Cox Automotive Forecast: New-Vehicle Sales Pick Up in April as Inventory Levels Continue to Improve

May 1,2023

news release

ATLANTA, April 25, 2023 – New-vehicle sales in April are likely to reveal the market has caught spring fever when announced next week. According to a forecast released today by Cox Automotive, the sales pace, or seasonally adjusted annual rate (SAAR), in April is expected to finish near 15.1 million, a large gain over last year’s supply-constrained level of 14.3 million. April’s sales pace is also forecast to show improvement over last month’s 14.8 million pace.

Sales volume in April is expected to rise 2.3% from one year ago, and that is with one less selling day than last year’s 27 days. However, sales volume in April is expected to decline 6.5% from March. April has 26 selling days, and March had 27. Still, despite a month-over-month decline, overall healthy April sales suggest that growing economic headwinds haven’t hit new-vehicle sales just yet.

According to Charlie Chesbrough, senior economist at Cox Automotive: “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.”

Dramatically Increased Inventory Level Supports New-Vehicle Sales in April

At the start of April, available new-vehicle supply volume was 70% above last year, according to a Cox Automotive analysis of initial vAuto inventory data. Days’ supply has hovered at the mid-50-day level through the spring, which is nearly 60% higher than this time last year. As published earlier this month, new-vehicle supply closed March at its highest level in two years despite surprisingly brisk sales.

Although sales have shown resilience thus far in 2023, some slowdown in the second half of this year is expected. As reported at the end of Q1, economic headwinds are expected to slow the new-vehicle sales recovery, although more incentives and additional units sold into fleet will continue to provide support.

April 2023 New-Vehicle Sales Forecast Highlights

• The annual sales pace in April is expected to finish near 15.1 million, up 0.8 million from last April’s 14.3 million pace and up from March’s 14.8 million.
• Sales volume is expected to rise 2.3% from one year ago and reach 1.3 million units.
• There are 26 selling days in April 2023, down one day compared to April 2022 and last month.

-April 27,2023-

On the futures market this week gasoline futures extended declines below $2.6 per gallon, hovering around their lowest level since March 24th.Wholesale futures prices are nearly 40 cents lower in the past month although motorists in California are not feeling much relief.

Nationwide the EIA says gasoline demand the third week of April is down to 8.7 million gal a day from 9 a few weeks ago.

Gasoline futures are falling right now while they headed much higher this time last year( see chart below)

AAA says lower oil prices is causing pump prices to fall, with the national average for a gallon of regular gasoline dropping a nickel since last week.In California prices are down 2 cents in a week -big whoop! As the say – California gas prices take the elevator up but take the stairs when they have to go down.

“For the first time in several weeks, the national average price of gasoline has seen a decline, and while the fall was quite small, the bigger news may be that we may have seen a short-term peak for the price of gasoline,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

De Haan said gas prices typically peak in May and June, but the oil market is weakening, and we may have already seen the summer peak in prices. “While it’s possible we could go higher later this summer should a major hurricane target sensitive infrastructure, it appears the odds that the national average will miss the $4 per gallon mark are rising. It’s certainly looking optimistic for motorists.”

-April 21,2023-

Firestone Brewery in Paso Robles will install phase 2 of its solar farm at their campus along Hwy 101 according to a public notice.

The latest project consists of a solar system facility to be installed in the rear of the Firestone campus. The system includes a 1.2 megawatt (MW) ground-mounted single axis tracker system on approximately 4.84-acres of a 13.75-acre field located southeast of Firestone’s main building operations, adjacent to the existing solar system.

The company’s first phase, already in place,is two separate solar systems.The larger of the two systems includes a 2.1-MW ground-mounted single axis tracker system on 9.78-acres of an overall 39-acre open field located east of Firestone’s main building operations, near the water treatment ponds. An additional 277 kW carport system is over a remote parking lot used by Firestone employees.

-April 21,2023-

Across the nation and in California, fuel prices are down from last year.That includes the all important transportation fuel – diesel- the truckers choice to transport goods, farmer’s favorite to plow fields, and the long time power source used to pick up neighborhood refuse.

In the Golden State where everything costs more, it is particularly welcome that the cost of diesel has plummeted since last summer when big rig drivers had to pay as much $8/gallon to carry a load.

Last year the average price of diesel reached a high of $6.88 a gallon in June raising the price of all goods that moved by truck and causing a considerable consumer backlash and contributing to the skyrocketing rate of inflation that still haunts us.

Today the US Energy Information Agency says the average price for diesel fuel in California is down to $4.96 – dropping over 50 cents a gallon over the past month.That is almost $2 a gallon decline from the high last year.

Local prices

Locally, diesel is selling below that average up and down the Valley including Fastrip in Farmersville for $4.89, Walmart in Fresno for $4.59 and Yokut Gas in Lemoore at $4.49 a gallon as of April 20.

