Light and dark colors in the world automobile market in the first quarter of 2024

In the first quarter of this year, car maker General Motors reported a slight decline in sales.

Tesla and BYD also reported declining sales amid a lackluster outlook for electric vehicle demand. Meanwhile, rival Toyota saw a sharp increase compared to the same period last year.

Analysts had expected total auto sales to rise about 6% in the quarter, helped by a still-strong U.S. labor market and improving supply conditions. But market watchers cautioned that many consumers were still feeling the pinch of higher interest rates.

Tesla reported global deliveries of 386,810 vehicles in the first quarter, down 8.5%, partly due to a sales slump in China, where it faces fierce competition from domestic electric vehicle (EV) makers.

Financial services firm Morningstar said the decline showed demand for Tesla models was slowing, as competitors, especially in China, could offer more discounts to attract consumers.

In another bit of bad news, GM reported a 1.5% drop in first-quarter 2024 vehicle deliveries in the US. However, the US giant said demand for its vehicles remained strong, thanks to incentive programs.

While overall electric vehicle sales declined year-over-year, GM said its growth is on track, with Equinox EV deliveries arriving at dealerships in the first half of 2024.

Aimed at middle-class consumers, Equinox sales are being closely watched to gauge demand for electric vehicles in the U.S. The first available versions of the model will start at $43,295, with the lowest-priced option of around $35,000 coming in late 2024. The Equinox will also be eligible for a $7,500 tax credit.

In contrast to GM, Toyota’s US sales in the first quarter rose 20.3% to 565,098 vehicles thanks to reduced inventories. Similarly, Honda also recorded a 17.3% increase in quarterly US sales to 333,824 vehicles, after experiencing a shortage of vehicles in 2023.

In the current macroeconomic environment, some potential car buyers may delay their purchases if they expect the Federal Reserve to cut interest rates later this year, according to Jonathan Smoke, an economist at auto services company Cox Automotive.

Mr. Smoke said the situation is not bleak but there is no trend of consumer spending improving in the near future.

BYD, China's largest electric vehicle (EV) maker, reported a 43% drop in first-quarter 2024 sales compared to the fourth quarter of 2023, handing over the title of world's largest EV seller to Tesla after winning it last year.

BYD sold 300,114 vehicles in the first quarter of this year, down from a record quarterly high of 526,409 in the previous quarter. The performance helped the Chinese automaker surpass Tesla.

However, Tesla’s recapture of the sales crown suggests that the American electric carmaker’s global influence will not be easily challenged, especially as both companies are predicting a slowdown in China’s EV sales growth this year. The figures also suggest that BYD’s short-term dominance is due to its domestic discounting program.

Since February, BYD has been cutting prices on its latest models by 5% to 20% compared to previous versions. Last week, BYD set a target of selling 3.6 million vehicles in 2024, up 20% from last year's record sales.