{"id":246966,"date":"2023-08-25T15:17:22","date_gmt":"2023-08-25T19:17:22","guid":{"rendered":"https:\/\/www.thedetroitbureau.com\/?p=246966"},"modified":"2023-08-25T15:17:31","modified_gmt":"2023-08-25T19:17:31","slug":"new-vehicle-sales-expected-to-jump-15-4-in-august","status":"publish","type":"post","link":"https:\/\/thedetroitbureau.com\/2023\/08\/new-vehicle-sales-expected-to-jump-15-4-in-august\/","title":{"rendered":"New Vehicle Sales Expected to Jump 15.4% in August"},"content":{"rendered":"\n

Record consumer spending sent new vehicle sales skyrocketing in August as dealer inventories recover from past shortages.<\/p>\n\n\n\n

\"Sale
New vehicle sales are expected to jump more than 15% in August as inventories move closer to normal.<\/figcaption><\/figure><\/div>\n\n\n\n

JD Power and GlobalData project<\/a><\/u><\/strong> that total new vehicle sales for the month will reach 1,354,600 units, a 15.4% year-over-year increase from August 2022. August has 27 selling days this year \u2014 one more than August 2022. <\/p>\n\n\n\n

Comparing the same sales volume without adjusting for the number of selling days translates to an increase of 19.9% from a year ago. The seasonally adjusted annualized rate (SAAR) for total new-vehicle sales is expected to be 15.3 million units, up 2.1 million units from last August.<\/p>\n\n\n\n

\u201cAugust feels like another rinse-and-repeat month as the industry continues its pace of double-digit sales growth for a fifth consecutive month,\u201d remarked Thomas King, president of the data and analytics division at J.D. Power. <\/p>\n\n\n\n

\u201cThis is facilitated by incremental increases in vehicle production and leveraging continued strong demand from fleet customers. Year-to-date total sales through August will be slightly more than 10.3 million units \u2014 an increase of 14.4% from a year ago \u2014 but still below pre-pandemic sales levels, which were north of 11.4 million.\u201d<\/p>\n\n\n\n

\u201cAs sales volumes improve, the average new-vehicle retail transaction price is declining modestly, trending down $566 or 1.2% from August 2022, to $45,537. The decline mostly is due to an increase in sales of smaller vehicle segments that have inherently lower transaction prices. However, even with the decline in average transaction prices, consumers are on track to spend nearly $47.8 billion on new vehicles this month \u2014 the highest on record for the month of August and 10.5% higher than August 2022.\u201d<\/p>\n\n\n\n

\"March
New vehicle sales are expected to jump more than 15% in August.<\/figcaption><\/figure><\/div>\n\n\n\n

Inventory catching up to demand<\/h2>\n\n\n\n

Retail new vehicle inventory levels in August are expected to finish around 1.3 million units, an increase from July and a large increase of 48.4% year-over-year compared with August 2022, but again, still well below pre-pandemic levels. <\/p>\n\n\n\n

Fleet sales are still elevated as manufacturers leverage higher vehicle production to allocate more vehicles to fleet customers. Fleet sales are projected to increase 45.6% from August 2022.<\/p>\n\n\n\n

\u201cThe increased vehicle supply and elevated interest rates have led to a decline in dealer profits \u2014 but those profits still exceed pre-pandemic levels,\u201d King pointed out. \u201cThe total retailer profit per unit \u2014 which includes grosses, finance, and insurance income \u2014 is expected to reach $3,534 in August. While this is 26.4% lower than a year ago, it is still nearly triple the amount in August 2019.\u201d<\/p>\n\n\n\n

The primary reason for the decline in profit is that fewer vehicles are being sold for prices higher than the manufacturer’s suggested retail price (MSRP). This month, only 28.5% of new vehicles are projected to be sold above MSRP, which is down from 46.8% in August 2022.”<\/p>\n\n\n\n

Total aggregate retailer profit from new-vehicle sales for this month is projected to be down 16.8% from August 2022, reaching $3.7 billion for the third-highest August on record.<\/p>\n\n\n\n

\"Car
The average new-vehicle retail transaction price is declining modestly, trending down $566 or 1.2% from August 2022, to $45,537.<\/figcaption><\/figure><\/div>\n\n\n\n