Nearly all heavy duty-trucks, delivery vehicles, buses, trains, ships, boats and barges, farm, construction and heavy duty military vehicles and equipment have diesel engines. Diesel is the fuel of choice because it has 12% more energy per gallon than gasoline and has fuel properties that prolong engine life making it ideal for heavy duty vehicle applications, says the Energy Commission.

Gas industry website GasBuddy has commented about the downward trend

Lower energy consumption, due partly to a mild winter, has contributed to the price decline. Last spring’s record-high diesel price was $5.82 per gallon in the US- and worse in California.

The price of diesel this summer could be $2 lower than the prior year, said Patrick De Haan, GasBuddy’s head of petroleum analysis. “Coming out of winter, we’ll continue to see diesel prices decline.

Higher interest rates have led to price declines related to lower consumption. “Diesel’s decline has been astounding. We’ve seen improvements in fundamentals over the last few months with diesel prices down nearly $1 per gallon in the last 100 days, thanks in part due to the Fed raising interest rates, throttling back the economy, as well as Mother Nature reducing consumption through a mild winter and curbing consumption of diesel’s cousin, heating oil,” De Haan adds.

Like diesel – California’s gasoline prices have been falling averaging $4.82 a gallon in the past few days according to AAA, but $5.91 a year ago. They peaked at $6.44 last June.

The latest financial commentary for April 20 says gasoline futures fell to $2.6 per gallon, the lowest in nearly five weeks, due to an unexpected inventory build and a weakened demand. According to new data from the Energy Information Administration (EIA), gas demand decreased from 8.936 million to 8.519 million b/d last week. Meanwhile, total domestic gasoline stocks rose by 1.3 million bbl, with markets expecting a 1.267 million draw. At the same time, WTI crude prices have been retreating from a 5-month high hit in April on fears that a globally slowing growth could dampen fuel demand. OPEC+ announced a surprising reduction of output by 1.6 million barrels per day starting next month for the remainder of 2023.

-March 30,2023-

Yokut Gas was again the low price leader in Kings County this week with regular priced at $3.89 gallon at press time, one of the lowest prices in the state. Two other local stations are below $4 according to Gas Buddy. Recently the wholesale price of gas in California has plunged as much as 40 cents from the first of March but pump prices are slow to follow even though sellers are paying less. Crude oil that was $110 per barrel a year ago is selling around $70.

Gasoline demand in 2023 appears to be lower than this same time last year.It’s not just that people are buying electric cars. Analysts point to changing work habits and how many days people go into their job or work from home.Workers who used to commute five days a week now drive fewer days. Also, year after year the fleet of cars operating get more fuel efficient. Add to that the run up in prices last summer when gas reached $6 a gallon that probably forced a change in driving habits by the consumer. Analysts expect US gasoline demand to drop by 1% annually over
the next few years

Yokut Gas is doubling its size by this summer

-March 19,2023-

from the Lompoc Record 

Allan Hancock College is continuing its efforts to create a more sustainable campus by installing solar panel canopies above parking lots at the college’s Santa Maria campus. The college partnered with ForeFront Power to develop a 2.4 MW solar energy system that contains 6,000 solar panels installed across multiple parking canopies. The canopies are expected to save the school $4 million in electricity costs over the 20-year lifespan of the solar energy system.

from California New Car Dealers 

February 15,2023-

Electric car sales market share nearly doubled in 2022 says the California New Car Dealers Assn.

-February 12,2023-

The Central Coast has some tough competition to land a new port facility to launch offshore wind projects off the  Morro Bay coast. The competition comes from Long Beach, who already has major terminals in place.Unlike the more pristine CentralCoast, another terminal in Long Bech is unlikely to generate opposition from  conservation agencies or groups  like a pioneer facility along SLO County’s shoreline.

The Port of Long Beach plans to build a new terminal on up to 400 acres that when completed would be the largest floating offshore wind turbine assembly system at a U.S. seaport, officials said.

Conceptual assessment for the project, Pier Wind, is expected to complete next year, said Mario Cordero, port executive director, in an address Jan. 26. The facility would aid the state goal of producing 25 GW of offshore wind energy capacity by 2045. Turbine assemblies taller than the Eiffel Tower would be towed to wind farms in central and northern California

The Port of Long Beach is looking to offshore wind turbine assembly and manufacturing as a new growth strategy as part of its vision for the future.  The port announces its plans for a terminal dedicated to California’s emerging offshore wind business as port executives review the state of the port and declared 2023 as the “Year of Imagination” as they look toward the future now that the surge in containers has peaked.

A centerpiece in the port’s future strategy and its overall goal to become the world’s first zero-emissions seaport, the new 400-acre terminal would be the largest offshore wind turbine assembly facility dedicated to floating wind farm technology. The proposed floating offshore wind staging and integration facility is dubbed “Pier Wind” within the port’s complex.

