Houston auto sales continued pandemic recovery in June
Houston’s auto market in June continued to recover from the pandemic and related economic fallout — including supply chain disruptions that contributed to shortages of vehicles.
New vehicle sales in the region jumped about 2 percent last month and 25 percent from a year earlier, according to TexAuto Facts, a monthly industry report published by Houstonbased InfoNation, Inc.
“It’s good news for June,” said Daniel McDowell, president and co-owner of InfoNation. “It looks like sales have responded.”
A year ago, vehicle sales were depressed by pandemic-related supply chain issues that created a scarcity of microchips and other materials needed by manufacturers to build cars. Vehicle shortages ensued. With cars in short supply, and consumer spending rebounding as the pandemic eased, prices soared, squeezing out many would-be buyers.
Car prices continue rise. The average vehicle bought at a regional dealership hit $50,487 in June, up about 2 percent from $49,688 in May and 15 percent from $43,867 a year ago.
McDowell noted that the Houston region continues to significantly outpace the national auto industry’s broader recovery. He said the heavy reliance on cars to get around in the region could explain the additional strength of the local auto market.
Still, he was reluctant to say the industry is out of the woods yet, especially as inflation continues to force many consumers to pinch pennies and forego large purchases.
“It’s been a total roller coaster for the last few months,” he said of monthly auto sales. “It’s just been up and down and up and down.”
The new auto sales numbers come as statewide economic growth, bolstered by the presence of oil and gas companies, continues to far outpace national averages.
On Thursday, Texas Comptroller Glenn Hegar revised statewide revenue estimates for the current, two-year fiscal peri
od. He now forecasts that the state will collect $135 billion in taxes in 2022-23 — about 15 percent more than the $117.2 billion that was projected in November 2021.
But there are concerns that the trend will not persist as inflation continues to soar. National inflation hit 9.1 percent in June — the highest rate in four decades — and is now running in the double digits in Houston because of massive leaps in food and energy prices.
Local energy costs jumped by 52.6 percent since June 2021, the Labor Department reported this week. Food prices in the Houston area have climbed by 11.2 percent over the same period — the largest yearly increase since 1981.
The Federal Reserve Bank of Dallas similarly warned of economic downturn because of inflation earlier this week, citing June surveys of 366 Texas businesses that indicate consumer confidence is waning.
All told, 26 percent of the surveyed businesses said they were being affected by “weak demand,” up from 15 percent in March. Fed officials said that’s indicative of growing fears about the economy and the effects of ongoing, sky-high inflation.
Patrick Jankowski, senior vice president of research at the Greater Houston Partnership, said there are signs that those fears are beginning to cool consumer demand. In recent months, he said, auto price increases have begun to moderate as some households cut back their spending.
“It looks like demand is softening,” Jankowski said. “It could be that most rational consumers aren’t going to go out and buy a car and take on a five-year note if they’re worried about losing their job.”
McDowell said supply chain hiccups remain a challenge for the local auto industry. With auto production still recovering from the microchip shortage and inflation running hot, car prices could stay high for a while.
“There still has not been a course correction,” he said of the ongoing microchip shortage.