Rising interest rates and near-record prices have made new cars and trucks out of reach for many U.S. consumers. Car buyers paid an average of $48,008 for a new car in March, up nearly $1,800 from March 2022, according to market research firm Kelley Blue Book. The average monthly payment for a new car was $784 last month, compared with $683 a year ago.
While GM’s U.S. sales rose in the first quarter, signs of weakening demand from broader market consumers have begun to emerge. Last week, AutoNation, the largest U.S. auto retailer, said its sales of new vehicles fell 2% in the first quarter.
“There’s a lot of mixed economic signals out there in the market and in auto retail, and I think that really calls for a more cautious approach than we’ve had in the past few years,” AutoNation CEO Mike Manley said on a conference call.
A big growth area in the automotive industry is electric vehicles. GM said on Tuesday it will build a battery plant with South Korean partner Samsung SDI. The two companies will jointly invest $3 billion to build the factory, but did not disclose the location. GM is teaming up with another South Korean company, LG Energy Solutions, and production has already begun at a battery plant in Ohio, with two others under construction in Tennessee and Michigan.
GM expects a surge in sales of electric vehicles later this year. In the first quarter, the company sold more than 20,000 electric vehicles in the United States. Mr. Jacobson said GM expects to produce more than 50,000 electric vehicles in the first half of the year and roughly double that in the second half.
“We are pleased with the strong demand for the electric vehicles we produce,” he said.
One of the reasons GM’s sales in China have fallen so much is because consumers have grown more fond of electric vehicles. That creates a huge opportunity for Chinese manufacturers and hurts Western automakers that have been slow to roll out electric vehicles.