is anticipated to report its gross sales whole on Thursday.