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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 per cent to 828,900 units from a year earlier, according to a report released by the consultants on Wednesday.

“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 labour to raw materials.

The average new-vehicle retail transaction price in January is expected to reach $44,905, the previous high 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 nonretail transactions, are projected to reach 932,099 units, a 15.6 per cent decrease from last year.

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.

Separately, research firm Cox Automotive said on Wednesday new-vehicle sales in January were expected to reach 1.01 million units, a drop of 8.9 per cent compared to January 2021.

Cox Automotive said about 1.2 million fewer vehicles were available at the start of 2022 compared to last year. Despite the added risk, J.D. Power and LMC Automotive expect 2022 global light vehicle sales to improve by 6 per cent to 86.2 million units.

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