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New vehicle sales in the U.S. rose nearly 5% in 2024 as buyers defied high interest rates, but EV sales growth slowed

New vehicle sales in the U.S. rose nearly 5% in 2024 as buyers defied high interest rates, but EV sales growth slowed


New vehicle sales in the U.S. rose nearly 5% from January through March, as buyers stayed in the market despite high interest rates. But electric vehicle sales growth slowed during the first three months of the year, with mainstream buyers wary of limited range and a lack of charging stations.

Automakers, most of which reported U.S. sales numbers Tuesday, sold nearly 3.8 million vehicles in the first quarter versus a year ago, for an annual rate of 15.4 million in sales.

With inventory on dealer lots growing toward pre-pandemic levels, auto companies were forced to reduce prices. J.D. Power said the average sales price in March was $44,186, down 3.6% from a year ago and the largest recorded decline for the month of March.

The company said automaker discounts in March were two-thirds higher than a year ago, around $2,800. That includes increased availability of lease deals. J.D. Power expected leases to account for almost a quarter of retail sales last month, up from 19.6% in March of last year.

Sales of electric vehicles grew only 2.7% to just over 268,000 during the quarter, far below the 47% growth that fueled record sales and a 7.6% market share last year. The slowdown, led by Tesla, confirms automakers’ fears that they moved too quickly to pursue EV buyers. The EV share of total U.S. sales fell to 7.1% in the first quarter.

Nearly all of the early adopters and people concerned about internal-combustion engines’ impact on the planet have bought electric vehicles, and now automakers are facing more skeptical mainstream buyers, Edmunds Director of Insights Ivan Drury said.

“That’s where all of those headwinds come in that we’ve seen in survey data,” Drury said. “Those real-world concerns about charging infrastructure, battery life, insurance costs.”

Cox Automotive Chief Economist Jonathan Smoke cautioned it appears the industry has already hit its spring sales peak as buyers expect the Federal Reserve to cut interest rates later in the year.

“Interest rates are still near 24-year highs, and consumers just don’t have the urgency to buy, with the expectation that rates will be lower later this year,” he wrote in a market report. Automobile interest rates still are averaging around 7% per year.

Drury said vehicles that are more affordable are selling faster than more expensive ones. Sales of many large and expensive SUVs fell during the quarter as companies faced more frugal buyers.

“Small sells,…

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