The auto industry is traveling a bumpy path to recovery since the pandemic as most makers reported first-quarter sales gains with three notable exceptions: General Motors Co., Stellantis NV and Tesla Inc., all of which saw declines.

Toyota Motor Corp., Honda Motor Co., Subaru Corp., Nissan Motor Co. Ltd. and Volkswagen AG all saw year-over-year sales gains. And while Ford Motor Co. reported a 6.8% sales gain with the help of its hot hybrid options, the Dearborn automaker did lean on incentives to move vehicles, experts say.

The uneven market reflects high interest rates, slowing growth in electric vehicle demand and a move by consumers toward lower-priced models.

GM sales dipped 1.5%, driven mainly by a drop in fleet deliveries, while the numbers were especially bleak for Stellantis, down 10%, and Tesla, the U.S. electric-vehicle market leader, down nearly 9%.

Paul Waatti, director of industry analysis for AutoPacific, a marketing research and consulting firm, pointed to increasing EV competition for Tesla's first quarterly sales drop in four years.

"We're starting to finally see Tesla volumes being chipped away by these new entrants," Waatti said.

Inventory levels across the industry may be getting back to pre-pandemic levels, but with the average new-vehicle price near $48,000, shoppers are looking for less-expensive options, and foreign automakers have more of them to offer.

"Think about the segments that GM, Stellantis, Ford don't even compete in anymore," said Ivan Drury, director of insights at Edmunds.com Inc., a vehicle information website. "They've left it all to the Koreans, the Japanese ... for the most part, if you look at the hole in the American lineup, it's been filled this entire time with those other brands, so they really are making the right vehicles for the right time."

Drury noted Honda and Toyota are turning vehicles so fast "that they would be selling even more of them if they could make enough of them."

Ford sold 508,083 vehicles in the first quarter, with growth in hybrids, EVs and internal combustion engine products.

"They have some affordable options, admittedly more so than the guys across the street, so that definitely helps," Drury said.

But Ford also has old inventory sitting that it needs to sell, Drury said.

"Even by March, they were almost at a 50/50 split of still selling 2023 versus 2024s," he said. "They're definitely juicing the sales. You can see those low APR offers are everywhere, there's cash on the hood ... they definitely know that they have an issue with the old inventory."

GM attributed its decline to 23% lower fleet sales, noting its retail sales increased 6%.

Stellantis had steep sales declines for its Ram and Dodge brands. Its top-selling Jeep brand saw a 2% uptick, bouncing back from an overall 6% drop last year.

Industrywide, high interest rates loom over demand with the annual percentage rate (APR) for new vehicles averaging 7.1% in the first quarter, the fifth consecutive quarter above 7%. The average monthly new-vehicle payment hit $735 in the first quarter, $4 below the previous quarter, according to Edmunds' data.

"Compelling new product launches combined with the reintroduction of incentives and rebounding inventory in the new vehicle market are all positive signs for shoppers, but elevated interest rates have dampened any positive market momentum," said Jessica Caldwell, Edmunds’ head of insights, in a statement.

Rates could drop this year once the Federal Reserve starts cutting the benchmark rate it has increased 11 times since March 2022 to tamp down on inflation. The central bank has forecast three rate cuts this year, though it left the rate unchanged in March. The rate is at a 23-year high of 5.25% to 5.5%.

Ford up on EVs, hybrids

On the EV side, sales are still rising, but their rate of growth is slowing.

"The majority of EVs are still priced out of most general consumers' budget at this point," Waatti said. "We haven't hit that tipping point with affordable EVs and awareness of EVs is still just starting to grow with the general consumer."

Customer Matthew Karaszewski, 36, from Canton Township looked briefly at Ford's electric F-150 Lightning but went with the Dearborn automaker's Maverick Hybrid compact truck instead. The Lightning's almost $50,000 price tag was above what Karaszewski was looking to spend. He was also concerned about how long the battery would last on a charge since he drives a lot.

