Headwinds for new vehicle supply

Image credit: Depositphotos.com

Continuing semiconductor shortages could slow down what was looking like a promising increase in new vehicle sales.

A recent analysis is cautioning against too much optimism over increased new vehicle sales. A report from DBRS Morningstar noted that even though considerable easing of constraints has taken place, semiconductor shortage will persist through the second half of this year. This will limit new vehicle production and sales.

“We expect slowing demand as more households renew their mortgages and the cumulative interest rate increases work their way through the economy,” the report added.

That said, pent-up demand is real. It has outweighed the effects of higher interest rates — as shown by 10 straight months of year-over-year growth in new vehicle sales, according to DesRosiers Automotive Consultants.

As for used vehicles, DBRS expects prices to stay elevated.

DBRS also added insights on the types of vehicles consumers are buying and, no surprise, light trucks continue to dominate at 77.6 per cent of production, in line with last year.