The report acknowledged the significant challenges faced by U.S. Original Equipment Manufacturers (OEMs) in recent years, including increased interest rates affecting affordability and the rapid growth of electric vehicles (EVs) altering market dynamics. These factors have prompted inventive yet risky strategies in capital allocation.
Looking into 2024, analysts see the potential for these challenges to diminish, particularly if there’s a move toward more disciplined capital management. Such a shift could be a key driver for the success of Detroit-based OEMs in the upcoming year.
Throughout 2023, and notably, in recent months, car dealers have reported a marked decrease in car sales, a trend often described as a ‘buyers’ strike’. This downturn in both new and used car sales is largely attributed to the impact of higher interest rates. Morgan Stanley anticipates that as interest rates potentially ease in 2024, sales of large discretionary items like cars are expected to increase.