“Retailers continue to sell vehicles before they physically arrive at the dealership. However, with increased inventory levels, more shoppers are now able to purchase vehicles from dealer lots,\u201d King said. \u201cIn August, 45% of vehicles are projected to be sold within 10 days of their arrival at the dealership, which is down from the peak of 57% in March 2022. The average time that a new vehicle spends in the dealer’s possession before being sold is expected to be 28 days, up from 19 days a year ago, but still less than half the pre-pandemic average of 70 days.\u201d<\/p>\n\n\n\n

Manufacturer incentives static<\/h2>\n\n\n\n

Manufacturer discounts in August are expected to be relatively flat when compared with July but have increased materially from a year ago when incentives were at record lows. The average incentive spend per vehicle has doubled from August 2022 and is currently on track to reach $1,902.<\/p>\n\n\n\n

Expressed as a percentage of MSRP, incentive spending is currently trending at 4%, an increase of 1.9 percentage points from August 2022. It is noteworthy that discounts on leased vehicles have risen in recent months. This month, leasing is expected to account for 20% of retail sales, up significantly from 16% in August of 2022, but still well below August 2019 when leased vehicles made up nearly 30% of all new-vehicle retail sales.<\/p>\n\n\n\n

\u201cElevated pricing coupled with interest rate increases continue to inflate monthly loan payments,\u201d King explained. \u201cThe average monthly finance payment in August is on pace to be $729, up $19 from August 2022. That translates to a 2.7% increase in monthly payments from a year ago. The average interest rate for new-vehicle loans is expected to be 7.3%, an increase of 182 basis points from a year ago.\u201d<\/p>\n\n\n\n

\u201cUsed-vehicle prices have declined slightly from a year ago but remain close to all-time highs. The average trade-in equity for August is trending toward $9,101, down $780 from a year ago. For context, trade-in equity this month is still double the pre-pandemic level, helping owners offset some of the pricing and interest rate increases.<\/p>\n\n\n\n

EVs battle headwinds<\/h2>\n\n\n\n
\"\"<\/figure><\/div>\n\n\n\n

EVs have become more affordable as manufacturers are bringing more moderately priced electrics to market. This is driving increased interest and buying action from consumers, even as some find they don\u2019t enjoy the EV experience. <\/p>\n\n\n\n

\u201cWith an EV Index score of 52 [on a 100-point scale], EVs are more than halfway to achieving parity with gas-powered vehicles,\u201d said Elizabeth Krear, vice president, electric vehicle practice at JD Power. \u201cAffordability remains the highest-scoring factor at 97, driven by aggressive pricing from Tesla. The three factors of interest, availability and adoption show modest improvement and infrastructure remains flat.\u201d<\/p>\n\n\n\n

However, the Experience rating according to JD Power declined 1.4 points, evidenced in the company\u2019s recent Initial Quality Study showing EV owners had more problems with their new vehicles than owners of gas-powered vehicles.<\/p>\n\n\n\n

\u201cAlthough the affordability factor is approaching parity, it is skewed by the premium market, driven largely by Tesla\u2019s 63% EV market share \u2014 and their continual price cuts,\u201d Krear explained. \u201cIn the high-volume segments like compact SUV and large pickup-light duty, affordability scores are at 80. The glaring hole is that no EV options exist in the midsize SUV segment.<\/p>\n\n\n\n

EVs claimed 8.5% retail market share in July. However, EV share is expected to reach 9% by year\u2019s end, according to the new JD Power EV Retail Share Forecast. <\/p>\n","protected":false},"excerpt":{"rendered":"

Record consumer spending sent new vehicle sales skyrocketing in August as dealer inventories recover from past shortages. Read the details at TheDetroitBureau.com. <\/p>\n","protected":false},"author":4389,"featured_media":246345,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","footnotes":""},"categories":[1],"tags":[12017,2378,12015,3056,417],"make":[],"post-state":[],"category_old":[],"acf":[],"_links":{"self":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/246966"}],"collection":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/users\/4389"}],"replies":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/comments?post=246966"}],"version-history":[{"count":1,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/246966\/revisions"}],"predecessor-version":[{"id":246969,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/posts\/246966\/revisions\/246969"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media\/246345"}],"wp:attachment":[{"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/media?parent=246966"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/categories?post=246966"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/tags?post=246966"},{"taxonomy":"make","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/make?post=246966"},{"taxonomy":"post-state","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/post-state?post=246966"},{"taxonomy":"category_old","embeddable":true,"href":"https:\/\/thedetroitbureau.com\/wp-json\/wp\/v2\/category_old?post=246966"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}