2023 Will Likely Continue the Trend of Decreased Demand for Vehicles

Cox Automotive expects 2022 automotive sales to finish the year at the lowest level since 2011, down 8% compared to 2021. The decline in sales is attributed to a supply shortage in the first half of the year and decreased demand due to high prices and rising interest rates in the second half of the year. The average new car payment increased to $700 in 2022, up from $565 in 2020. 2023 will likely continue the trend of decreased demand for vehicles, as the Fed continues to raise interest rates. The used vehicle market in particular is expected to be disproportionately affected as prices continue to fall to correct historic growth during the new vehicle shortage of 2020 and 2021. The decline in vehicle prices and F&I profits will likely cause dealerships to focus more on the service lane in 2023.