While shopping for a new vehicle to replace his 2013 Buick Regal, he came across the Maverick, which met his high miles-per-gallon requirement. He got the XL trim in white for $27,000.

"It's never been really feasible for me to have a truck up until the Maverick came along with a hybrid engine," he said. "Personally, I think hybrid has a better future than full electric ... they should invest more into making these hybrids even more fuel-efficient."

At Ford, EV sales were up 86% in the first three months of the year, representing 4% of the Dearborn automaker's mix. It sold 20,223 EVs out of a total of 508,083 deliveries from January through March.

The automaker has reemphasized hybrid and internal combustion engine products from the Ford Blue side of its business. Hybrid sales were up 42% to a record 28,421 sales. That's expected to grow with increased shipment of the F-150 hybrid model.

Despite the Mustang Mach-E SUV losing eligibility for the federal government's $7,500 clean-vehicle tax credit at the start of the year, sales were up 77%. It benefitted from a price cut in February, a tax credit passed onto consumers by Ford Credit for leases and other incentives.

Ford put a stop-shipment on the F-150 Lightning pickup in February as a part of an extended quality check process. That's expected to be lifted this month, though sales in the first quarter still rose 80%. Ford, the country's electric truck sales leader, this week cut the second shift at its Dearborn Electric Vehicle Center that produces the Lightning to align production with demand. It also increased prices on most '24 Lightnings in January.

The bulk of Ford's sales are ICE products, which were up 2.6%. America's top-selling F-Series trucks, including the Lightning, were down 10%. Deliveries of the refreshed '24 model began at the end of February after lots throughout Metro Detroit filled with the trucks during a quality process check as production ramped up. Sales of heavy trucks fell 19%.

Sales of the popular Maverick compact truck jumped 82%. Included in that were Maverick Hybrid sales, which were up 77%.

Ford's SUV sales had an all-time best quarter.

On the luxury side, Lincoln brand sales were up almost 32%. On the commercial side of the business, Transit vans were up 25% as the nameplate marks its 10th anniversary. All-electric E-Transit vans were up 148%.

GM: Buick a bright spot

GM's Ultium-based electric vehicles started to see some momentum in the first quarter. But GM's overall EV sales of 16,425 in the first quarter did not beat last year's milestone of 20,000, which GM hit on the back of the since-discontinued Chevrolet Bolt.

In this year's first quarter, EV sales were still led by the Bolt, of which GM halted production in December, with 7,040 delivered, down 64% from last year. Meanwhile, the Lyriq's sales increased 499% from 968 to 5,800.

Plagued by a stop-sale for software issues, the new Chevrolet Blazer EV, now back on sale, tallied just 600 deliveries in the first quarter. The new Silverado EV Work Truck had just over 1,000 deliveries. At GMC, the electric Hummer EV pickup and SUV deliveries increased from two reported in the first quarter of 2023 to 1,668 this past quarter. And GM delivered 256 of the BrightDrop electric delivery vans.

Meanwhile, on the internal combustion engine side of the business, GM noted it sold 197,000 pickups for the best first quarter since 2020.

With affordability at top of mind, Chevy has continued to push the gas-powered, $20,400 Chevrolet Trax subcompact SUV as its most affordable option for consumers. GM also has the $25,100 Chevy Malibu sedan and the $22,400 Buick Envista small SUV.

GM sold 37,588 of the Trax over the three months for its best-ever quarter and 9,662 of the new Envista.

All of GM's brands saw slight sales declines year-over-year except for Buick, which saw a 16% uptick. Chevy and Cadillac saw 2% declines. GMC's sales dropped 5%. As of March 2024, GM had 534,479 vehicles in its inventory. This time last year, GM reported 412,000 vehicles in stock.

Stellantis: Jeep gains, Ram slides

Stellantis, meanwhile, is only now bringing its first fully electric vehicles to the American market, with plans to launch eight by the end of the year. Its plug-in hybrids have been in the United States for a couple of years, though, and provided a much-needed sales boost for the company in the first quarter, 82% year over year.

