California’s automotive sector demonstrated remarkable resilience and growth in 2023, with new vehicle registrations reaching levels unseen since the pre-pandemic era of 2020. According to the California New Car Dealers Association (CNCDA), the state experienced an impressive 11.9 percent year-over-year increase in new vehicle registrations, totaling 1,775,915 units. This robust performance underscores the enduring demand for vehicles in California and signals a strong recovery within the automotive market, driven in part by Recent Automotive Releases and evolving consumer preferences.
CNCDA California Auto Outlook Report Q4 2023 cover – highlighting key findings on recent automotive releases and new vehicle registrations in the state.
2023: A Year of Automotive Market Recovery
The CNCDA’s fourth quarter 2023 California Auto Outlook report, compiled using data from Experian Automotive, reveals that the state’s new car market not only rebounded but exceeded expectations. With 1.78 million sales recorded, surpassing last year’s prediction of 1.76 million, 2023 marked a significant milestone. This resurgence can be attributed to several factors, including pent-up consumer demand and the appeal of recent automotive releases across various segments. The top-selling passenger cars in California for 2023 included the Tesla Model 3, Toyota Camry, and Honda Civic, while the light truck segment was led by the Tesla Model Y, Toyota RAV4, and Honda CR-V. Toyota maintained its position as the leading brand in the state, reflecting its consistent popularity and diverse lineup.
The Rise of Electric and Hybrid Vehicles
A key trend highlighted in the report is the increasing adoption of electric and hybrid vehicles. While battery electric vehicles (BEVs) experienced a slight dip in market share in Q4 2023, they still concluded the year with a substantial 21.4 percent share of the market. Notably, non-plug-in hybrid vehicles reached their highest sales figures, capturing 11.1 percent of the market in 2023. Overall, the combined market share of BEVs, plug-in hybrids (PHEVs), hybrids, and fuel cell vehicles in California reached an impressive 35.9 percent, a significant jump from just 11.6 percent in 2018. This shift indicates a strong move towards alternative powertrain options, influenced by both environmental consciousness and the exciting array of recent automotive releases in the electric and hybrid categories. California continues to dominate the BEV market, accounting for 33.8 percent of all BEV sales nationwide, significantly higher than the U.S. market share of 7.5 percent.
Brand Performance and Market Dynamics
While Tesla remains the leader in California’s BEV market, its dominance is being challenged as traditional automakers introduce their own electric models. In 2023, Tesla experienced a 10.5 percent decrease in market share year-to-date, while Mercedes and BMW witnessed the most substantial growth in BEV sales, with increases of 2.2 and 2.8 percent respectively. This suggests that consumers are increasingly open to exploring electric offerings from established brands, particularly as more recent automotive releases from these manufacturers become available. Franchised dealerships played a crucial role in the growth of alternative powertrain vehicle sales, accounting for over 62 percent of combined sales in this segment. Sales of BEVs at franchised dealerships surged by 94 percent from 2022 to 2023, compared to a 29 percent increase by direct sellers, highlighting the continued importance of dealerships in the evolving automotive landscape.
2024 Outlook: Continued Growth Anticipated
Looking ahead to 2024, the CNCDA report projects a further 3.2 percent increase in new vehicle registrations in California, approaching 1.83 million units. This optimistic forecast is based on the state’s strong underlying demand, a robust labor market, and a positive economic outlook. While potential challenges such as the upcoming presidential election and geopolitical uncertainties exist, the anticipation of stable federal interest rates could lead to even stronger sales growth than currently predicted. The continued introduction of recent automotive releases, particularly in the electric and hybrid segments, is expected to further fuel market momentum.
Regional Market Trends
Both Northern and Southern California markets experienced growth in car and light truck retail registrations compared to the previous year. Northern California saw a 10.1 percent year-over-year increase in its share of the statewide total, while Southern California recorded an 8.8 percent increase. Northern California also remains the primary adopter of BEVs, capturing 25.6 percent of the state’s BEV market share, compared to 21.3 percent in Southern California.
Conclusion
The 2023 California auto market recap paints a picture of a dynamic and recovering industry. Driven by strong consumer demand and the appeal of recent automotive releases, particularly in the electric and hybrid vehicle space, the market achieved its highest registration numbers since 2020. With a positive outlook for 2024, California’s automotive sector is poised for continued growth, adapting to evolving consumer preferences and embracing the future of mobility. As David Simpson, CNCDA Chairman, noted, dealerships are committed to “adapting and evolving to meet our customers’ needs and preferences,” ensuring California remains a leading automotive market in the years to come.