The port aims to capitalize on the new offshore wind projects designed for the Pacific coast after the first California wind lease auction conducted by the Bureau of Ocean Energy Management in December last year that generated $750 million. Five companies presented bids for the five lease areas totaling more than 370,000 acres off the coast of Northern and Central California. The projects would have a combined installed capacity of 4.6 GW and because of the ocean topography, it is expected that they would largely be based on floating wind turbines.

“I am proud to be part of an industry and a port that together offer innovative approaches and forward-thinking initiatives that continue to be the most imaginative solutions in the nation,” said Mario Cordero, Port of Long Beach Executive Director during the State of the Port on January 26.

The conceptual assessment for the new facility is scheduled for completion in April 2023. The assembled turbines would be deployed to wind farms off the coast of Central and Northern California and will help the state meet its goal of producing 25 GW of offshore wind power by 2045, in addition to creating jobs and economic opportunities for communities near the San Pedro Bay port complex.

 

Hopes to convince SLO County to rejoin public agency

Monterey-based Central Coast Community Energy (3CE) has approved a 25-year contract with Hydrostor for the construction of a compressed-air energy storage facility, that once built, will provide 500 megawatts of energy storage, making it the largest Compressed Air Energy Storage Project in the world.The project is in Kern County.Hydrostor says they should begin delivering green energy to the state’s power grid by 2028.

Hydrostor has a similar compressed air project near Morro Bay that is being studied by the California Energy Commission.The so called Pecho project faces opposition from the California Coastal Commission in a preliminary statement. Hydrostor has developed an advanced compressed air process (A-CAES) that will inject air into underground caverns, using water to maintain constant pressure. When released, the air is used to power turbines that generate electricity.

In an unrelated matter the new liberal majority on the SLO County Board Of Supervisors is expected to discuss joining Central Coast Community Energy (3CE) in March, next month.

Every city in the county has already joined this program, which allows consumers to buy energy from a nonprofit Community Choice Aggregation group rather than from PG&E. The County could join the agency in 2025. That would mean unincorporated jurisdictions like Los Osos would no longer get power restricted to PG&E.

“3CE is aware that County of San Luis Obispo Board of Supervisors is engaging in a conversation about their priorities and how 3CE is growing California’s clean and renewable energy resources, reducing emissions, and directly benefiting communities through innovative electrification programs that support local businesses, schools, affordable housing development, and everyday homeowners.” shared Robert Shaw, 3CE’s Chief Operating Officer.

“3CE is ready to support the Board as well as SLO County residents and businesses as they make this important decision about how to best serve their community.” If enrolled, unincorporated SLO County would make up 13% of 3CE’s total electric load and 13% of 3CE’s customer base.

 -February 3,2023-

What’s more valuable than all the commercial building projects permitted in Kings County in 2022? One 1000 acre solar project.

One utility-scale solar project permitted in Kings County in October 2022 valued at $62.2 million eclipsed the value of all other commercial permits in the county at $62.01 million. That solar project is one of the 12 Westlands Solar Farm projects built or pending – named Chestnut along the Avenal Highway.

Meanwhile the California PUC is poised to order California’s power providers to procure an additional 4 GW of resources, to come online in 2026 and 2027 pointing to a variety of factors, says a report in the magazine Utility Dive.

They include “increasing electric demand, more than regulators  anticipated, likely due to extreme weather, a greater expected increase in electric vehicles, higher usage of air conditioning, and electrification of the built environment. At the same time, California expects to have less access to imported electricity from its neighboring states, as they face similar trends.”

That will mean plenty of new solar projects in the Valley that will need to launch permitting soon to come on line in that time frame.

In the meantime more big firms are adding renewable energy  for their own use. That includes Home Depot which has pledged to produce or procure 100% renewable electricity equivalent to the electricity needs for all of its facilities by 2030. The home improvement company says they’ll add solar to 25 California stores starting early in 2023.There are 10 stores between Fresno and Delano in the Central Valley.

Also Amazon now says last year’s additions to their renewables portfolio included 918 megawatts of energy produced in Arizona, California and Texas.

Amazon says they made renewable-energy investments in late 2022 that will enable it to operate on 100% clean energy as soon as 2025, five years ahead of its original target, the company said.

According to a report from industry trade group the American Clean Power Association, Amazon, along with Facebook parent company Meta Platforms Inc. (META) and Google, owned by parent company Alphabet Inc. (GOOGL), are the top three corporate purchasers of wind and solar energy.

 

The three lead a total of 326 companies that had contracted for 77.4 gigawatts of wind and solar energy by the end of 2022, which is enough energy to power over 1,000 data centers or 18 million American homes, American Clean Power said.

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