For Stellantis, sales of several Jeep models, including the Wagoneer, Compass and Renegade, were up, while the Chrysler Pacifica minivan also saw healthy sales growth.

But the automaker was hurt by declining sales of its Ram pickup and vans, as well as the Dodge Charger. Both the popular pickup and the Charger muscle car are releasing new models this year, however, which should help boost sales.

Startup EV maker Rivian Automotive Inc. delivered 13,588 vehicles in the first quarter, which was in line with the automaker's expectations. In the first quarter of 2023, Rivian sold 7,946 vehicles.

Foreign makes mostly up

Kia Corp.'s sales dropped 2% year over year with 179,621 vehicles delivered, marking the second-best first-quarter behind 2023's record. With sales of the new, all-electric three-row EV9 SUV, Kia's first-quarter EV sales were up 88% from the previous year.

Hyundai Motor Co. on Tuesday said it sold 184,804 vehicles for a slight sales increase of 0.2% compared with the first three months of 2023, setting a new first-quarter record. Its EV sales for the quarter increased 62% year over year.

Toyota reported selling 565,098 Toyota and Lexus vehicles for the quarter, up 20% from the same period a year earlier. Sales of electrified vehicles — which for Toyota are primarily hybrids — surged by 74%, the company said, to 206,850 sales, making up more than a third of its overall sales.

Honda's sales increased 17% compared to a year ago, reaching 333,824, marking its best first quarter for overall sales since 2021. Subaru's sales were up 6.7% for the quarter, to 152,996 vehicles and Nissan's rose by 7.2% to 252,735.

German automaker Volkswagen reported first-quarter sales reached 82,101, up 21% from a year ago.

How dealers feel

The biggest issue facing dealers like Jim Schebil, owner of Fox Hills Chrysler Jeep in Plymouth, Michigan, is the combination of high vehicle prices and interest rates that make monthly payments unaffordable for prospective customers.

Schebil had mostly a slow quarter for sales, though he did watch traffic on his showroom floor start to increase in the last three weeks, which bodes well for a strong spring.

"We're coming into our good season," he said. "The second quarter is always better."

In February, Jeep dropped prices on some of its more popular vehicles, which has helped get them moving, Schebil said.

"The Grand Cherokee is selling well, because of the lowering of the price, and the incentives on it," he said. "The Compass is moving better."

He said he's also seen good demand for Wrangler 4xe plug-in hybrids, which he can now get in stock after they were previously mostly being sent to California and other states that have more stringent emissions regulations.

"Pretty much we can get anything we need," he said.

At Champion-Hargreaves Chevrolet in Royal Oak, Michigan, dealer Walt Tutak is starting to see inventory levels get back to "normal."

Champion-Hargreaves has gone from having under 300-to-400 vehicles available because of the pandemic disruption to about 1,000 vehicles.

"Now you have the supply, so now it's more in the consumers' corner," Tutak said.

With the United Auto Workers-GM contract settled, everything seems to look good moving into the rest of the year, Tutak said.

Experts at Cox Automotive on a call last week said supply is up 50% from a year ago and, with this rate of growth, should return to pre-COVID levels of 3 million-plus vehicles later this year, giving consumers more options and perhaps an opportunity for better deals.

"The outlook for the rest of 2024 is that some brands will be forced to cut prices to give sales a boost, and their competitors will need to consider responding or risk losing sales and market share," Cox Automotive Senior Economist Charlie Chesbrough said on a forecast call last week. "All of this means that it's going to be providing a relief to customers as high vehicle prices are now in retreat."

Prices remain more than 20% above the first quarter of 2020, but the average transaction price for a new vehicle is now near $47,244, down 2% from a year ago, according to data from Kelley Blue Book, a Cox company.

Cox is forecasting slight sales growth this year, with 15.7 million vehicle sales expected, up from 15.5 million last year. For the first quarter, Cox forecasted U.S. new-vehicle sales will increase 5.6% year over year with 3.8 million vehicles sold, showing the industry is continuing to recover from the 10-year low of 13.8 million total sales reported in 2022.

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