Macquarie Projects US Auto Sales to Stabilize Around 16 Million Units Annually

Macquarie analysts have put forth a forecast for the US light vehicle market, suggesting a steady sales pace of approximately 16 million units per year, signaling a shift from previous higher volumes. This reflects a settling phase following years of fluctuation, with the latest seasonally adjusted annual rate (SAAR) hitting 16.2 million in May.

Despite a sluggish consumer mood and elevated fuel costs, vehicle sales appeared resilient in May, with 1.48 million units sold-matching last year's numbers but showing a 7% gain from April. This steadiness hints at a more balanced demand environment amid economic uncertainties.

Hybrid electric vehicles (HEVs) are quietly becoming the profit backbone for Asian automakers, grabbing 17.3% of the market in May-the highest ever. Companies like 005380 and 000270 logged eye-popping HEV sales growth of 126% year-over-year. Meanwhile, Toyota and Honda posted more modest yet solid gains at 10% and 22%, respectively, with Toyota smoothing out production for newer models.

Battery electric vehicles (BEVs), meanwhile, have plateaued at a 6% market share after dipping from an 11.6% peak last September. Tesla, which accounts for close to half of BEV sales in the US, saw its deliveries slide 12% compared to last year, dragging BEV sales down 18% overall.

One factor taking the wind out of BEVs' sails is rising battery costs tied to the booming energy storage sector, forcing automakers to hike prices and erode affordability. The result: margin pressures and slower sales growth in a segment that had been sizzling hot.

Consumer incentives have nudged up, with average spending on deals rising 6% year-over-year to $3,502 per vehicle-about 8% of the $46,023 average transaction price. The price tag itself held steady from last month and edged up just 1% year-over-year, based on JD Power data highlighted by Macquarie.

Looking forward, Macquarie projects that the US auto sales annual run rate will linger around 16 million for the next several years. The firm singles out Kia and Toyota as prime beneficiaries of this new market dynamic, followed by Hyundai, thanks to their expanding hybrid offerings and resulting margin boosts.

The US auto market might have hit a plateau, but how automakers pivot with technology and pricing strategies will certainly keep the industry watching closely.