Cheers to a more normal 2023 in the auto industry

I never liked the term “new normal.” What’s “normal” is always changing, ever-new, like a new model year.

But sometimes we see more tectonic shifts: The $5 day. The Flint sit-down strike. The chicken tax. Nader. Transplants. Tesla. COVID-19.

We’re not done with COVID, but it’s become less of an immediate threat, individually or economically — at least in the West. China is another story.

We’re not done with the chip shortage, either, but like COVID, it’s becoming a less acute pain point. After more than 10 million light vehicles of production were lost for lack of semiconductors in 2021, fewer than half that many were lost in 2022, according to AutoForecast Solutions.

Looking back, though, this was not the recovery year I had anticipated. Russia’s invasion of Ukraine took the legs out of European production, which remains a significant part of the globally integrated auto industry.

And although production constraints have put the industry into something like a recession, the Federal Reserve suddenly decided that high inflation was more systemic than transitory and started hiking interest rates. That slammed the brakes on full-size pickup demand, which is highly correlated with new housing starts, as well as the affordability of still-scarce used vehicles.

While COVID was an unusually profitable time for automakers and retailers, it was a particularly trying time for suppliers, grappling with inconsistent and unpredictable production schedules as well as overall depressed output. The coming year may bring a return of more normalcy, in terms of factory output and vehicles selling at or below sticker.

Another sign of the return to normal-ish life is the return-to-office-ish practices that General Motors, among others, is looking to restore.

But it’s a changed industry we’re returning to: More digital retail, more EVs.

The EV market has been reshaped by Sen. Joe Manchin’s stipulations on taxpayer support. Battery and electric vehicle assembly plants are going up all over North America. And the new year will bring a new system for allocating credits to qualifying buyers of qualifying zero-emission vehicles … eventually, just not on Jan. 1.

The new year will also bring the culmination of the UAW’s historic, though so-far-little-used, right to directly elect officers. The Detroit 3 will be negotiating in 2023 with not only a UAW that is poised to be more combative, but with Unifor in Canada as well, which also has new leadership following a scandal of its own.

Is this “normal”? At least the year will be new.

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