U.S. auto sales to slip in January on slim inventory, higher prices

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Jan 26 (Reuters) - U.S. auto retail sales are expected to dip in January as reduced manufacturing due to the Omicron variant, supply chain constraints and global inflation caused prices to soar amid high demand, consultants J.D. Power and LMC Automotive said.

Retail sales of new vehicles could fall 8.3% to 828,900 units from a year earlier, a report released by the consultants on Wednesday said.

"The volume of new vehicles being delivered to dealerships in January has been insufficient to meet strong consumer demand, resulting in a significantly diminished sales pace," said Thomas King, president of the data and analytics division at J.D. Powers.

The COVID-19 pandemic has caused bottlenecks in supply chains, driving up costs for everything from labor to raw materials.

With consumer demand exceeding supply, new vehicle prices continue to go up. The average new-vehicle retail transaction price in January is expected to reach $44,905, the previous high for any month was in December 2021 at $45,283.

U.S. business activity grew at its slowest pace in 18 months in January as a winter surge in COVID-19 infections worsened worker shortages at factories, though demand remained strong.

Total new-vehicle sales for January 2022, including retail and non-retail transactions, are projected to reach 932,099 units, a 15.6% decrease from last year.

"The start of 2022 faces risk from a multitude of drivers that have been affecting the market for several months. The addition of geo-political concerns with a potential Russia-Ukraine conflict is adding additional economic risk," said Jeff Schuster, president, Americas operations and global vehicle forecasts, LMC Automotive.

The seasonally adjusted annualized rate for total new-vehicle sales is expected to be 14.1 million units, down 2.6 million units from 2021.

Despite the added risk, the consultants expect 2022 global light vehicle sales to improve by 6% to 86.2 million units.

(Reporting by Kannaki Deka in Bengaluru; Editing by Shinjini Ganguli)