New vehicle sales in the United States in January are expected to reach 1.01m units, a drop of 8.9% compared to January 2021, according to a forecast from Cox Automotive.

The January pace of US auto sales, or seasonally adjusted annual rate (SAAR), is forecast to show a sizeable month over month improvement and finish near 15.3m, up from 12.4 million in December, which was the slowest pace since May 2020.

Improvement in the January sales pace is a positive sign for the market, but it is mostly due to seasonality adjustments. In fact, there haven’t been any significant market changes to positively impact sales. New vehicle sales remain stuck in the 1m to1.2m range.

January is expected to continue this trend, as the market continues to be held back by tight inventory. New vehicle inventory is starting 2022 down 61% from last year or 1.2m fewer vehicles available at the start of 2022 compared to the start of 2021.

According to Charlie Chesbrough, senior economist at Cox Automotive: “A large decline in sales to start the year after a robust holiday shopping period is expected, and adjustments are made to sales data to reflect this. In January, the seasonal factors will reveal that, even though sales volumes are stuck in their current range, the market is moving in the right direction and, importantly, not getting worse.”