Hyundai, Kia rack up double-digit U.S. sales gains in April

Hyundai and Kia racked up U.S. sales gains for the ninth-straight month in April on higher inventories and incentives, signaling pent-up demand remains healthy even as rising interest rates cool the U.S. economy and consumer confidence.

Volume rose 15 percent at Hyundai and 16 percent at Kia last month, the companies said Tuesday.

Hyundai's retail sales rose 5 percent to 64,895 in April, with fleet volume of 5,917, or 8 percent of total deliveries in the month.

Randy Parker, CEO of Hyundai Motor America, cited "high demand for Hyundai product" and "a diverse lineup" of crossovers, trucks and electrified vehicles for the latest results.

Hyundai said it had 49,045 cars and light trucks in U.S. stock at the end of April, down slightly from 53,119 at the close of March but up sharply from 15,809 at the end of April 2022.

Sales of Kia's electrified vehicles rose 74 percent to 11,798 last month, while utility vehicles accounted for 71 percent of April deliveries.

Kia, with one of the industry's lowest days supply of new vehicle, as well as a hot streak with retail buyers, continues to prioritize production for dealers while keeping fleet volumes "very modest."

Genesis also saw sales rise by double digits with April volume of 5,857, up 16 percent and a record for the month, behind higher deliveries of the GV70 and GV80, as well as the new GV60 EV. Genesis sales have now advanced six consecutive months.

Toyota Motor Corp., Honda Motor Co., Subaru and Mazda will report April sales tallies later Tuesday. Ford Motor Co. and Volvo are scheduled to release their results Wednesday. The rest of the industry reports U.S. sales on a quarterly basis.

Analysts estimate that the market expanded up to 5.7 percent in April, with fleet driving most of the gain, as inventories continue to recover. U.S. auto sales rose 8.4 percent in the first quarter behind healthy retail demand and robust fleet volume as automakers tackled a backlog of orders from commercial, government and rental customers.

Retail inventory hit approximately 1.2 million vehicles in April, flat with March but 45 percent higher than in April 2022, J.D. Power and LMC Automotive said.

"With the significant improvement in overall new-vehicle availability from a year ago, dealer margins are declining and manufacturer incentive spending is increasing," said Thomas King, head of data and analytics at J.D. Power. "Nevertheless, the demand for vehicles in the retail market remains strong due to pent-up demand from pandemic-related production shortages."

Among brands, Kia, Toyota, Honda, Lexus, Subaru, BMW, Land Rover, Hyundai and Volkswagen had the lowest U.S. supplies last month, Cox Automotive said, while Jeep, Buick, Ram, Chrysler, Infiniti, Jaguar, Dodge and Lincoln had the highest stockpiles.

Higher production, inventory and incentives are being offset by rising affordability concerns, reflecting near-record-high vehicle prices and uncertain consumer confidence, analysts say.

"Auto sales will remain subject to the unsteadiness apparent in the overall economy, with the likelihood of month-to-month volatility ahead," said Chris Hopson, principal analyst at S&P Global Mobility.

"Interest rates on vehicle loans appear to be plateauing as manufacturers offset higher financing costs with increased APR-based relief," said Zack Krelle, an analyst with TrueCar. "Affordability concerns remain and we're seeing demand for lower-priced vehicles, under $30,000, move vehicles off the lot more quickly."

The seasonally adjusted annualized sales rate, after dipping below 15 million to 14.9 million in March, is forecast to come in at 15.1 million to 16 million in April, analysts say, well above the 14.52 million reading in April 2022. The pace of sales tallied 16.13 million in January and 15.07 million in February.

The average new-vehicle retail transaction price in April was expected to reach $46,044, a 2 percent increase from April 2022 but down from the record high of $47,362 set in December, J.D. Power and LMC Automotive said, as rising incentives make an impact. TrueCar estimates transaction prices averaged $45,251 last month, up from $44,018 in April 2022 but down slightly from $45,651 in March.

The average incentive per new vehicle rose an estimated 59 percent to $1,599 last month from April 2022, J.D. Power and LMC said, while incentive spending as a share of sticker price was tracking at 3.3 percent, an increase of 1.1 percentage points from April 2022. TrueCar estimates incentives averaged $1,606 per vehicle last month, up from $1,327 in April 2022 and $1,542 in March, with nearly every major automaker padding discounts month to month and year over year. Just two automakers, Toyota and Honda, saw lower incentives last month compared with April 2022, TrueCar estimates.

The average incentive per new light truck last month was expected to be $1,673, up $644 from April 2022, J.D. Power and LMC Automotive said, and the average incentive on new cars was expected to be $1,328, up $404 from a year earlier.

Fleet deliveries are expected to total 229,100 last month, up 33 percent from April 2022 on a selling day-adjusted basis, J.D. Power and LMC Automotive said, and fleet volume is expected to account for 17 percent of total light-vehicle sales, up from 14 percent a year earlier.

• There were 26 selling days in April vs. 27 in April 2022.
• The average interest rate on a new-vehicle loan was expected to increase to 6.85 percent in April, or 2.27 percentage points higher than a year earlier, J.D. Power and LMC Automotive said.

"Relatively strong sales in the wake of rising interest rates and worsening economic headwinds suggests there remains some pent-up demand. Product availability has improved substantially over this time last year. Dealer lots are no longer empty, so there is far more selection for vehicle shoppers that may have been waiting to buy a particular model or configuration."

— Charlie Chesbrough, Cox Automotive senior economist