While last year started out with sales being hindered by limited supply, by mid-year sales were being hindered by rising interest rates ratcheting up prices.

Other economists are predicting a recession this year, but Cox Automotive Chief Economist Jonathan Smoke cited measures of resilience.

Smoke said the U.S. economy now has 1.2 million more jobs than before the pandemic, gasoline prices are lower than they were a year ago and consumer confidence is rising.

Data also showed consumer spending rose last year, including a 19% gain in spending on cars, parts and service.

Jonathan Smoke

"We see no evidence the consumer is holding back," Smoke said. "The consumer has not stopped spending."

Despite inflation, Smoke said household finances are in better shape than before the COVID-19 pandemic. "Inflation is eating into savings, but a buffer remains," he said.

This year's flat-lining of sales will be the result of yet higher interest rates as the Fed raises the federal funds rate another 25 to 50 basis points, Smoke said.

Charlie Chesbrough, senior economist at Cox Automotive, said in a Jan. 4 report that 2022 had the lowest sales volume in a decade.

"As the market closes out 2022 and we look to the year ahead, there is little reason to believe retail vehicle sales will increase in any meaningful way," Chesbrough said. "With high auto loan rates in place and inflationary pressures on American consumers, vehicle affordability will continue to put downward pressure on the U.S. auto market."

Charlie Chesbrough

On Monday, Cox Automotive also released its Manheim Used Vehicle Value Index, which reflects the amount dealers pay for used vehicles after adjusting for the mix and seasonal factors.

The index showed declines in 2022 and 2023 after record gains during the pandemic. The index rose 2.5% in 2019, 14.1% in 2020 and a record 46.7% in 2021. But last year, the index fell 14.9% in 2022, and it's expected to fall 4.3% this year before rising 4.1% in 2024.