The auto industry has survived the bulk of the supply chain problems that have plagued it since the start of the pandemic. Now, in an era of inflation and rising interest rates, analysts say that challenge is likely to be replaced by another: less demand from consumers.

Auto sales in 2022 were, in a word, abysmal, according to Jessica Caldwell, executive director of insights at Edmunds.

“Sales were quite low, they hadn’t been that low in a very long time, mostly because of the inventory shortage that has been ongoing for quite some time,” Caldwell said.

Analysts say the supply picture looks better for the year ahead, with more vehicles available for people who want them. But will those customers show up?

The answer to that depends on the economy, says Charlie Chesbrough, senior economist at Cox Automotive.

“We’re already seeing a relatively weak new and used vehicle market,” Chesbrough said. “But if we did see a full-blown recession with rising job losses and higher interest rates, all of that would be a very big headwind for the vehicle market.”

Policymakers have tried to tamp down inflation by raising those interest rates.

“They’ve really had an impact for vehicle buyers and it’s starting to make affordability an even greater issue,” Chesbrough said. “Monthly payments are starting to rise.”

That’s also due to higher manufacturing costs, Chesbrough said. 2023 looks likely to be a year of transition on many fronts for the industry, including the kinds of cars Americans buy.

Cox Automotive is projecting that this year, for the first time, the number of electric vehicles sold in the U.S. will surpass 1 million.